How to Start a Business in Ukraine

Ukraine, with its strategic location in Eastern Europe and a burgeoning economy, presents a wealth of opportunities for ambitious entrepreneurs. The country’s recent economic developments and reforms have made it an attractive destination for foreign investment and business ventures.

However, navigating the complexities of Ukraine’s legal and business landscape can be challenging, especially for those unfamiliar with the local environment.

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This comprehensive guide aims to simplify the process of starting a business in Ukraine for foreigners by providing step-by-step insights into the company registration process, understanding the Ukrainian tax system, and exploring the best business opportunities in the region.

Whether you’re considering a sole proprietorship, a Limited Liability Company (LLC), or a Joint Stock Company (JSC), this guide covers all the essential aspects to help you establish a successful business in Ukraine.

Why Ukraine?

Ukraine’s location at the crossroads of Europe and Asia offers unique advantages for businesses looking to tap into diverse markets.

The country boasts a skilled and cost-effective labor market, making it an ideal location for startups and established businesses alike.

Additionally, Ukraine’s simplified tax system and government incentives for foreign-owned businesses further enhance its appeal as a business destination.

Economic Overview and Opportunities in Ukraine

Ukraine is not just the second-largest country in Europe by area; it’s also a land of untapped potential in various sectors.

From agriculture and manufacturing to IT services, the country shows remarkable growth potential.

Ukraine’s membership in the World Trade Organization (WTO) and the Association Agreement with the European Union (EU) increases its attractiveness to global investors. 

Before starting a business, it’s essential to understand the legal requirements in Ukraine, which vary for domestic and foreign entities.

Advantages of Doing Business in Ukraine

  • Simplified Tax System: For small firms with a turnover of up to 5 million UAH annually, Ukraine offers a simplified taxation option, reducing the administrative burden and aiding in tax savings.
  • Favorable Exchange Rates: The stability of the Ukrainian currency adds to the profitability for businesses operating with budgets in dollars or euros.
  • Competitive Labor Market: With an average wage lower than many European countries, Ukraine presents an attractive proposition for businesses requiring cost-effective labor.
  • Strategic Location: Ukraine’s central position in Europe, coupled with its developed transportation network, provides a competitive edge for businesses.

In the following sections, we’ll delve deeper into the prerequisites for starting a business in Ukraine, the types of business structures available, the detailed registration process, financial considerations, and how to leverage local and international support for your business venture.

Why Start Your Business in Ukraine?

There are several compelling reasons to consider registering a company in Ukraine:

  1. Simplicity: The process of company registration in Ukraine is relatively straightforward and doesn’t involve excessive bureaucracy. This ease of registration encourages entrepreneurs to start their businesses quickly.

  2. Transparency: Ukraine has been working on improving its business environment and increasing transparency. The government has made efforts to streamline processes and reduce corruption, making it a more attractive destination for investors.

  3. Cost-Effective: Registering a company in Ukraine is cost-effective compared to many other countries. The registration fees and associated costs are generally affordable, making it accessible to a wide range of entrepreneurs. For financial considerations, review how much does it cost to register a company in Ukraine.

  4. Quick Turnaround: Depending on the type of company you want to establish, registration can be completed in a relatively short time frame, ranging from 1 to 14 days. This means you can set up and start your business operations swiftly.

  5. Equal Opportunities: Ukraine treats its citizens and foreigners equally in terms of business ownership and operation rights. This inclusivity is conducive to attracting foreign investors who want to tap into the Ukrainian market.

  6. Favorable Tax Rates: Ukraine offers competitive tax rates for businesses. Depending on the type of business and the region, you can benefit from a corporate income tax rate as low as 5%. During martial law or other exceptional circumstances, this rate may temporarily increase to 2%, which is still relatively favorable.

Overall, registering a company in Ukraine presents an attractive option for entrepreneurs looking to establish a business in Eastern Europe, with its straightforward registration process, affordable costs, and favorable tax environment.

However, it’s essential to conduct thorough research and seek professional guidance to navigate the specific requirements and regulations (learn about business regulations and compliance in Ukraine to ensure your operations adhere to local laws) for your business type and industry in Ukraine.

