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☛ EN Advice Starting and doing Business in Ukraine

Discussion in 'Ukraine' started by texkourgan, Jul 11, 2013.

  1. texkourgan

    texkourgan Addicted member
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    Hello!

    Have you contemplated doing business or are you a business owner in Ukraine?

    Are foreign investors welcome? How hard is it to register and manage a company? What is the procedure to get started? Is it easy to recruit? What are the corporate tax rates in Ukraine?

    What advice would you give to other prospective business owners? What do you wish you had known before opening a business in Ukraine?

    Thank you very much for your participation! Your advice can help other members get started.
     
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  2. GreyKyiv

    GreyKyiv Member

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  3. Cyrilexpat

    Cyrilexpat Administrator
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    Hello GreyKyiv,

    Maybe instead of just send visitors to your own site you could post some information here on the forum. This a primarily a community site to discuss expat topics and help each other, not only redirecting visitors... :confused:

    Thanks in advance and see you soon on the forum
     
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  4. GreyKyiv

    GreyKyiv Member

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    I beg a pardon Cyrilexpat if this breached rules of this forum. But I do not refer them to my website. My blog is only a set of legal consultations. I made them specifically for making it easier and not to post the same text on different forums. Plus there are lots of text. Anyway, for example I will post one article here to give you a notion what I am talking about. If it is still required to avoid sharing links then I will obey by the rules.
     
  5. GreyKyiv

    GreyKyiv Member

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    How to do business in Ukraine by individuals without setting

    How to do business in Ukraine by individuals without setting up a company

    A private individual can be registered as a private entrepreneur that is a special legal status for carrying out business without having a company for this purpose.

    Procedure of registering as private entrepreneurs
    The procedure of registering as private entrepreneurs, also known in Ukraine as “FOP” (hereinafter the “FOP”) is regulated by the Law of Ukraine “On State Registration of Legal Entities and Private Individuals Entrepreneurs” (hereinafter “the Law”). According to this Law, a person is registered as FOP by his/her place of residence.

    Information about the foreigner’s place of residence in Ukraine is inscribed to his/her temporary/permanent residency certificate (or to some other documents not very common).

    A place of residence is defined as an administrative territory the person lives in over 6 months a year (Law of Ukraine “On Freedom of Movement and Free Choice of Residence Place in Ukraine”).

    Most of foreigners (e.g. the US and EU citizens) do not need any visa to come to Ukraine and to stay here for 90 days within 180 day. To be able to live in Ukraine for more than 6 months a foreigner, in most cases, should get a temporary or permanent residency certificate. These documents are issued to foreigners who got a special Ukrainian visa, i.e. the visa D.

    So a foreigner can do business in Ukraine without having a company here. Business can also be carried out by a FOP. In order to get registered as a FOP a foreigner should register his/her place of residence. To do so he/she has to live at the address for over 6 months that requires, usually, obtaining the visa D and, after that, obtaining a temporary or permanent residency certificate.

    Registration of FOP is pretty simple and free of any charges. A person should only submit to the state registrar:
    (i) registration application;
    (ii) copy of the applicant’s Ukrainian tax ID with his signature on it;
    (iii) power of attorney (optional, read below).

    Re Application:

    The form of application is determined by a special state body and it changes from time to time. So I am giving a link to the official web-source were you can download the up-to-date application form:
    http://ddr.minjust.gov.ua/uk/e51951fc5b ... pryemciv_/

    Follow this link and click on the hyperlink that reads “Форма 10 – реєстраційна картка на проведення державної реєстрації фізичної особи – підприємця”. After that you will be asked to choose where you want to download the application to your computer.

    You fill out in there your name, address, your types of business and contact information.

    The most difficult for you will probably be picking out types of business for your FOP. But do not worry, it is pretty much easy to do, everything you need is understanding of the Ukrainian language or a friend who can help you out here. Then you just visit the following official web-source and choose those types of business you need from the given list: http://kved.ukrstat.gov.ua/KVED2010/kv10_i.html. Note only that the list contains categories and sub-categories. A type of business is one that has a 4 digit number.

