Property owners who regularly lease residential or non-residential premises often choose entrepreneurial activity as a convenient way to conduct such business. However, before registering as a sole proprietor (FOP), it is important to consider the requirements of the Tax Code of Ukraine regarding the application of the simplified taxation system.
The Main Directorate of the State Tax Service in Kyiv region points out that sole proprietors can engage in the business of leasing real estate, provided they comply with the requirements established by tax legislation.
Most often, the third group of the simplified tax system is chosen for this activity. Taxpayers of this group pay the unified tax at the rate defined by Article 293 of the Tax Code of Ukraine, as well as the military levy in accordance with legislative requirements. In addition, FOPs are required to pay the unified social contribution for mandatory state social insurance, unless otherwise provided by law.
At the same time, the legislation establishes a number of restrictions.
Thus, in accordance with subparagraph 291.5.3 of paragraph 291.5 of Article 291 of the Tax Code of Ukraine, sole proprietors cannot be payers of the simplified tax if they lease:
– land plots with a total area of more than 0.2 hectares;
– residential premises and/or their parts with a total area of more than 400 square meters;
– non-residential premises (structures, buildings) and/or their parts with a total area of more than 900 square meters.
In case of exceeding the specified areas, the entrepreneur loses the right to use the simplified taxation system and must switch to the general system in the manner prescribed by the Tax Code of Ukraine.
There are also specific features for taxpayers of the second group of the simplified system. They can provide rental services only to the general public or to other payers of the simplified tax. If the tenant is a legal entity or a sole proprietor currently on the general taxation system, the second group of the simplified system cannot be used for such activities.
At the same time, payers of the first group of the simplified tax are not entitled to engage in activities involving the leasing of real estate.
When choosing entrepreneurial activity for leasing real estate, the owner should assess in advance the scope of activities, the area of the objects, the range of potential tenants, and compliance with the conditions for remaining on the simplified taxation system. This will help avoid violations of tax legislation and ensure stable business operations.
Illustrative photo: Raimond Spekking / CC BY-SA 4.0
