Оновлено: січ 25
● The company formation considered in this guideline is a limited liability company (aka TOV (ТОВ) that stands for Товариство (company) з (with) Обмеженою (limited) Відповідальністю (liability). It is the most popular type of legal entity in Ukraine. There are others like Joint Stock Company, Extra Liability Company, etc., but they are used for some certain purpose not so often. In order to understand if you need another type of legal entities it is necessary to understand what business is planned to be carried out.
● In this guideline we don't know what business is to be carried. Therefore, we cannot tell now whether your business needs to obtain licenses, special permits etc., as well as whether the company needs to be registered at a real brick & wall office or a legal/formal/post address will be enough.
● In this guideline we envisage an option when a company will be founded by 1 shareholder - a foreign national citizen (hereinafter the “Foreigner”).
Step No. 1 – getting Foreigner’s papers
A Foreigner’s Ukrainian tax ID will be needed to open a company in Ukraine. It can be obtained in Ukraine personally by visiting a Tax Service Office or by a representative acting based on a Power of Attorney.
To obtain a Ukrainian tax ID the following steps are needed:
❖ Foreigner’s passport translated into the Ukrainian language, translation is notarized. Translation and notarization costs depend on the original language and a number of pages and fees of your translator. E.g. one of translation agencies in Kyiv charges UAH 400 for translation and notarization of a US passport, all takes 1 business day.
❖ A tax ID is issued within 14 calendar days.
Step No. 1.1. (optional) – issuance of a PoA
Provided that the Foreigner does not want to visit a notary or state registrar office for registration of the Ukrainian company, he/she can issue a notarized PoA authorizing another person to do so.
A visit to the notary office has to be accompanied by a certified translator.
When Foreigner is already in Ukraine, he/she can do this at a notary office. A visit to a notary has to be accompanied by a certified translator.
HINT: To save on translation costs you can hire a freelancer instead of a translation agency. Agencies charge more and have a minimal package (usually it costs 3 hours minimum). While a freelance in Kyiv could be much less expensive, you can even find one for as little as UAH 100. Just to make sure your translator has a diploma of a professional translator.
When Foreigner is out of Ukraine, he/she can issue such a PoA at any Ukrainian consulate or at a local notary. A PoA issued at a local notary office has to be apostilled / legalized and then translated into the Ukrainian language by a certified translator whose signature under the translation has to be notarized or certified by a consulate. We advise doing translation in Ukraine to save on costs and time.
Step No. 2 – office of the Ukrainian company
If the Ukrainian company is not going to carry out any licensed activity and does not need to be registered as a VAT payer, then a legal/formal/postal address is enough for the registration purpose.
Otherwise, the Ukrainian company may have to have a real brick & wall office with an official office rent agreement.
The Ukrainian company’s address has to be included in the registration form, so before registering a company there must be already an office.
Prices for offices depends on its location and size. E.g. in Kyiv a legal address in average costs UAH 1700 per year and UAH 450 per quarter for secretary services.
HINT: You can register a company at your friend’s address and pay virtually nothing for the legal address rent (depends on how nice your friend is:) ).
Step No. 3 – registration of the Ukrainian company
The procedure of registration of a company is regulated by the Law of Ukraine “On State Registration of Legal Entities and Private Individuals Entrepreneurs”.
Registration of a Ukrainian company is taking place at a notary office or at a state registrar office, takes around 1 hour and is basically submitting and signing of a number of documents.
HINT: Not all notaries do company registrations, yet many do so. Notaries are more expensive, however, they allow you to agree all texts beforehand and to visit them at a pre-scheduled time or even to call them at your place. State registrars are much cheaper but usually you will have to wait your turn in long lines for long hours and from an early morning. State registrars also tend to find a reason to reject your documents so you need to visit them again, and maybe – again… If money is more important than time for you, then consider to register your company at a state registrar office.
Disregarding where you register your Ukrainian company, at a state registrar or at a notary office, you should submit the following documents:
3.1. registration application.
It is made in the Ukrainian language only, signed either by founders personally or by the attorney under a PoA issued by each of the founders (requirements and costs for such PoAs are described above).