    I have prepared in English an example for you so you understand how a ready application should look like. Note that an application form has to be filled out only in the Ukrainian language. You can find the example filled out by me following this link:
    https://www.dropbox.com/s/uc0gio44ojugw ... E.doc?dl=0.

    Re Ukrainian tax ID:

    If you are a foreigner and do not have a Ukrainian tax ID, then you need to get it to be registered as FOP. The good news is almost free and easy to get it. So, get a copy of your passport translated into Ukrainian and notarize this translation. Almost all translating offices do this. Average cost of having a copy of your passport translated and notarized is UAH 100.

    Take your translated and notarized copy of the passport as well as someone who can speak Ukrainian (if you cannot) with you and visit the central tax office of your district. For example, in Kyiv it is at 33/19 Sholudenka str. Go there, find a relevant officer. He will hand a simple application over to you, you fill it out and return to the officer together with your translated and notarized copy of the passport. Your tax ID will be ready within a week and you will be able to receive it at the same place.

    Re Power of Attorney:

    A power of attorney is needed if you have someone to go and submit the documents on your behalf. I have prepared for you a unified bilingual power of attorney. Note that the English text is only for your understanding of the document and the notary needs merely the Ukrainian version.

    Delete the English text, fill out your representative’s name and other details in the template, sign it in presence of a Ukrainian notary and ask a notary to make one copy of it as well. You can download the template of my PoA by clicking on the following link: https://www.dropbox.com/s/1pupemxiimxl09e/PoA.doc?dl=0.

    If you do not need anyone for filling the documents with the registrar office and you can do this yourself, then you do not need this power of attorney.
     
  6. Cyrilexpat

    Cyrilexpat Administrator
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    The article was put into moderation mode but has now been approved. That is the reason why it did not appeared immediately after posting.
    Thanks for sharing the information.

    Could you also maybe provide information on setting up a company? Or is it something that is not recommended/frequent for a foreigner?
    Is sole trader status available for instance?

    Thanks in advance :thumbup:
     
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  7. GreyKyiv

    GreyKyiv Member

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    Could you be more specific? I assume it is the same that a private entrepreneur I wrote about above. Cheers
     
  8. GreyKyiv

    GreyKyiv Member

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    Step by step guide (with samples) how to register a company

    Step by step guide (with doc samples) to how to register a company in Ukraine

    Those who moved or plan to move to Ukraine are very often interested in how start doing business in Ukraine. This question is asked on every forum almost every month. So I decided to provide an almost complete guide of how to do this so everyone understands the requirements and the procedure. Moreover, if you have some knowledge of Ukrainian or some Ukrainian friend who can spend a couple of hours with you, you will be able to fill out, draw up and submit all necessary documentation yourself.

    There are several ways of starting doing business in Ukraine, however, the easiest and most common option is to incorporate a limited liability company (aka LLC, Ltd etc). Below I will explain how to do this step by step and provide with samples of needed documents.

    Time expenses: registration takes up to 3 business days after the required package of documents has been submitted.

    Money expenses: There is no any fee for registration of an LLC. You will need only to pay a translator and a notary (more on these expenses is below).

    LLC features: An LLC is a very simple legal entity. It can be found by one or more founders who could be natural persons and/or legal entities, Ukrainian and/or foreigners. Its charter capital is formed in Ukrainian Hryvnias and can be as small as UAH 1 and as big as you want.

    Required documents:
    1) Application.
    2) Resolution of founders.
    3) Charter.
    4) Power of attorney (optional. Needed if someone else submits the documents on your behalf).

    Re Application:

    The form of application is determined by a special state body and it changes from time to time. So I am giving a link to the official web-source were you can download the up-to-date application form:
    http://ddr.minjust.gov.ua/uk/fe59010e3f ... nyh_osib_/
    Follow this link and click on the hyperlink that reads “Форма 1 – реєстраційна картка на проведення державної реєстрації юридичної особи, утвореної шляхом заснування нової юридичної особи” that is the first one in the list. After that you will be asked to choose where you want to download the application to your computer.

    You fill out in there the LLC’s name, its address, its charter capital, names, addresses and shares of the LLC’s director and members, the LLC’s types of business and contact information.

