What types of business activities are allowed for sole proprietors (FOP) under the simplified tax system in Ukraine (Groups 1–4)?

Group 1: For micro-businesses without employees

Who you can work with: Individuals, sole proprietors on the simplified tax system, or LLCs also on the simplified system.

Allowed activities:

• Retail trade at markets;
• Providing personal services to individuals (e.g., hairdressers, tailors, appliance repair, etc.).

Restrictions:

• Annual income cap: 1,336,000 UAH (167 times the minimum wage in 2025);
• No excise goods (alcohol, tobacco, fuel);
• No employees allowed.

Group 2: For small businesses serving individuals or other FOPs

Who you can work with: Individuals, FOPs on the simplified system, and LLCs on the simplified system.

Allowed activities:

• Retail trade (any kind);
• Restaurant services without alcohol (beer, cider, perry, and table wine are allowed);
• Services for individuals and simplified tax clients.

Restrictions:

• Annual income cap: 6,672,000 UAH (834 times the minimum wage in 2025);
• No excise goods (except beer);
• No services to companies on the general taxation system;
• Max 10 employees.

Group 3: Most flexible option

Who you can work with: Anyone (individuals, FOPs, LLCs, companies on general or simplified taxation).

Allowed activities: Any business not prohibited by law (exceptions: currency exchange, gambling, financial services without a license, etc.).

Restrictions:

• Annual income cap: 9,336,000 UAH (1167 times the minimum wage in 2025);
• No limit on number of employees.

Group 4: For agricultural producers only

Who can apply: Only agricultural producers who earn 75%+ of their income from agricultural products.

Allowed activities: Cultivation, storage, processing, and sale of agricultural products.

Restrictions:

• Only agricultural activities;
• Only FOPs or legal entities with agricultural focus.

Prohibited activities for all tax groups:

• Gambling;
• Currency exchange;
• Sale of excise goods (except where allowed by law in Groups 2 and 3 with a license);
• Mining of natural resources;
• Enterprise management services;
• Financial services without proper licensing.

How to choose the right tax group?

• Analyze your clients: individuals or companies?
• Estimate income: current and expected.
• Consider your team: do you plan to hire staff?
• Review your activity type: is it allowed under the chosen group?

Choosing the right tax group is key to running a smooth and compliant business. If you choose the wrong one, you could lose your simplified status or face fines.

‍Our team is here to help — from selecting the right taxation system to monthly reporting, we’ve got your back!