How to Start a Business in Ukraine: A Step-By-Step Guide

Here’s a quick look at the exact steps you need to take to start a business in Ukraine.

  1. Business Registration: Registering your business with the State Register of Legal Entities and Individual Entrepreneurs (USR) is a legal requirement. This step formalizes your business’s existence and provides you with a unique legal entity identifier. Registering your company in Ukraine is one of the first steps to officially launching your business.

  2. Tax Registration: Registering for tax purposes with the State Tax Service of Ukraine and obtaining a tax identification number (TIN) is mandatory. You’ll need this number for all tax-related matters, including filing tax returns.

  3. Permits and Licenses: Depending on your business type and activities, you may need specific permits and licenses to operate legally. It’s crucial to research and obtain the necessary documents to comply with local regulations.

  4. Labor and Employment Laws: If you plan to hire employees (or hire a Ukrainian team), you must follow Ukrainian labor laws, including employment contracts, working conditions, and wage regulations.

  5. Tax Compliance: Complying with tax laws, including paying income tax, VAT (if applicable), and other relevant taxes, is mandatory. Failure to do so can result in penalties and legal consequences. Understanding Ukraine’s business taxes is critical for financial planning and compliance.

  6. Social Insurance Contributions: If you have employees, you are required to register with the State Social Insurance Fund and make social insurance contributions on behalf of your staff.

  7. Intellectual Property Protection: If your business involves intellectual property, such as trademarks, patents, or copyrights, protecting your rights through registration is essential to ensure legal protection.

  8. Compliance with Regulations: Your business must adhere to all relevant laws and regulations, including those related to environmental standards, health and safety, and other industry-specific requirements.

  9. Financial Records and Accounting: Maintaining accurate financial records and adhering to Ukrainian accounting standards is not only a legal requirement but also essential for the financial health of your business.

  10. Business Insurance (if applicable): While not always mandatory by law, having business insurance, such as liability insurance or property insurance, can protect your business and is often recommended.

Let’s take a closer look at the main steps of starting your business in Ukraine and dive into further detail of the most important aspects.

Ukraine Business Registration: Types of Business Structures in Ukraine

In Ukraine, you have various options for structuring your business, each with its own advantages and considerations. Here’s an overview of the different business structures available:

Sole Proprietorship

This is a straightforward option for individuals looking to provide services or sell goods directly to consumers.

It offers quick online registration, minimal administrative requirements, and the ability to manage your income as it comes in.

However, as a sole proprietorship, you are personally liable for any business obligations.

Limited Liability Company (LLC)

An LLC is the most common form of business in Ukraine.

It allows for collaboration with other individuals or entities, has no minimum share capital requirement, and limits liability to the company’s assets.

While it’s relatively flexible, note that at the time of registration, only Ukrainian citizens can be appointed as directors. I

f you wish to have a foreign director, you’ll need to follow a specific process to obtain a work permit.

Joint Stock Company (JSC)

JSC is suitable for larger enterprises. It involves dividing share capital into equal shares, which are certified by stocks.

Both individuals and companies can own these stocks.

The minimum share capital required in Ukraine is substantial. JSCs are typically more complex to manage and involve a higher level of regulatory compliance.

Representative Office

A representative office is not considered a separate legal entity but operates under the control of a parent company.

It’s responsible for property ownership, opening bank accounts, and tax payments in Ukraine. However, the parent company is legally accountable for contracts entered into by the representative office.

The registration process for a representative office is more involved and time-consuming compared to company registration.

Other Types of Companies

Ukrainian law provides for several other types of business structures, such as additional liability companies (similar to LLCs but with additional member liability), general partnerships (with full member liability), limited partnerships (with some members having limited liability), and private enterprises (owned by individuals or companies).

The choice of structure depends on your specific business needs and preferences.

When selecting a business structure in Ukraine, it’s essential to consider factors like liability, capital requirements, management, and the nature of your business activities. Consulting with legal and financial experts in Ukraine can help you make an informed decision that aligns with your business goals and ensures compliance with local regulations.

