The Council is preparing a revolution for small businesses: it will be possible to work without an individual entrepreneur (Document)
20 February 13:29
Ukraine may officially allow citizens to conduct business without registering as individual entrepreneurs (FOP). The Verkhovna Rada has resumed consideration of draft law No. 8143 “On the freedom of entrepreneurial (economic) activity of households,” which provides for the creation of a new model of economic activity—the so-called home economy. This was reported by "Komersant Ukrainian" with reference to the draft law.
The purpose of the bill is to enshrine in Ukrainian law the legal status of households as economic entities, provide tax and economic incentives, and stimulate income growth among the population.
The authors of the initiative emphasize that this will activate the economic activity of citizens, legalize small businesses, and strengthen the country’s economy.
What is a household as a business entity?
The bill proposes for the first time to officially establish the legal status of a household — that is, a family or group of individuals who live together and share a common lifestyle — as an economic entity.
This means that households will be able to conduct business activities without registering as sole proprietors, but in compliance with established rules and tax reporting requirements.
In this way, the state is creating a legal mechanism for the functioning of the home economy — a new form of small business in Ukraine.
Conditions for doing business without registering as a sole proprietor
The draft law provides for three main conditions:
- submission of an annual tax return for the household;
- conducting activities exclusively by members of the household;
- annual income must not exceed UAH 8 million.
Income will be accounted for in a simplified format in accordance with the procedure to be determined by the Cabinet of Ministers of Ukraine.
What types of activities will be allowed without registering as a sole proprietor
The draft law defines a wide range of activities that can be carried out without entrepreneur status.
These include:
- hairdressing and cosmetology services;
- legal advice;
- tutoring and private lessons;
- care for the elderly or sick;
- governess services;
- cleaning of premises;
- repair of clothing, footwear, furniture, and appliances;
- maintenance of household appliances;
- laundry and ironing;
- retail trade in markets;
- transportation of passengers and cargo;
- restaurant business;
- cosmetic services without a license;
- other types of activities without a license.
Who will not be able to use this law
The draft explicitly excludes:
- all licensed activities.
- real estate brokerage (purchase/sale/rental/appraisal);
- jewelry made of precious metals/stones;
Household budget: what counts as income and expenses
Household income is all receipts of all members for the year in monetary and non-monetary form.
The project lists income sources very broadly: salaries, remuneration, civil law contracts, entrepreneurial income (including sole proprietorship/independent activity), scholarships, passive income, winnings, income from the sale of own products, social transfers (except social services), insurance payments, non-state pension payments, etc.
Expenses include:
- expenses for economic activity,
- the cost of living for each member of the household — 60% of the average monthly salary for the previous year.
This is an unusual norm: the project actually incorporates a “minimum living estimate” into the household expenditure accounting model.
Social guarantees and state support
The bill also introduces the concept of “social transfer” — state assistance that will be provided on the basis of the household’s tax return.
This will allow:
- provide targeted assistance to citizens;
- control the use of budget funds;
- support households in difficult life circumstances.
At the same time, pensioners and students may have a simplified declaration procedure.
Why is the state introducing a new business model?
The adoption of the bill will allow:
- legalize small family businesses;
- reduce the shadow economy;
- increase household income;
- create new opportunities for self-employment;
- stimulate economic development.
The bill also does not require additional spending from the state budget.
What will change for Ukrainians
If the law is passed, Ukrainians will be able to officially run small businesses without registering as sole proprietors, simplifying the start of entrepreneurial activity.
This could be one of the biggest small business reforms in recent years and create new opportunities for millions of Ukrainian families.
Final provisions: what else will have to be changed in the laws
The draft provides for changes to:
- The Civil Code of Ukraine (the idea of “freedom to create households” is added, a new article on the right of households to conduct economic activities without registration is introduced, and the responsibility of household members as individuals is established).
- The Commercial Code of Ukraine (households are added to business entities, state support for entrepreneurship is also prescribed for households).
- The Law on State Social Assistance to Low-Income Families (taking into account the new law).
The Cabinet of Ministers must also:
- develop a form for the annual household declaration;
- prepare amendments to the Tax and Budget Codes;
- bring subordinate legislation into line.
