Individual entrepreneurs who change their single tax group during the year often do one thing wrong. This can lead to the loss of the right to a simplified taxation system.
Is the income limit “reset” after changing the group?
If an individual entrepreneur switches from one single tax group to another in the middle of the year, there is no new start. The income counter is not reset, writes YANKIV
The tax office looks at income for the entire calendar year – from January 1 to December 31. And it doesn’t matter how many times you changed the group during this time.
This means that if you started the year in the first group, then switched to the second, and ended in the third group, your total income for the year should not exceed 10,091,049 hryvnias – the limit of the third group.
What limit should you take into account?
You need to focus on the annual limit of the group you are in after the transition.
That is, the scheme is as follows:
you calculate all income from the beginning of the year;
you take the limit of the new group;
you compare the total amount with this limit.
The limit is not divided into months, it is set immediately for the entire calendar year. To understand, let’s consider an example:
The income limits for 2025 were: the first group – 1,334,438 hryvnias per year, the second group – 6,672,190 hryvnias per year. An entrepreneur, working in the first group from January to June, has already used 100 thousand hryvnias from his total limit. After moving to the second group from July 1 to the end of December, he can earn not 6,672,190 hryvnias, but 6,572,190 hryvnias, since 100 thousand hryvnias are already taken into account as part of his annual income,
the editorial office writes.
When can you lose the right to “simplification”?
If an entrepreneur made a mistake in the calculations and exceeded the permitted limit for his group, he loses the right to work on the simplified system from the quarter in which the excess occurred.
What to do in this case?
For individual entrepreneurs of group 1: if the income exceeded the limit, the entrepreneur must either change the status to group 2 – 3, or completely exit the simplified system.
For individual entrepreneurs of group 2: the same logic applies – a transition to group 3 of the single tax or a complete rejection of the simplified system is required.
For individual entrepreneurs of group 3: when the income exceeds the permitted limit, a rate of 15% is applied to the amount that exceeded the limit plus a mandatory change of the taxation system to the general one.
