September 9, 2021 · 8 min read
Foreign Economic Activity for FOP Group 3: What You Need to Know
As of 2021, Group 3 is actively used for IT FOPs, less often Group 2.Being in Group 3, an IT FOP pays 5% of the received income and a Single Social Contribution (SSC) of 22% of the minimum wage.
How to Choose a Bank for Opening a Foreign Currency Account for an IT FOP
The rapid development of internet services has made it possible to perform a significant part of legally mandated procedures online, including those necessary to start using certain banking products. Today, every bank offers a huge number of options for various types of business cards – it is simply impossible to compare them all within a single article.
There are separate package programs for representatives of the IT industry. Therefore, there is no universal solution, nor can there be. The entrepreneur must make this choice independently.
Nevertheless, there are a number of criteria by which you can compare several banks and choose the optimal one for yourself:
- Cost of opening a current account.
- Monthly account maintenance fee (whether there was/was no movement of funds).
- Commission amount (payments, cash withdrawals via ATM, cash deposits, currency exchange).
- Card limit.
- Availability of internet banking and its cost.
- Mobile application for account management.
- SMS notification.
- Acquiring (a service of technological and informational support for settlements on transactions carried out using electronic payment instruments within a payment system).
For example, let's compare two banks: PrivatBank vs Monobank
An individual entrepreneur with Monobank will not have to pay bank commission for:- opening and maintaining accounts in hryvnia, dollars, or euros
- payments within Ukraine
- tax payments
- providing account statements
- transfers of funds to a Monobank card.
Simply put, FOP account maintenance is free.
Regarding opening an FOP account at PrivatBank in a bank branch, it costs 100 hryvnias, but this service is also free on the website. Its maintenance in this bank can cost from 50 UAH per month, and payments to accounts in other banks cost from 3 hryvnias/payment.
Another important point for FOP clients is the conditions for cash withdrawals from the card.
Monobank offers the possibility to transfer money from your account to an individual's card for free, and then, depending on the card type, withdraw up to 50,000 hryvnias per month without commissions.
At PrivatBank, cash withdrawals from an FOP card "Key to Account" or money transfers to a "card for payments" can also be free with a sum limit, for example, up to 20,000 UAH within 3 hours. Pay attention to this.
Open an FOP account with Monobank can be done by clients who already have a card. However, there is no need to go to the bank either to get the card or to open an FOP account. Everything is done remotely in the app.
Regarding opening an account with PrivatBank, it also offers the possibility of remote account opening, provided that you are already a PrivatBank client. To open an FOP account remotely, you need to obtain an EDS (Electronic Digital Signature) in Privat24 for private clients.
To manage funds in an FOP account with Monobank, no additional applications, logins/passwords for new personal accounts are needed. All services are provided through one familiar and convenient mobile application.
If we talk about Privat24, it provides separate logins for individuals and for businesses, so you will have to switch between different personal accounts during work.
Some entrepreneurs receive income in foreign currency (e.g., IT specialists). It is not possible to withdraw it directly from an FOP account. Therefore, to use the earned foreign currency, entrepreneurs usually first exchange the money for hryvnia, then transfer the hryvnia funds to their personal card, from which they can dispose of the money as they wish.
Thus, having analyzed the conditions of the two banks, it can be concluded that each bank "fights" for its client and tries to create favorable conditions by offering various products. And in this "fight," significant advantages will be:
- free account opening and maintenance
- free cash withdrawals
- fully remote service
- all services in one application
- 24/7 currency exchange between accounts.
On our YouTube channel "Biznesuy" you can watch an interesting and useful video about electronic labor books, and it will only take 6 minutes.
Foreign Currency Operations for FOP Group 3: Documents for FEA, Exchange Rate Differences, Currency Purchase, Reporting
What Documents Does an FOP Need for FEA
Standardly, these are an invoice, a contract, and a service provision act. Depending on the bank's requirements, simplified rules may apply; for confirming the export of services, an invoice may be sufficient.If you use only an invoice, it should contain the maximum amount of data about the agreement, making it easier to confirm information if the bank requests documents verifying the foreign currency payment.
For example, an invoice may state a condition that if the customer has paid the invoice, they have accepted the services provided without additional signing of a service provision act. If you want to further secure yourself with a contract, it can be signed electronically, including by accepting a public offer (para. 2, Art. 6 of the Law of Ukraine "On FEA").
Does an FOP Need to Calculate Exchange Rate Differences
Currency sales usually occur at the interbank rate or the bank's rate, which often differs from the NBU rate set on the date of sale; this difference is called the exchange rate difference. Even if currency is sold on the day it arrives in the foreign currency account, the selling rate may differ, and the hryvnia account will receive an amount greater or smaller than what was recorded in the income ledger (calculated at the NBU rate).
If income increased, it's a positive exchange rate difference; if it decreased, it's a negative one. For single-tax FOPs, this does not lead to consequences, as they maintain simplified accounting and do not calculate exchange rate differences. Accordingly, they do not adjust income by their amount.
What are the Peculiarities of Currency Purchase by an FOP
It is only possible to buy foreign currency through a bank on the foreign exchange market (Art. 6 of the Law of Ukraine "On Currency").
For example, online via client-bank: you need to fill out an application for currency purchase (para. 10 of NBU Resolution No. 5) and send documents to the bank confirming that you need the currency for payment under an agreement – a contract, an invoice. From the foreign currency account, you can then make a payment abroad. The bank will charge a commission according to its tariff. The money must be used within 10 business days from the moment it is credited to the foreign currency account for the purposes specified in the currency purchase application (para. 44 of NBU Resolution No. 5).
Does an FOP Need to Submit Foreign Currency Reporting
No foreign currency reporting is required.How to Withdraw Foreign Currency from an FOP Account
When foreign currency funds are received into a settlement account, the FOP can keep the money in the account until needed. However, it is important to consider that there are certain restrictions when using foreign currency funds:
- it is forbidden to transfer foreign currency from a business account to a personal foreign currency account (or any other individual's account opened for personal needs)
- it is not possible to withdraw foreign currency from a settlement account (receive cash). You can sell the foreign currency and then withdraw the required amount, but already in hryvnias.
What are the Penalties for Violating the Procedure for Foreign Currency Operations by an FOP
Art. 162-1 of the Law of Ukraine "On Currency and Currency Operations" states that violation of the procedure for conducting foreign currency operations entails the imposition of a fine on officials of legal entities (except authorized institutions), citizens - business entities from one thousand to three thousand non-taxable minimum incomes of citizens, namely, from 17 thousand to 51 thousand UAH, (Art. 162-1 of the Code of Administrative Offenses).
