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26.05.2022

Peculiarities of payment of taxes and EUV by lawyers during martial law

1. Taxation of self-employed persons. A lawyer who practices law individually is a self-employed person (Part 1 of Article 13 of the Law of Ukraine "On Advocacy and Advocacy").

A self-employed person is a taxpayer who is an individual entrepreneur or carries out independent professional activity, provided that such person is not an employee within the scope of such entrepreneurial or independent professional activity (paragraph 14.1.226. part 14.1. article 14 of the Tax Code of Ukraine).

Registration of self-employed persons is carried out by entering into the State Register of Individuals – Taxpayers (hereinafter referred to as the State Register) records of state registration or termination of entrepreneurial activity, independent professional activity, re-registration, registration, removal from registration, making changes regarding a self-employed person, and as well as taking other actions provided for by the Procedure for accounting of taxpayers and fees (Part 65.2 of Article 65 of the Tax Code of Ukraine).

In order to register a natural person who intends to carry out independent professional activity, such a person must submit an application and documents in person (send by registered letter with a description of the attachment) or through an authorized person to the supervisory body at the place of permanent residence (Part 65.3 of Article 65 of the Tax Code of Ukraine).

A certificate of registration of a taxpayer is issued to a natural person engaged in independent professional activity by the controlling body with an indication of the term, if such a term is specified in the registration certificate or other document (permit, certificate, etc.) confirming the right of the natural person to conduct independent professional activity activity (Part 65.7 of Article 65 of the Tax Code of Ukraine).

Individuals who conduct independent professional activities are required to keep records of income and expenses from such activities. Accounting of income and expenses can be done in paper and/or electronic form, including through an electronic cabinet (Part 178.6 of Article 178 of the Tax Code of Ukraine).

Citizens' incomes received during the calendar year from independent professional activities are taxed at the rate determined by Article 167.1. 167 of the PKU. Taxable income is considered aggregate net income, i.e. the difference between income and documented expenses necessary for carrying out a certain type of independent professional activity.

In accordance with the Law of Ukraine dated 15.03.2022 No. 2120-ХХ "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the application of norms during the period of martial law" amendments were made to the PC of Ukraine, in particular, subsection 1 of Chapter XX "Transitional Provisions » The PC of Ukraine was supplemented by a new paragraph 22, it was established that according to the results of the tax (reporting) periods for 2022, as part of the expenses from the implementation of a certain type of independent professional activity, as well as as part of the expenses of a natural person – an entrepreneur from the implementation of economic activity, except for persons who have chosen a simplified taxation system, documented expenses in the form of property value may be taken into account, including funds voluntarily transferred (given, transferred) to the Armed Forces of Ukraine, the National Guard of Ukraine, the Security Service of Ukraine, the Foreign Intelligence Service of Ukraine, the State Border Guard Service of Ukraine , the Ministry of Internal Affairs of Ukraine, the Department of State Security of Ukraine, the State Service of Special Communications and Information Protection of Ukraine, voluntary formations of territorial communities, other military formations formed in accordance with the laws of Ukraine, their units, military units, units, institutions or organizations, maintained at the expense of the state budget, for the needs of state defense, as well as for the benefit of the central body of executive power, which ensures the formation and implementation of state policy in the field of civil protection, civil protection forces and/or public, communally owned health care facilities , and/or health care structural divisions of regional, Kyiv and Sevastopol city state administrations, and/or funds transferred to special accounts opened by the National Bank of Ukraine for fundraising.

Natural persons engaged in independent professional activity, as well as foreigners and stateless persons who are registered with the regulatory authorities as self-employed persons and are residents, submit a tax return based on the results of the reporting year in accordance with this section within the time limits provided for taxpayers incomes of individuals, in which, along with incomes from conducting independent professional activities, other incomes from sources of their origin in Ukraine and foreign incomes must be indicated.

However, Law of Ukraine No. 2118-Х of 03.03.2022 "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the peculiarities of taxation and reporting during the period of martial law" amended subsection 10 of Chapter XX "Transitional Provisions" of the PC of Ukraine and supplemented by Clause 69, which stipulates that in the event that the taxpayer is unable to fulfill his tax obligations in a timely manner, in particular with regard to compliance with the deadlines for paying taxes and fees, submitting reports, including the reports provided for in Clause 46.2 of Article 46 of this Code, registration in the relevant registers of tax or excise invoices, adjustment calculations, submission of electronic documents containing data on actual fuel balances and volume of circulation of fuel or ethyl alcohol, etc., taxpayers are exempted from the liability provided for by this Code with mandatory performance of such duties within three months after the termination or cancellation of martial law in Ukraine.

