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Can FOPs be philanthropists?

01/ 10/ 2021
  Author: Alexander Fedorko, Lawyer of Dynasty Law & Investmen They say do good and it will come back to you, but this principle does not apply in relations with the supervisory authority. From a practical point of view, the question is whether individual entrepreneurs can be philanthropists (donations)? The answer to this question is ambiguous. The provisions of the Law of Ukraine On Charitable Activities and Charitable Organizations state that a philanthropist can be either an able-bodied individual or a legal entity. At the same time, he did not decide the fate of individual entrepreneurs as philanthropists. The Civil Code of Ukraine stipulates that a natural person with full civil capacity has the right to carry out business activities that are not prohibited by law. An individual exercises his right to entrepreneurial activity subject to its state registration in accordance with the procedure established by law. In their turn, the controlling bodies in their tax consultations note that since the entrepreneurial activity of a natural person-entrepreneur does not provide for charitable activities, as well as the fact that the participants in civil relations during charitable activities are able-bodied natural persons, such natural person an entrepreneur may not donate funds, ship goods free of charge (perform work, provide services) within the framework of entrepreneurial activity, arguing that these actions are charitable. Private individuals who are payers of the single tax generally risk losing the application of the simplified taxation system. This is due to the fact that the State Tax Service equates charity with activities that are incompatible with the simplified taxation system, which is the basis for the transition to a general taxation system. This legal position of the supervisory authorities is contradictory, and is not supported by experts of Dynasty Law & Investment, who believe that a natural person-entrepreneur is primarily a capable individual, and only then he uses his right to conduct business activities that do not interfere with it. use your right to donate. However, since, as of today, the courts have not yet formed case law on this issue, the individual entrepreneur who makes a donation has a risk of adverse tax consequences. As a result, Dynasty Law & Investment experts do not recommend making a charitable donation to an individual entrepreneur. If you are an individual entrepreneur and you have a desire to make a charitable donation, contact Dynasty Law & Investment and specialists will help you complete the transaction.

Author: Alexander Fedorko, Lawyer of Dynasty Law & Investmen

They say do good and it will come back to you, but this principle does not apply in relations with the supervisory authority. From a practical point of view, the question is whether individual entrepreneurs can be philanthropists (donations)? The answer to this question is ambiguous.

The provisions of the Law of Ukraine “On Charitable Activities and Charitable Organizations” state that a philanthropist can be either an able-bodied individual or a legal entity. At the same time, he did not decide the fate of individual entrepreneurs as philanthropists.

The Civil Code of Ukraine stipulates that a natural person with full civil capacity has the right to carry out business activities that are not prohibited by law. An individual exercises his right to entrepreneurial activity subject to its state registration in accordance with the procedure established by law.

In their turn, the controlling bodies in their tax consultations note that since the entrepreneurial activity of a natural person-entrepreneur does not provide for charitable activities, as well as the fact that the participants in civil relations during charitable activities are able-bodied natural persons, such natural person an entrepreneur may not donate funds, ship goods free of charge (perform work, provide services) within the framework of entrepreneurial activity, arguing that these actions are charitable.

Private individuals who are payers of the single tax generally risk losing the application of the simplified taxation system. This is due to the fact that the State Tax Service equates charity with activities that are incompatible with the simplified taxation system, which is the basis for the transition to a general taxation system.

This legal position of the supervisory authorities is contradictory, and is not supported by experts of Dynasty Law & Investment, who believe that a natural person-entrepreneur is primarily a capable individual, and only then he uses his right to conduct business activities that do not interfere with it. use your right to donate.

However, since, as of today, the courts have not yet formed case law on this issue, the individual entrepreneur who makes a donation has a risk of adverse tax consequences. As a result, Dynasty Law & Investment experts do not recommend making a charitable donation to an individual entrepreneur. If you are an individual entrepreneur and you have a desire to make a charitable donation, contact Dynasty Law & Investment and specialists will help you complete the transaction.

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