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What Is an FOP in Simple Terms?
Simply put, an FOP is an individual registered as an entrepreneur who has the right to carry out commercial activities. Unlike an employee, a sole proprietor organizes their own work, is responsible for the results, and pays taxes on income earned.
A sole proprietor is an independent market participant — their own boss. They are free to choose business activities, taxation system, and partners. However, this freedom comes with responsibilities: an FOP is liable for obligations with all personal assets.
Types of FOPs
In Ukraine, there are several FOP groups, each with specific rules and limitations. The choice depends on business type, income level, and number of employees.
Group 1 Sole Proprietor
This is the simplest group for small businesses. It includes entrepreneurs engaged in retail trade from market stalls or providing household services to individuals. In 2025, the annual income limit for this group is 1,336,000 UAH. Group 1 FOPs cannot hire employees.Group 2 Sole Proprietor
This group includes those providing goods or services to individuals and/or single tax payers. In 2025, the income limit is 6,672,000 UAH and up to 10 employees are allowed. Group 2 FOPs can work with simplified tax regime entities or individuals only.Group 3 Sole Proprietor
The most popular group with the fewest restrictions. It includes entrepreneurs engaged in any legal activity. The income limit is 9,336,000 UAH in 2025, and the number of employees is unlimited.How Entrepreneurial Activity Works
An FOP operates under Ukrainian legislation and acts independently. A business can be run solo or in cooperation with others based on mutual agreements.
Each group has specific conditions:
- Group 1 is limited to certain types of activities defined by law;
- Group 2 is limited in terms of customer types;
- Group 3 is the most flexible but requires more precise accounting.
The group choice affects taxation, reporting requirements, and income limits. Analyze all factors carefully before registering.
Taxation Systems for FOPs
There are two systems: general and simplified. The general system requires paying 18% personal income tax and a 5% military levy. The simplified system involves a single tax, which depends on the group and business type.
Details for each group in 2025:
- Group 1: Pays a fixed single tax set by local councils (max 302.80 UAH/month). Also pays social security (ESV) — 22% of the minimum wage (1,760 UAH) — and a military levy of 800 UAH (10% of the minimum wage). Total monthly minimum: 2,862.80 UAH.
- Group 2: Pays a fixed single tax (max 1,600 UAH/month), ESV as above, and military levy of 800 UAH. Total monthly taxes: approx. 4,160 UAH.
- Group 3: Pays a percentage of income — 3% with VAT or 5% without VAT. Also pays ESV and 1% military levy from income. Must pay taxes both for themselves and employees.
Major tax updates for 2025:
- Mandatory ESV payments reinstated from Jan 1, even with no income;
- Military levy now mandatory: 5% under the general system, specific rules for the simplified system;
- Updated rules for reserving employees from military service: from March 1, businesses must confirm critical status;
- Monthly tax reporting introduced.
Rules for real estate sales by FOPs also changed — tax rates increased for second and subsequent transactions within a year. When selecting a tax system, consider not just tax rates but also accounting/reporting complexity and limits on income and activities.
FOP Client Services in the GlobusPlus App
Globus Bank provides a full range of financial services for sole proprietors via the GlobusPlus mobile app. Entrepreneurs with an account can:
- View account and card balances;
- Transfer funds using IBAN;
- Top up FOP deposits in a few clicks;
- Repay business loans easily;
- Make internal transfers between own accounts;
- Get account statements instantly.
GlobusPlus offers competitive and transparent rates. For example, transfers via IBAN cost 4 UAH (up to 100,000 UAH) or 15 UAH (above 100,000 UAH).
Being an FOP is a convenient and accessible way to run a small business. It's important to choose the right group and tax system and use modern tools to manage finances. GlobusPlus is ready to support entrepreneurs with convenient and beneficial solutions to help grow your business with confidence and financial stability.