Please note that exemption from liability occurs only if the taxpayer proves that he is unable to fulfill his tax obligation.

Also, in accordance with Clause 25 of Subsection 10 of Chapter XX "Transitional Provisions" of the PC of Ukraine, self-employed persons (natural persons – entrepreneurs, persons engaged in independent professional activity), who had or did not have employees, called up for military service during mobilization or involved in the performance of mobilization duties in the positions provided for by the wartime states, during the special period defined by the Law of Ukraine "On Mobilization Training and Mobilization" , for the entire period of their military service, they are exempted from the obligation to accrue, pay and submit tax reports from the personal income tax in accordance with Section IV of this Code, and are also exempted from the obligation to calculate, pay and submit tax returns from the single tax in accordance with Chapter 1 of Section XIV of the Code of Ukraine.

The basis for such exemption is a statement of a self-employed person and a copy of a military ticket or a copy of another document issued by a relevant state body, indicating data on the conscription of such a person for military service during mobilization, for a special period, which are submitted to the revenue and tax authority under at the place of tax registration of a self-employed person within 10 days after his demobilization. If a demobilized self-employed person is undergoing treatment (rehabilitation) in connection with the performance of duties during mobilization, for a special period, an application and a copy of a military ID card or a copy of another document issued by the relevant state body shall be submitted within 10 days after the end of her treatment (rehabilitation).

If a self-employed person called up for military service during mobilization, for a special period, has employees and for the duration of his military service during mobilization, for a special period, authorizes another person to pay employees wages and/or other income, then the duty to calculate and withhold personal income tax from such payments for the period of military service of a self-employed person is borne by this authorized person.

Personal income tax, which was calculated and withheld by the authorized person from such payments to individuals, is paid to the budget by the demobilized self-employed person within 180 calendar days from the first day of his demobilization without charging fines and financial sanctions. At the same time, the demobilized self-employed person in the application provided for in this paragraph shall enter data on the amounts of the employee tax charged and withheld by the authorized person during the period of the self-employed person's military service.

Tax reporting on the amounts of tax calculated and withheld during the military service of a self-employed person by an authorized person from among employees and other natural persons shall be submitted by a demobilized self-employed person in the manner and within the time limits established by this Code, without the accrual of fines and financial sanctions provided for by the Criminal Code of Ukraine.

2. Payment by lawyers of EUV . In accordance with the Law of Ukraine dated 15.03.2022 No. 2120-ХХ "On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the application of norms for the period of martial law" amendments were made to the Law of Ukraine "On Collection and Accounting of a Single Contribution to General Conditions" mandatory state social insurance", in particular, the "Final and Transitional Provisions" is supplemented by a new item 919, which provides that temporarily, from March 1, 2022 until the termination or cancellation of martial law in Ukraine and within twelve months after the termination or cancellation of martial law, self-employed persons have the right not to accrue, calculate or pay a single contribution for themselves. At the same time, such persons shall not complete the calculation of the single contribution as part of the tax declaration for the period in which, in accordance with the first paragraph of this clause, the single contribution was not accrued, calculated and paid.

In addition, the Law of Ukraine No. 2120-IX added clause 921, which stipulates that during the period of the legal regime of martial law and within three months after its termination or cancellation, fines and fines are not charged for violations in the field of payment of the EUV.

3. A new rate of 2% of the single tax. If a lawyer carries out his legal activities in the organizational and legal forms of a lawyer's office or a lawyer's association, the Law of Ukraine No. 2120-IX allows to become a payer of the single tax of the third group using the features of taxation during martial law.

The percentage rate of the single tax for single tax payers of the third group, who use special features of taxation, is set at 2% of income.

The tax (reporting) period for payers of the single tax of the third group, who use special features of taxation, is a calendar month.

In order to choose or switch to a simplified system of taxation by a payer with special features, a business entity submits an application to the controlling body. At the same time, the income calculation for the previous calendar year is not attached to the application.

You can read about the features of the transition to a simplified taxation system with payment of 2% of income in 73 answers of the State Tax Service of Ukraine to 73 relevant questions at the link – https://tax.gov.ua/media-tsentr/novini/578879.html

Yakov Voronin

lawyer, doctor of legal sciences, chairman of the Committee on Customs and Tax Law of NAAU

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