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VAT for Ukrainian sole proprietors (FOPs) has not been cancelled — it has been postponed. As of 19 October 2026 the plan is this: from 1 January 2028, entrepreneurs on the simplified tax system with a turnover above €85,000 a year (about ₴4.37 million) are to become VAT payers. The law has to be passed by the end of April 2027, and there is no text yet.
Below: what has been decided and what has not, who will be affected, how much you would pay, with examples for an online store and for services, and what is worth doing right now. We are a group 3 FOP ourselves, so we calculate the way we would for our own business. This is an overview as of 19 October 2026, not tax advice.
Want numbers for your own FOP right away? The VAT calculator for FOPs shows whether you will have to register and how much you would pay with VAT.
| Question | Status as of October 2026 |
|---|---|
| Will FOPs pay VAT | Most likely: it is a commitment to the IMF |
| From which year | From 1 January 2028 — government and IMF plan |
| Turnover threshold | €85,000 a year ≈ ₴4.37 million — preliminarily agreed |
| The law | Due by the end of April 2027; no text yet |
| Single tax with VAT | 3% for group 3 — current rule, the law may change it |
| VAT returns | Monthly or quarterly — bill 16037-d, first reading only |
The threshold is compared with turnover — all receipts from sales — not with profit. The single tax group limits are tied to the minimum wage, so they change every year.
| Group | Income limit 2026 | Limit 2027 (draft) | Affected by VAT |
|---|---|---|---|
| Group 1 | ₴1,444,049 | ₴1,594,182 | no: limit below threshold |
| Group 2 | ₴7,211,598 | ₴7,961,364 | yes, if above threshold |
| Group 3 | ₴10,091,049 | ₴11,140,182 | yes, if above threshold |
Exactly how turnover will be counted is for the law to decide. In the Ministry of Finance’s March draft, turnover was to be counted over the previous 12 calendar months from quarterly returns for group 3 and from the previous year’s income for group 2, and the tax service itself was to register businesses as VAT payers from 1 January. These details may still change.
What will happen to group 2 itself is also an open question. The government has committed to the IMF to review groups 2 and 3 in 2027: moving some activities from group 2 to group 3 and introducing rates of up to 10% for some services in group 3. There are no specific lists yet.
One more fact: according to Svitlana Vorobei, more than a thousand FOPs on both the general and the simplified system are already VAT payers. For some businesses it even pays off — we will show which ones below.
The VAT rate is 20%. For a business client that pays VAT, you simply add 20% to the price, and the client gets it back as a tax credit: nothing becomes more expensive for them. A private customer cannot reclaim VAT, so there are two options: raise the price or pay the VAT out of your margin — that is 1/6 of every receipt. On the other hand, the VAT you pay to suppliers on purchases is deducted: that is your tax credit (input VAT).
We calculated three typical cases for group 3 at the current rates. Without VAT: a 5% single tax and a 1% military levy. With VAT: 3% and 1% of income excluding VAT. Prices for private customers stay the same, prices for businesses go up by 20%. The single social contribution (ESV) is the same in both cases, so it is left out.
| Online store | Consumer services | B2B services | |
|---|---|---|---|
| Turnover now | ₴6,000,000 | ₴5,000,000 | ₴6,000,000 |
| Clients | private customers | private customers | VAT payers |
| Purchases with VAT a year | ₴3,600,000 | none | ₴600,000 |
| Receipts incl. VAT | ₴6,000,000 | ₴5,000,000 | ₴7,200,000 |
| Taxes now: 5% and 1% | ₴360,000 | ₴300,000 | ₴360,000 |
| With VAT: 3% and 1% | ₴200,000 | ₴166,667 | ₴240,000 |
| VAT payable | ₴400,000 | ₴833,333 | ₴1,100,000 |
| Total taxes with VAT | ₴600,000 | ₴1,000,000 | ₴1,340,000 |
| Change per year | −₴240,000 | −₴700,000 | +₴220,000 |
| Raise prices for private customers | by ≈5% | by ≈17.5% | not needed |
Why the store loses less: it buys goods from VAT payers, and ₴600,000 of tax credit covers most of the VAT on its sales. Consumer services have almost no purchases with VAT, so there is no credit to claim, and for them VAT means minus 1/6 of revenue. For B2B services, registration even pays off: clients pay 20% on top and reclaim it, while you pay 3% instead of 5% and reclaim the VAT on your purchases. The examples do not include accounting costs or the risk of tax invoices being blocked.
Group 2 cannot be VAT-registered today, so for group 2 this assumes the law lets you stay in the group with VAT, as the Ministry of Finance’s December draft proposed. Then the fixed single tax does not change, and the difference comes from VAT alone. Example: turnover of ₴5 million, private customers, purchases with VAT of ₴1.5 million a year. VAT payable is ₴583,333 a year, and to earn the same you would need to raise prices by about 14%.
If you sell to private customers, VAT will end up either in your prices or in your margin. Start with the numbers: what your turnover will be in 2027, how much you buy with VAT, and how much of the VAT you are ready to absorb and how much to pass on in prices.
Once you are a VAT payer, your website and accounting will need:
For some group 3 FOPs — yes, and there is no need to wait until 2028. It pays off when most of your clients are VAT payers and your purchases with VAT are substantial: clients will not feel a price increase, while you pay 3% instead of 5% and reclaim the VAT on purchases. It does not pay off when you sell mostly to private customers and buy almost nothing with VAT.
You can switch to the 3% rate from the start of a quarter by applying in advance, and you register as a VAT payer with a separate application. Check the deadlines and the procedure with an accountant: a mistake here costs more than a consultation.
It is the first thing that comes to mind, and it is exactly what the government and the IMF agreed to guard against. The government is to draw up rules against artificial business splitting and sham switching between tax regimes by the end of December 2026. The memorandum also provides for pilot projects to find businesses that artificially hold down their turnover to avoid registering for VAT.
A split without a real business purpose — separate lines of business, teams, clients — can lead to additional tax assessments. If your business really consists of different lines, discuss it with an accountant before the law is passed.
All current payment and filing deadlines are in the FOP tax calendar. If you are only planning to sell online, start with the article on how to start an online store in Ukraine, and if you sell on a marketplace, compare Prom and your own store.
We are a group 3 FOP ourselves and we are keeping track of the VAT plans. Want to get your website ready in advance? Write to us — during business hours we reply within 15 minutes and will suggest what to change on your website and what it might cost.
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