The Process for Registering a Company in Ukraine

Registering a company in Ukraine involves several important steps to ensure a smooth and legal process. Here’s a breakdown of the company registration process:

  • Determine Company Profile and Draft Charter: The first step is to decide on the type of company you want to register and draft the company’s charter. This document outlines the company’s structure, objectives, and operational guidelines. It may also include details on the founders, directors, and supervisory board (if applicable).

  • Founder’s Meeting: Organize a meeting of the company’s founders to approve the charter and appoint key positions, such as directors, members of the supervisory board (if required), and a representative responsible for state registration.

  • Notary Certification: The signatures of the shareholders (or their authorized representatives) on the charter must be certified by a notary. This step ensures the authenticity of the signatures.

  • Draft Registration Application: Prepare an application for the company’s registration using the standard application form approved by the Ministry of Justice of Ukraine. This form will contain essential information about the company, its founders, and its intended activities.

  • Submission to Companies Registrar: Submit the registration application along with all required documents to the Companies Registrar. Ensure that all necessary documents, including the charter and notarized signatures, are included in the submission.

  • Receipt Issuance: Once the application is submitted, the Companies Registrar will issue a receipt with an application filing number. This number allows you to track the progress of your registration online through the Ministry of Justice of Ukraine’s online service.

  • Registration Confirmation: After the registration process is complete, you can obtain an Extract or Company Profile from the Companies Registrar. This document confirms the company’s registration and provides essential information about it.

  • Commence Business Operations: With the registration process successfully completed and the necessary documentation obtained, your company is ready to start conducting business operations in Ukraine.

It’s important to note that the specific requirements and timeline for company registration in Ukraine may vary depending on the type of company, location, and other factors. Consulting with legal professionals or business advisors with expertise in Ukrainian corporate law can be invaluable during this process to ensure compliance with all regulatory requirements and a smooth registration experience.

What Type of Company Should a Foreigner or Foreign Business Choose in Ukraine?

When deciding on the type of company to establish in Ukraine, foreign entrepreneurs and businesses have several options to consider, each with its own set of regulations and benefits.

However, the optimal choice for many foreign investors, especially those entering the Ukrainian market for the first time, is setting up a Limited Liability Company (LLC). The advantages of choosing an LLC in Ukraine include:

  • Limited Liability: As the name suggests, the personal liability of the company’s owners (shareholders) is limited to the amount of their investment in the company. This can protect personal assets from business liabilities.
  • Flexibility in Management: LLCs in Ukraine offer a relatively flexible management structure, which can be particularly advantageous for small to medium-sized enterprises that require swift decision-making processes.
  • Simpler Registration Process: Compared to other corporate structures like Joint Stock Companies, establishing an LLC has a more straightforward registration process and fewer requirements concerning minimum capital.
  • Tax Benefits: LLCs may benefit from more favorable tax legislation, including the simplified taxation system, which can be attractive for small and medium-sized entrepreneurs.
  • Foreign Ownership: There are no restrictions on foreign ownership in Ukrainian LLCs, allowing 100% foreign ownership, which provides for full control by the foreign investor(s).
  • Share Transfer: Shares of an LLC can be sold or transferred with relative ease, offering flexibility to change the ownership structure if needed.

Here are the suggested steps when forming an LLC in Ukraine tailored for foreign businesses:

  1. Choose a unique company name and ensure it’s not already in use;
  2. Prepare and notarize the founding documents, such as the Articles of Association;
  3. Register the company with the Ukrainian state registrar, tax authorities, and other relevant bodies;
  4. Open a corporate bank account in Ukraine;
  5. Obtain any necessary permits or licenses specific to your industry or sector.

It’s important to note that while the LLC structure is highly recommended for its numerous benefits and suitability to foreign investment, entrepreneurs should also consider the specific needs of their business, financial standing, and long-term goals.

Individual circumstances may dictate the need for alternate structures like a Representative Office or a Joint Stock Company for certain strategic or operational purposes.

