An individual entrepreneur works through an agent: the State Tax Service explained what amount is considered income and when you can lose the simplified system

The State Tax Service clarified the rules for the operation of the FOP on a single tax through a legal entity-agent, which accepts payments from buyers, keeps its commission and transfers the balance to the entrepreneur. The key nuance: the income of the FOP is the entire amount paid by the buyer, not just the funds received in the account after deducting the agent’s fee.

The DPS clarification applies to the FOP of the second group, which works in the field of restaurant business and plans to accept orders and payments through the platform of a legal entity.

According to the proposed model, the buyer pays for the order through the application, the funds are received by the agent company, after which it withholds the fee stipulated in the contract and transfers the balance to the entrepreneur.

The question of whether such a scheme does not violate the requirements of the simplified system and exactly what amount should be shown as business income has become a fundamental question for the FOP.

The agent can keep a commission from the funds received

The Tax Code stipulates that taxpayers of the first to third groups of the single tax must make payments for goods, works and services exclusively in monetary form – cash or non-cash.

DPS explained that the situation when the agent receives funds from buyers on behalf of the FOP, independently withholds from them the remuneration provided for in the contract, and transfers the rest to the entrepreneur, is not a non-monetary form of settlement or a barter operation.

So, by itself, this model of work through an intermediary does not deprive the entrepreneur of the right to remain on the single tax.

Offsetting is already a risk for the FOP

A different situation arises if the FOP and the agent carry out the registration of counterhomogeneous claims.

If the debts of the parties are repaid by mutual settlement, the DPS considers such a mechanism as a non-monetary form of settlement.

For the single tax payer, this can have serious consequences.

In the case of using a method of calculation that does not meet the requirements of paragraph 291.6 of the Tax Code, the entrepreneur must switch to paying other taxes and fees from the first day of the month following the tax period in which the violation occurred.

Therefore, not only the content of the contract with the agent is important, but also how the parties actually make calculations.

The tax is calculated from the total amount paid by the customer

One of the most important conclusions of the consultation was the determination of the amount of the FOP’s income.

If the agent receives funds from the buyer on behalf of and on behalf of the entrepreneur and then keeps his own commission, the income of the FOP is the full amount paid by the buyer.

The commission of the intermediary does not reduce the income of the entrepreneur for the purposes of the single tax.

For example, the client paid UAH 10,000 for the order. The agent withheld UAH 1,000 of his remuneration and transferred UAH 9,000 to the entrepreneur.

In this case, the FOP must reflect UAH 10,000 in income, not UAH 9,000.

Thus, it is not enough to focus solely on the bank statement and the amount actually received in the account after deducting the commission.

What documents to confirm income

Business owners of the first and second groups, as well as single tax payers of the third group, who are not VAT payers, can keep records of income in any form – on paper or in electronic form.

However, this does not exempt the entrepreneur from the need to have documents confirming business operations.

When working through an agent, the values can be:

the contract between the FOP and the legal entity;
primary documents regarding the operations carried out;
information about payments and orders received from buyers;
documents on the amount and withholding of the agent’s fee.

The primary documents must contain mandatory details provided for by law.

Therefore, in a more complex agency model, the mere fact of receiving a certain amount in the bank account of the FOP may not be enough to confirm the correctness of the tax accounting.

What must be remembered FOP

The main conclusion of DPS is that working through an agent does not in itself contradict the simplified system.

If the agent accepts money from the buyer, keeps the commission provided for in the contract and transfers the balance to the entrepreneur, this is not considered a prohibited non-monetary settlement.

At the same time, for tax purposes, the FOP must take into account the entire amount paid by the client, including the agent’s commission.

Instead, the use of netting instead of the usual withholding of agency fees can be recognized as a non-monetary settlement and jeopardize the entrepreneur’s right to remain on the simplified taxation system.