Can “sleeping” FOPs avoid paying taxes in Ukraine

With the beginning of 2025, a key tax change took place in Ukraine, affecting so-called "sleeping FOPs" — entrepreneurs who are officially registered but do not generate income. Previously, they benefited from a military exemption allowing them to suspend payment of the Unified Social Contribution (USC), but starting from January 1, 2025, this exemption has been canceled for all FOPs on the simplified tax system. Tax consultant Mykhailo Smokovych announced this on his YouTube channel.

“Sleeping” FOPs are required to pay USC

Thus, now “sleeping” FOPs are obliged to contribute at least 1,760 UAH per month to their accounts.

The cancellation of the exemption significantly changed the financial burden on entrepreneurs. At the same time, legislation maintains complete exemption from paying USC for several socially protected categories. These entrepreneurs have the right to not pay USC at all, even if they receive income from activities.

List of FOPs exempt from paying USC

• FOPs-pensioners and persons with disabilities receiving appropriate benefits;

• Officially employed FOPs (including part-timers), for whom USC is paid by the employer;

• Active military personnel;

• Persons on a three-year maternity leave caring for a child.

Tax obligations: What to pay depending on the group

In addition to USC, “sleeping” entrepreneurs still face the question of paying the Unified Tax (UT) and Military Tax (MT). Here, obligations drastically depend on the chosen group of the simplified tax system.

I and II groups of the simplified system:

For representatives of these groups, fixed rates of UT and MT are established. The charges of these funds do not depend on incomes, so entrepreneurs are obliged to pay fixed amounts even in their absence. As of October 2025, these amounts are at such a level:

• UT: 303.80 UAH/month (Group I) and 1,600 UAH/month (Group II).

• MT: 800 UAH/month (for both groups).

III group of the simplified system:

For this group, taxes are paid as a percentage of income. In the absence of any financial inflows, FOPs of Group III do not have to pay UT and MT, but the payment of USC remains mandatory.

General taxation system:

Only entrepreneurs under the general system can completely have no tax obligations (including USC) if they have no profit. This is the only system where “sleeping” status fully exempts from all payments.

How a “sleeping” FOP can legally minimize financial losses

Tax consultant Mykhailo Smokovych states: “There are several ways that allow minimizing tax payments in the absence of income.” Entrepreneurs who do not make a profit but do not want to close their registration can use such legal tools:

1. Tax holidays. Submitting an application allows not to pay taxes for only one month.

2. Transition to Group III or the general system. Transitioning to Group III allows avoiding UT and MT in the absence of income, but requires payment of USC. Transitioning to the general system fully exempts from all tax obligations (including USC) in the absence of profit.

3. Closing FOP. If the activity has been suspended for a long time, the most rational step is to close the registration, as there is no sense in keeping it active and paying the mandatory USC.

Earlier, we wrote that the number of closed FOPs has increased in Ukraine.