Consulting with local legal and business advisors with expertise in Ukrainian corporate law is a vital step to ensure all regulatory requirements are met and to assist in navigating the complexities of establishing and running a business in Ukraine.

What Documents Need to Be Submitted to Start a Business in Ukraine?

When registering a company in Ukraine, you will need to submit various documents to complete the process.

The specific documents required may vary depending on the type of company and the nature of its ownership.

Here’s a list of common documents that are typically needed for company registration in Ukraine:

  1. Completed Registration Application: A properly filled-out registration application form is a fundamental document required for initiating the registration process. This form includes essential information about the company and its founders.

  2. Decision on Company Formation: A decision document, signed and notarized by the company’s founders, is needed. This document outlines the intention to form the company and may also appoint key positions, such as directors.

  3. Articles of Association: The articles of association (charter), signed and notarized by the owners, provide detailed information about the company’s structure, objectives, and operational guidelines.

  4. Passport and Identification Number: If the owner of the company is an individual, a copy of their passport and Ukrainian identification number (TIN) is required. These documents should be notarized.

  5. Legal Entity Documents: If the company owners are legal entities (other companies), you will need a copy of their articles of association. These documents must also be notarized, apostilled, or legalized, depending on the jurisdiction of the legal entity.

  6. Foreign Company Extract: If the owner is a foreign company, you will need an apostilled or legalized extract from the foreign registry of that company. This document proves the existence and legal status of the foreign entity.

  7. Ownership Structure Information: It’s important to provide details about the ownership structure of the company, including information about ultimate beneficial owners (UBOs). A copy of the passport of the UBO should be certified by a notary.

Please note that additional documents and requirements may apply based on the specific circumstances of your company and the type of business you intend to conduct in Ukraine. 

How Much Does it Cost to Register & Incorporate a Business in Ukraine?

The cost of incorporating a company in Ukraine can vary depending on the type of entity you choose to establish.

Here is an approximate breakdown of the costs for different entity types in the first year, along with annual costs in the second year and beyond:

  1. Limited Liability Company (LLC):

    • First-Year Cost: Approximately US$10,900
    • Second-Year and Beyond: Approximately US$1,250 per year
  1. Joint Stock Company (JSC):

    • First-Year Cost: Approximately US$9,500
    • Second-Year and Beyond: Annual costs of approximately US$1,250
  2. Branch/Representative Office:

    • First-Year Cost: Approximately US$8,800
    • Second-Year and Beyond: Annual costs of approximately US$1,250

These costs generally include various expenses related to Ukraine company incorporation, corporate bank account setup, legal registered office services, and government registration fees.

It’s important to note that these figures are approximate and can vary depending on specific factors, such as the location of your company and the services you require.

Additionally, fees may change over time due to regulatory updates or changes in service providers.

Ukrainian Government Assistance for Foreign-Owned Businesses

The Ukrainian government has taken several proactive steps to encourage foreign direct investment (FDI) and support foreign-owned businesses looking to establish themselves in Ukraine.

Here are some of the key government initiatives and organizations that offer assistance to foreign investors and businesses:

  1. National Investment Council: Established in 2014, the National Investment Council serves as the president’s advisory and consultative body. Its primary purpose is to promote and facilitate foreign investment in Ukraine. The council collaborates closely with various government agencies to create a favorable investment climate.

  2. UkraineInvest: Created in 2016, UkraineInvest is a dedicated investment promotion office that plays a crucial role in supporting FDI. It serves as a one-stop-shop for investors, assisting them in identifying or initiating projects and guiding them through the regulatory processes required for business setup in Ukraine. UkraineInvest is a valuable resource for foreign investors seeking information on tax incentives and operational benefits available under the “On State Support of Investment Projects with Significant Investments” law.

  3. Investment Incentives Law: The recently enacted investment incentive law, “On State Support of Investment Projects with Significant Investments,” provides various tax and operational benefits to companies undertaking substantial investment projects in Ukraine. UkraineInvest serves as the primary contact point for businesses looking to leverage these incentives.

