Employment or civil law contract: what is important to know

Press service of the State Tax Service of Ukraine, published 18 August 2025 at 09:17 Chapter: News

Correct choice of the cooperation form between business entities and individuals directly affects amount of tax obligations and compliance with labor legislation.

Employment contract – provides for the official registration of employment relations, payment of single contribution, personal income tax, and military levy from salaries. Employer is responsible for accrual and payment of these taxes and contributions.

Civil law contract is concluded for performance of specific work or provision of service. In this case, payment is made in the remuneration form and obligation to pay taxes (personal income tax and military levy) falls on the customer or the contractor – depending on the contract terms. At the same time, civil law contract does not provide for social guarantees (vacations, sick leave, etc.).

It is worth remembering that replacing employment relationships with the civil law ones in order to minimize tax obligations is a legislative violation and may result in penalties.

Tax transparency starts from legal employment!