Tax Audits in 2025: What Freelancers and Sole Proprietors Should Expect in Ukraine
After the first days of the full-scale war, tax audits in Ukraine were suspended, but later in 2022 they were resumed in a limited format. Today, we are witnessing a new dynamic: the State Tax Service has become more active in penalizing businesses, especially small and micro businesses, and audits themselves are conducted on the basis of clearly defined provisions of the Tax Code. What should entrepreneurs expect and what risks have become relevant?
The tax service can conduct two types of audits: documentary (at the place where documents are submitted) and actual/on-site (directly at the place of business).
Scheduled audits remain valid: a schedule has been approved for 2025, which also includes sole proprietors. Unscheduled inspections are possible only on legal grounds ignoring requests, suspicion of violations, submitting VAT for refund, etc. In addition to the tax authorities, other bodies can also audit sole proprietors:
- State Labour Service if there are employment relationships or hired employees
- Pension Fund regarding reporting and cooperation with other agencies
- Local authorities on permits, amenities, trade issues
Moratorium: Protection or Formality?
Presidential Decree No. 538/2025 introduced a moratorium on groundless audits, but did not cancel them entirely. Audits are possible if:
- The sole proprietor is included in the schedule
- There are grounds for an unscheduled audit
- Risks or suspicions of violations have been identified
For businesses in combat zones, there are additional restrictions, but this does not guarantee complete exemption from control.
What and How Is Most Often Checked
The main focus is on the reality of income, compliance with cash and banking discipline, registration of employeesand compliance with the chosen single tax group. Having complete documentation is key to avoiding fines:
- Contracts with clients
- Bank statements
- Acts of completed work
- Declarations and reporting
- Personnel documents (if there are employees)
The frequency of audits for micro-businesses and sole proprietors depends on the level of risk:
- High once a year
- Medium once every two years
- Low once every three years
For groups 1-2 of the single tax, actual audits are appointed only in the presence of several risk factors, and scheduled audits only if included in the schedule.
Freelance and Taxes: What You Need to Know About Legal Work with Foreign Clients
The pandemic, and later the war, accelerated Ukrainians’ transition to freelancing. By 2024, nearly a million people worked as freelancers. The main part sole proprietors registered on the simplified system. The optimal form for a freelancer is sole proprietor, Group III. It allows you to work with foreign clients, control income limits, choose activity codes (KVEDs) and pay simple taxes:
- Single tax 5% of income
- UST (Unified Social Tax) 22% of the minimum wage monthly
- Military levy in specified cases
All income, including through PayPal, Wise, Revolut, is subject to declaration. It is important to keep statements, invoices, and contracts if audited, this will help confirm the source of income. Receiving payment to a personal card is possible, but in this case, the tax burden is much higher PIT 18% and military levy 1.5%. This is legal but unprofitable and risky.
Cryptocurrency Still Not the Best Choice
Operations with cryptocurrency have many nuances. It is better to avoid them as the main way of receiving income: it is difficult to confirm the origin of funds, and it is hard to comply with currency and tax legislation.
The state is returning the tax control system to pre-war logic, gradually removing most wartime concessions. The moratorium partly protects micro-business, but does not exclude audits in case of risks or suspicion of violations. For entrepreneurs, the key is order in documentation and strict compliance with rules. For freelancers official registration, transparency of transactions, and readiness for any tax queries.
Business discipline, transparent income, and focus on legal schemes are not just about avoiding fines but also about business stability in the changing realities of modern Ukraine.
Questions for readers:
Have you faced tax audits since the war began? What tools or strategies help you stay compliant and avoid fines?
About the Author
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