Registration & maintenance of IE for IT companies

Most IT specialists working in Ukrainian IT companies are employed under the terms of the B2B contract. Therefore, if a Ukrainian or foreign company wants to hire an IT specialist, it must offer a service agreement to him/her.
IT specialists are registered as so-called individual entrepreneurs (IE) – self-employed individuals who carry out economic activities at their own risk in order to make profit. IE can provide services to both individuals and legal entities. There are 4 tax groups for IE in Ukraine.There are 2 groups suitable for IT specialists – II and III.

Comparative characteristics of II and III tax groups:

Group II
Group III
They can work with
Group II
With other IEs and legal entities under a simplified system of taxation and with private individuals

They cannot provide services to non-residents.
Group III
With other IEs , legal entities, regardless of the tax system, with private individuals.

May provide services to non-residents.
Annual turnover (amount of income)
Group II
Up to UAH 5,000,000.
Group III
Up to UAH 7,000,000.
Opportunity to hire employees under an employment contract
Group II
Up to 10 people .
Group III
There are no restrictions.
Taxation
Group II
20% of the minimum wage set at the beginning of the year (at the beginning of 2021 the tax is - 1200 UAH per month)
Group III
3% of income with VAT
5% of income without VAT
The amount of the SSC
Group II
22% of the minimum salary (at the beginning of 2021 - UAH 1,320 per month)
Group III
22% of the minimum salary (at the beginning of 2021 - UAH 1,320 per month)
Reports
Group II
1. The tax declarations Single Social Contribution - individual entrepreneur - (2 times a year)

2. Report on the amounts of income of insured persons and the amount of Single Social Contribution paid(Appendix 5) - (1 time per year)
Group III
1. The tax declarations Single Social Contribution - individual entrepreneur - (4 times a year)

2. Report on the amounts of income of insured persons and the amount of accrued Single Social Contribution paid (Appendix 5) - (1 time per year)
NACE suitable for IT professionas and can be used by every group
Group II
62.01 - Computer Programming;
62.02 - Consulting on informatization issues;
62.03 - Activities to control computer equipment;
62.09 - Other activities in the field of information technology and computer systems;
58.21 - Publication of computer games;
58.29 - Launching of secondary software;
63.11 - Data processing, publication of information web portals and other related activities;
63.12 - Web portals;
63.99 - Provision of other information services.
Group III
62.01 - Computer programming;
62.02 - Consulting on informatization issues;
62.03 - Activities to control computer equipment;
62.09 - Other activities in the field of information technology and computer systems;
58.21 - Publication of computer games ;
58.29 - Launching of secondary software;
63.11 - Data processing, publication of information web portals and other related activities;
63.12 - Web portals ;
63.99 - Provision of other information services.
70.22 - Consult on financial activities and management

Example:

In Ukraine, IE pay two taxes:

1) Single tax (Single Tax) – its amount depends on the group of taxation:

• 2nd group of EP (in 2021) = 43 dollars (1200 UAH).
• EP 3 group (5% of income). For example, if the income is $4,000 , the tax is $200 .

2) Single Social Contribution (SSC) – at the beginning of 2021 = $ 47 (UAH 1,320)

For example, the total income of IE per month - 4000 dollars ( gross ), the following taxes must be paid:

1) If IE works under the II tax group:

4 000 dollars – 43 dollars (1200 USD) (Single tax) – 47 dollars (1320 USD) (Single Social Tax) = 3910 dollars . (But I will note that IE under the 2nd tax group can receive funds only from a Ukrainian company or another IE, working under a simplified system ).

2) If IE works under the III tax group:

(4 000 USD – 47 USD (Single Social Tax)) – 5 % = 3753 dollars . 

IE registration process

Today, the process of registration for IE is very simple. It is possible to register online.

The registration process is as follows:

1
Physically, a person forms an EDS - Electronic digital signature (Qualified electronic signature). It is possible to do it for free in Private24 (online) or offline in the tax office. Also, there are paid EDS services.
2
After receiving the EDS you need to log in to the portal Diia (use it to register as IE).
3
Then we submit an application for registration as an individual entrepreneur and choose a tax group (online).
4
The last stage - opening a bank account. Nowadays it is possible to open an account online in some banks ( Monobank and Privatbank).

Managing your IE includes:

  • calculation of taxes and payment assistance;
  • creation of primary documentation;
  • preparation and submission of reports to regulatory authorities;
  • support for current activities;
  • advising on current activities.

Advantages of working with AboutHR :

recruiting

Experience in assisting IE with outsourcing centers of foreign companies in Ukraine;

staff search

Modern approach to accounting - most transactions are made online, electronic documentation, minimum of paperwork;

recruitment

We speak English and will be able to provide every customer with a detailed action plan at any stage of cooperation.

Find out the cost of the service

Answer the questions and we will calculate the cost of services for you:

    If you send a request before 14:00, you will receive an offer the same day!