Will a Sole Proprietor Lose the "Simplified Taxpayer" Status Due to Donations to the Armed Forces of Ukraine
Individual entrepreneurs do not lose the right to operate under the simplified taxation system if they transfer charitable assistance for the needs of the Armed Forces of Ukraine from their business account.
As explained by the Main Department of the State Tax Service in Khmelnytskyi region, according to the legislation, the charity donor is the individual person, not the individual entrepreneur. At the same time, charitable activity is not carried out within the scope of the sole proprietor’s entrepreneurial activity.
The State Tax Service also reminded that the legislation requires entrepreneurs to open separate accounts for business and personal needs. At the same time, the use of personal accounts for entrepreneurial activity is prohibited.
However, the law does not impose any restrictions on the disposal of funds received from economic activity for an individual registered as a sole proprietor. The entrepreneur can freely use these funds, including for charitable assistance.
Transferring funds to support the Armed Forces of Ukraine directly from the business account is not grounds for losing the right to remain on the simplified taxation system, the State Tax Service concluded.
As previously reported by the "Judicial and Legal Newspaper", volunteer collections to bank cards may not be subject to personal income tax and military levy. At the same time, it is necessary to comply with the requirements established by law.
In Ukraine, a volunteer is considered an individual who voluntarily and free of charge provides assistance for socially useful purposes. This is defined by the Law of Ukraine "On Volunteer Activity." Volunteer activity can be carried out both through organizations and institutions that engage volunteers and independently. In the case of individual activity, the volunteer is obliged to inform the recipients of assistance that they do not cooperate with the relevant organization. For certain types of volunteering, the law provides certain restrictions.
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