3.2. resolution of the founders on incorporation of the Ukrainian company. It has to be notarized and the average cost of this in Kyiv is UAH 500.
It has to be signed either by all of the founders personally in presence of a notary or by the attorney under a PoA issued by each of the founders (requirements and costs for such PoAs are described above).
3.3. charter of the Ukrainian company.
There is a simple standard charter that can be used by default. To read its provisions follow this link. It is incorporated by the company merely by referring to it in the company’s registration application.
A specially tailored charter can be drafted as well meeting your individual needs.
HINT: When may you need a specially tailored charter? Well, there are many reasons for this. If you need to have a board of directors with certain powers for each of them; when you want to set special payment terms for the company’s director; and so on.
Company registration time: 1-3 business days.
*After your company is registered it has to report to the tax office on the monthly basis. As long as there are not many operations yet, it is not difficult, can be done online and you can do this yourself after a short masterclass. However, if you hire an accountant for this job, an average fee in Kyiv for this will be UAH 3000 per month.
**If you do not want to visit the tax office monthly to submit your tax returns, then it is wise to get a certified e-signature. It costs only UAH 1400.
OPENING A BANK ACCOUNT
A bank account is opened by the company’s director, so no presence of the Foreigner is required.
A bank account can be opened as soon as the company is registered.
Below is an average list of all necessary expenses to be occurred during a company registration process.
WORK PERMIT FOR THE FOREIGNER
Even though the Foreigner will be a shareholder of his own Ukrainian company, he/she will need a work permit to work for this company anyway, including for being a director of this company.
Thus, the first director of the company has always to be a Ukrainian citizen.
To get such a work permit for the Foreigner the Ukrainian company must submit to a relevant department of the State Employment Service of Ukraine the following documents:
1) application by the established form signed by the current Ukrainian company’s director;
2) notarized copy of Foreigner’s passport translated into the Ukrainian language;
3) Foreigner’s colored photo in size of 3.5 x 4.5 centimeters;
4) draft of the employment agreement certified by the current Ukrainian company’s director.
By this time the share capital of the company has to be completely allocated.
HINT: Taking into account that the Ukrainian company will have to pay at least for a work permit and legal address rent, we recommend to allocate on the company’s account at least UAH 15,000.00. If you decide to pay also the director’s minimum salary then please add extra UAH 5,762.06 per month.
The State Employment Service of Ukraine takes a decision to grant or deny a work permit within 7 business days.
A copy of the employment contract has to be provided to the State Employment Service of Ukraine within 10 calendar days from the date of execution of the contract.
A work permit is issued for and is valid up to 3 years.
The company has to pay Foreigner monthly not less than a minimum wage that as of today consists of:
UAH 3802.02 net which is what Foreigner must receive;
UAH 1960.06 social security tax.
However, taking into account that this salary is paid to the Foreigner, the actual expense here is only the taxes in the total amount of UAH 1,960.06 per month. The rest is basically putting your money from one pocket to the other.
State duty for the work permit issuance has to be paid by the company within 10 business days from the day of granting the work permit and can be any of the 3 options by your choice:
UAH 4378 for a work permit for up to 6 months;
UAH 8756 for a work permit for up to 12 months;
UAH 13134 for a work permit for up to 3 years.
Below is an average list of all necessary expenses to be occurred during the work permit process.
APPOINTING THE FOREIGNER AS THE COMPANY’s DIRECTOR
As soon as the Foreigner gets his/her work permit he/she can become the company’s director. To make this happen the shareholders must convoke a general meeting of shareholders and vote for appointment of the Foreigner as the Ukrainian company’s director.
A change of the director shall be registered with a notary / state registrar. A new director takes the office the same day.
The company shall submit the following documents to appoint a new director:
2) resolution of shareholders on dismissing the current director and appointing a new one.
*The company does not submit but must make sure it has also:
- resignation application of the former director;
- order on resignation of the former director;
- signature of the former director in the labor book register;
- employment application of the new director;
- order on appointment of the new director.