  4. Business Ombudsman Council of Ukraine: This advisory body, operating under the Cabinet of Ministers, offers a platform for both domestic and foreign businesses to report grievances related to unfair treatment by government officials or state-owned enterprises. It acts as a mediator and advocate for businesses facing challenges in Ukraine.

  5. Draft Law #3607: In June 2020, a draft law (registered as draft law #3607) was introduced with the aim of enhancing the authority of the Business Ombudsman Council to investigate complaints and address issues related to business operations in Ukraine. If enacted, this law could further improve the business environment for foreign-owned companies.

These government initiatives and organizations collectively contribute to making Ukraine a more attractive destination for foreign investment and business establishment.

They provide valuable support and guidance to foreign investors, helping them navigate the regulatory landscape and address any issues or grievances that may arise during their business operations in the country.

Your Ukraine Business Questions, Answered

Where do you apply to register a business in Ukraine?

In Ukraine, to register a business, you must apply to the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations. The process is handled by the Ministry of Justice of Ukraine. Businesses can be registered through several channels, including online through the Ministry’s website, in-person at a state registration office, or through an authorized third-party service center.

Who can submit the registration documents?

The registration documents for a new business in Ukraine can be submitted by the founder(s) or a legal representative of the business. If a representative is handling the registration, they must have a power of attorney that authorizes them to perform such actions on behalf of the founder(s).

How long does it take to register a company in Ukraine?

The standard time frame for registering a company in Ukraine can vary but it traditionally takes about 1-2 working days after the submission of all required documents. This period can change depending on the workload of the registering authority and the accuracy of the documents provided. Expedited services may also be available for a faster registration process.

What needs to be done after a company is registered?

After a company is registered in Ukraine, several post-registration steps are necessary. The company must be registered with the tax authorities, obtain any relevant licenses and permits, register with social security funds, and potentially register trademarks. Additionally, the business must open a bank account and set up record-keeping and accounting systems in compliance with Ukrainian law.

How do you register a company for tax and what are the tax rates?

To register a company for tax in Ukraine, the company must submit an application to the State Tax Service of Ukraine. Following registration, the company will receive a tax identification number (TIN). As for tax rates, Ukraine has several tax structures depending on the type of business and income: the standard Corporate Income Tax rate is 18%, Value Added Tax (VAT) is generally 20%, and there are specific regimes with different rates for small businesses, such as the simplified taxation system. Individual rates may change, and various deductions and exemptions could apply.

Is it possible to register a company in Ukraine during the war?

It is possible to register a company in Ukraine despite the ongoing war, although the security situation can affect the ease and speed of doing business. Prospective business owners should check for the latest information and potential limitations or restrictions in certain areas.

Do you need a tax number to start a business in Ukraine?

Yes, obtaining a tax number, specifically a Taxpayer Identification Number (TIN), is a required step in starting a business in Ukraine. This number is essential for tax reporting and compliance and is part of the registration process for legal entities and individual entrepreneurs.

Do you have to be physically present to open a Ukrainian bank account?

Traditionally, being physically present was required to open a bank account in Ukraine due to the need for identity verification and the signing of relevant bank documents. However, advancements in digital banking and special measures (potentially influenced by the ongoing war or the pandemic) may allow for remote account opening. It’s advisable to check with specific banks for their current requirements as policies may have changed to accommodate remote or digital processes.

We Can Help to Start Your Business in Ukraine

When venturing into international markets like Ukraine, meticulous planning, thorough research, and sound financial strategy are paramount.

At Ukraine Gateway Group, we understand the complexities of expanding your business overseas.

We can help you navigate the intricacies of market entry, ensure legal compliance, and streamline talent acquisition for optimal operational efficiency.

Our expertise extends to providing comprehensive HR and administrative support, eliminating the challenges associated with managing a global workforce.

With Ukraine Gateway Group by your side, you can focus on exploring new markets and strategically managing your company while we handle the day-to-day HR responsibilities, ensuring your business thrives in the Ukrainian market.

Say goodbye to the complexities of global expansion and let us be your trusted partner in achieving success abroad.