Bank accounts of the individual entrepreneur: use of "entrepreneurial" income at its own discretion

by | Jul 24, 2019

Bank accounts of the individual entrepreneur: use of “entrepreneurial” income at its own discretion

As stipulated in Art. 44 CCUs, entrepreneurship is carried out on the basis of a free disposal of profits remaining at the entrepreneur (in particular, in the individual entrepreneur) after payment of taxes, fees and other statutory payments. In view of this, the individual entrepreneur can freely use the funds from the current business account for his own needs, prepaidly paying all taxes, fees and other statutory payments from entrepreneurship.

Thus, funds transferred from a business account to a personal account by a sole proprietor are not subject to personal income tax.

Otherwise, cases of transfer of personal income tax after tax and fees to personal accounts, for example, husband or wife, parents, children (par. 14.1.263 PCU) are regulated. Thus, according to item 174.6 of the PCU, the profits accrued to a tax payer in the form of a gift are subject to taxation at the rate of 18% of the personal income tax and the 1.5% military fee as an additional benefit. Thus, the individual entrepreneur acquires the status of a tax agent.

Consequently, the money donated from the account of the individual entrepreneur  – the payer of the single tax to the bank card of the individual – one of the family members of the first-degree or second-degree relatives of the individual entrepreneur – is considered to be part of the monthly income of such an individual and is taxed on general grounds. 

In the light of the above, and in order to avoid unnecessary taxation, we recommend that you initially transfer funds from the current entrepreneur account from your current business account to your personal bank account, from which you have already sent the desired amount to the card of a family member, since according to item 174.6 of the PCU funds donated by relatives of the first degree of affinity are taxed at the income tax at 0% tax rate.