The company is obliged to notify the tax service about dismissal and hiring directors one day prior and on the same day respectively.
Below is an average list of all necessary expenses to be occurred during the director change process.
TEMPORARY RESIDENCE PERMIT
A work permit gives the Foreigner a right to apply for a temporary residence permit that allows the Foreigner to stay in Ukraine more than 90/180 days.
Before applying for a temporary residence permit the Foreigner shall get the D visa first.
Visa D is a long-term multi-entry visa issued to foreigners for a period of up to 90 days with a purpose for preparation of documents for Ukrainian residence.
Foreigner shall submit the following documents to get a D type visa:
2) visa application;
3) one colored photo in size of 35 x 45 millimeters;
4) insurance policy covering not less than EUR 30,000.00 (average cost USD 30 per year);
5) documents proving sufficient financial resources for living in Ukraine for the time period of visa;
6) bank receipt certifying payment of a consular duty;
7) copy of a work permit.
Time for getting a D type visa is up to 10 business days for USD 65 and up to 5 business days for USD 130.
HINT: Other amounts of visa fees (check them here) may apply based on the reciprocity principle used between Ukraine and a relevant country.
To get a temporary residence permit based on employment, the Foreigner must submit to a relevant department of the State Migration Service of Ukraine the following documents:
1) application by the established form signed by the Foreigner;
2) original of the Foreigner’s passport having the D visa that is returned to the Foreigner immediately upon identification;
3) copy of the Foreigner’s passport with the D visa;
4) translation into the Ukrainian language of the Foreigner’s passport with the D visa. The translation should be made by a certified translator whose signature on the translation should be notarized. Translation and notarization costs depend on the original language and a number of pages and fees of your translator. E.g. one of translation agencies in Kyiv charges UAH 400 for translation and notarization of a US passport, all takes 2 business days.
5) bank receipt certifying the payment of the state duty for granting temporary residence;
6) four (4) colored photos in size of 3.5 x 4.5 centimeters
7) insurance policy;
8) declaration of the Ukrainian company’s (Foreigner’s employer) with its undertaking to notify the State Migration Service about early termination or expiration of the Foreigner’s employment contract;
9) original of the Foreigner’s work permit that is returned to the Foreigner immediately upon inspection;
10) copy of the Foreigner’s work permit.
A temporary residence permit is issued within 15 calendar days from the date of submitting the documents.
A temporary residence permit based on employment is issued for up to three (3) years.
FOREIGNER’s LIVING ADDRESS REGISTRATION
Once the Foreigner receives his/her temporary residence permit, he/she is obliged to register at his/her living address in Ukraine within the next 30 days.
To register at the address the Foreigner (or his/her representative under a notarized PoA) shall submit to a centre of providing administrative services by this address the following documents:
1) written application;
2) copy of the temporary residence permit;
3) receipt on payment of UAH 04.00 of the administrative duty;
4) copy of the dwelling lease agreement.
FINDING A PLACE FOR REGISTRATION
By registering a foreigner at his/her place a landlord undertakes some legal obligations, liability and risks:
✔ in case of violation by a foreigner of Ukrainian immigration law the landlord may be brought to administrative liability and be fined in the amount of UAH 8500;
✔ the apartment a foreigner is registered at maybe searched, arrested and be subject to other legal actions if this foreigner gets in some legal troubles;
✔ early termination of a rent agreement as dissolution of residence registration may be impeded in some cases and in some cases it may be done only via court;
✔ in some cases the law prohibits to terminate a rent agreement and dissolve the residence registration;
✔ in some cases the landlord is charged higher price for utilities for every extra person registered at the dwelling.
All these make landlords reluctant to agree on registering their tenants at their dwellings disregarding of tenants’ citizenship. That is why it is often takes time, effort and money to solve this problem and there is no some average price for this type of service.
Below is an average list of all necessary expenses to be occurred during the temporary residence process.
If you like to get free of charge legal advice regarding the above mentioned processes, then we recommend you to get it from iVan - a digital immigration lawyer.
Contact Legal Ideas law firm to get professional legal advice on your personal case.