Draft Law on Family Entrepreneurship Registered

On March 17, the Verkhovna Rada of Ukraine registered Draft Law No. 13109 “On Family Entrepreneurship”.

According to the explanatory note to the document, family entrepreneurship is a global economic trend and provides favorable conditions for the sustainable development of the state; for Ukraine, in particular, this type of entrepreneurship can be a guarantee of the restoration and development of economic and human potential after the losses suffered in the war.

Family entrepreneurship is defined as a form of employment of citizens – members of one family in order to achieve economic and social results and/or to make a profit. According to the Law of Ukraine “On Employment of the Population”, employment is an activity of persons not prohibited by law, related to the satisfaction of their personal and social needs in order to receive income (salary) in monetary or other form, as well as the activity of members of one family who carry out economic activities or work for business entities based on their property, including free of charge.

The Draft Law proposes to determine that family entrepreneurship can be carried out by several, but not less than two, members of one family – citizens of Ukraine and be carried out both in the status of a legal entity – a family enterprise, and in the status of an individual entrepreneur – a family business entity.

A family entrepreneurship entity is organized by an individual together with members of their family on the basis of an agreement (declaration) on the creation of such a family entrepreneurship entity, the essential conditions of which are determined by the Draft Law.

The head of the family entrepreneurship entity is its founder – an individual entrepreneur.

Members of the family entrepreneurship entity may be members of the same family of the first and second degree of kinship who have reached the age of 14 and, exercising their right to freely chosen employment, have united for the joint conduct of family entrepreneurship and comply with the provisions of the agreement (declaration) on the creation of the family entrepreneurship entity.

If necessary, the family entrepreneurship entity has the right to involve in its work, in addition to members of the same family of the first and second degree of kinship, other citizens – persons working in the family entrepreneurship entity under an employment agreement (contract). The total number of members of the family entrepreneurship entity and persons working in it under an employment agreement (contract) must not exceed 10 people.

Relations between members of the family entrepreneurship entity in the process of conducting the family business, including issues of remuneration, are regulated by them independently and are not considered labor.

The family entrepreneurship entity is on a simplified system of taxation, accounting and reporting under the conditions specified by the Tax Code of Ukraine. The mandatory state social insurance of members of the family entrepreneurship entity is carried out on a voluntary basis. Members of the family entrepreneurship entity are equated with domestic workers.

It is proposed to establish a ban on the family entrepreneurship entity from carrying out economic activities in the areas of:

– wholesale trade;

– production, export, import, sale of excisable goods (except for retail sale of fuels and lubricants in containers up to 20 liters and activities of individuals related to the retail sale of beer, cider, peri (without added alcohol) and table wines);

– restaurant business, provided that such activity is carried out in a commercial facility in which trade in excisable goods is simultaneously carried out (except for the retail sale of beer, cider, peri (without added alcohol) and table wines).

The family entrepreneurship entity operates on a self-financing basis. All expenses are covered by the family entrepreneurship entity from its own income and other sources not prohibited by law. The family entrepreneurship entity is liable for its obligations with all its property, which may be subject to seizure in accordance with the law.

Draft Law No. 13109