When tax authorities and banks can block a card: instructions for individual entrepreneurs

Q: How much money can a sole proprietor with a blocked account disburse?

An individual entrepreneur with seized accounts can only make expenditures to a limited extent - no more than UAH 13,400 per month (the sum of two minimum wages). Every year, the Law ‘On the State Budget of Ukraine’ is amended to determine the amount of the minimum wage, so the amount of UAH 13,400 may be changed from January of the following year.

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10 Sep. 2024

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When tax authorities and banks can block a card: instructions for individual entrepreneurs

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Ukraine

When can a bank block accounts?
In what cases is financial monitoring of individual entrepreneurs' accounts carried out?
When can the tax authorities block an entrepreneur's account?
Can an entrepreneur make expenditures if his or her accounts have been seized?
How can I make expenses if my accounts are frozen?

When tax authorities and banks can block a card: instructions for individual entrepreneurs

Blocking a company's current account is one of the sanctions applied by the tax authorities to ensure timely payment of taxes. Blocking can last up to 3 months. Find out in which cases the sanction is applied and what the algorithm of actions is if this has already happened

Legal assistance: starting and running a business in Ukraine

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Recently, Ukrainians have faced massive blocking of their accounts by banks without explanation. This is particularly uncomfortable for individual entrepreneurs who have obligations to their clients. In what cases a bank and the tax service may block a client's accounts, what are the grounds for financial monitoring and how to make payments on seized accounts, read in the article.

When can a bank block accounts?

Accounts may be blocked by the bank in the following cases:

- there have been no transactions for 12 months (and there is no balance on the account)

- death of the client;

- breach of obligations by the client under the Agreement;

- cooperation may lead to financial losses, deterioration of the bank's image;

- submission of false information by the client;

- use of the account for purposes other than personal needs;

- the client's activities are contrary to the law;

- suspicion of illegal payment transactions;

- the result of financial monitoring.

Earlier, we told you how to pay off a loan if your accounts are blocked by the TCC. Read the details for civilians in this article.

In what cases is financial monitoring of individual entrepreneurs' accounts carried out?

If a person carries out financial transactions exceeding UAH 400,000 (especially if it is a cash withdrawal), he or she may be suspected of illegal money laundering. The Bank may apply financial monitoring. Accounts may be blocked for the period of such monitoring or as a result of it. The bank does not provide information about the reason for the blocking.

The grounds for financial monitoring are as follows:

- the client makes transfers abroad or receives transfers from abroad in the amount of more than UAH 50,000

- transactions are related to gambling and lotteries;

- there is a suspicion of establishing ties with Russia or Belarus;

- the customer's address is fictitious or located in a place of mass registration;

- income from assets (cryptocurrency) exceeds UAH 30,000;

- a sharp change in the state of the citizen's income.

The National Bank has introduced financial restrictions for Ukrainians abroad - read the details in the article.

When can the tax authorities block an entrepreneur's account?

The main reason for blocking an account is late payment of taxes. The entrepreneur receives a written warning of a possible blocking. If the entrepreneur fails to pay taxes within the specified period, the tax service has the right to go to court to collect the debt. The court may initiate proceedings against an entrepreneur in two cases:

- If there is a suspicion of tax evasion;

- If there is a significant tax debt.

If the entrepreneur has not paid the tax, the tax service is not obliged to inform the offender that they have applied to the court. Usually, the account is blocked for 72 hours, but in case of significant arrears, the period can be extended up to 3 months.

Please note! In accordance with Article 54 of the Law on Banks, funds in a current account are not subject to protection from arrest, so there may be no limit on the amount that will be exempt from arrest.

For more informationon taxes for sole proprietorships in 2024, please read the material.

Can an entrepreneur make expenditures if his or her accounts have been seized?

In accordance with the Law of Ukraine ‘On Enforcement Proceedings’, individual entrepreneurs are prohibited from making expenditures from seized funds. The seizure may be imposed on several accounts in the same bank or on accounts in different banks. If the debtor decides to open a new account while the existing ones are already seized, such an account will be blocked.

An individual entrepreneur who has seized accounts can make expenses only in limited amounts - no more than UAH 13,400 per month (the sum of two minimum wages).

Please note! Every year, the Law ‘On the State Budget of Ukraine’ is amended to determine the amount of the minimum wage, so the amount of UAH 13,400 may be changed from January of the following year.

In addition, a sole proprietor has the right to pay taxes and fees. It's worth remembering that the main purpose of seizing accounts is to pay off tax liabilities.

How can I make expenses if my accounts are frozen?

If several accounts in one or more banks are seized, the debtor must apply to the state private enforcement officer to determine one current account from which the expenses will be made. The application may be submitted in person or by letter. It may also be submitted electronically, subject to all the rules of electronic document management.

Mandatory elements of the application:

- current account number;

- name of the bank where the account is opened

Please note: An individual entrepreneur is responsible for the accuracy of the information provided.

Within two days from the date of receipt of the application, the state or private enforcement officer issues a resolution in which the proposed account is determined to be an expense account for the debtor. Thereafter, no later than the next business day, the public or private enforcement officer must perform the following actions

- send the issued resolution to the bank;

- check other enforcement proceedings against this individual entrepreneur;

- if there are any such proceedings, send the resolution to another private enforcement officer and the tax service.

If the procedure is followed, the expense account will be approved.

For more informationon how to open a sole proprietorship in Ukraine and the first steps a private entrepreneur should take, read Visit Ukraine's article.

For qualified legal assistance, please contact Visit Ukraine specialists. They provide assistance to individual entrepreneurs and legal entities on business and tax issues.

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Frequantly

asked questions

When will a bank account be blocked if it is not used?

The current account will be blocked if there have been no transactions for 12 months and there is no balance on the account.

Table of contents

When can a bank block accounts?

In what cases is financial monitoring of individual entrepreneurs' accounts carried out?

When can the tax authorities block an entrepreneur's account?

Can an entrepreneur make expenditures if his or her accounts have been seized?

How can I make expenses if my accounts are frozen?

Frequantly

asked questions

When will a bank account be blocked if it is not used?

What is the minimum amount for financial monitoring?

When does a court initiate proceedings against an entrepreneur?

How long is an account blocked by the bank?

How much money can a sole proprietor with a blocked account disburse?

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