    The most difficult for you will probably be picking out types of business for your LLC. But do not worry, it is pretty much easy to do, everything you need is understanding of the Ukrainian language or a friend who can help you out here. Then you just visit the following official web-source and choose those types of business you need from the given list: http://kved.ukrstat.gov.ua/KVED2010/kv10_i.html. Note only that the list contains categories and sub-categories. A type of business is one that has a 4 digit number.

    I have prepared in English an example for you so you understand how a ready application should look like. Note that an application form has to be filled out only in the Ukrainian language. You can find the example filled out by me following this link:https://www.dropbox.com/s/b04ulz9xjyp7xhu/Registration_application_EXAMPLE.doc?dl=0.

    UPD. Note that the example is a little bit different from the form to be filled out. This is because a new form was approved since I had prepared and posted this article on the web.

    Re Resolution of founders:


    A resolution of founders is a document in which an LLC’s founders express their decision to incorporate a company, specify its name, address, amount of the charter capital and their shares. I have prepared a unified bilingual template of the resolution (in fact it is called “Minutes of the General Meeting of Members”) so you could fill out your information, delete everything unnecessary, sign it and that is all – your resolution is ready and enforceable.

    You can download the template of my resolution by clicking on the following link: https://www.dropbox.com/s/6i9kdcg2uqupp ... s.doc?dl=0.

    Re Charter:


    I have prepared for you a unified bilingual template of the charter. All you need is just to feel out information you already have in your application of resolution. Yes it is that simple. You can download the template of my charter by clicking on the following link: https://www.dropbox.com/s/ekf6qzilptd2w ... G.doc?dl=0.

    Re Power of Attorney:

    A power of attorney is needed if you have someone to go and submit the documents on your behalf. I have prepared for you a unified bilingual power of attorney. Note that the English text is only for your understanding of the document and the notary needs merely the Ukrainian version.

    Delete the English text, fill out your representative’s name and other details in the template, sign it in presence of a Ukrainian notary and ask a notary to make one copy of it as well. You can download the template of my PoA by clicking on the following link: https://www.dropbox.com/s/cur04ju1wk0ew0x/PoA.doc?dl=0.

    If you do not need anyone for filling the documents with the registrar office and you can do this yourself, then you do not need this power of attorney.

    Some preparations that could be necessary subject to who the LLC’s founders are:

    (i) If you want to be the LLC’s owner personally.


    If you are a foreigner and do not have a Ukrainian tax ID, then you need to get it. It is required for notarization of your signature on the LLC’s charter. The good news is almost free and easy to get it. So, get a copy of your passport translated into Ukrainian and notarize this translation. Almost all translating offices do this. Average cost of having a copy of your passport translated and notarized is UAH 100.

    Take your translated and notarized copy of the passport as well as someone who can speak Ukrainian (if you cannot) with you and visit the central tax office of your district. For example, in Kyiv it is at 33/19 Sholudenka str. Go there, find a relevant officer. He will hand a simple application over to you, you fill it out and return to the officer together with your translated and notarized copy of the passport. Your tax ID will be ready within a week and you will be able to receive it at the same place.

    (ii) If you want your overseas company to be the LLC’s owner.

    In case you already have a company somewhere abroad and want this company to be the LLC’s founder and owner, then you need to add to the package of registration documents (described above) copies of your overseas company’s charter and extract from its local company registry proving the company is registered and in good standing. There also should be a document authorizing you to represent the company’s interests in Ukraine, including to incorporate an LLC on its behalf (e.g. PoA).

    Note that these documents need to be either legalized or apostilled (this depends on the country in which the company is registered). In Ukraine you will translate and notarize these documents as has been already explained above.

    (iii) LLC’s director.

    Mind that foreigners cannot be the first director of the LLC. This is because a director is an LLC’s hired employee (even if the LLC’s owner and director is the same person). In Ukraine a company has to obtain a work permit to be able to hire foreign nationals.

    So the company incorporates with a Ukrainian director. Then it applies for a work permit and after it receives this permit, the company can withdraw its current director and hire a foreigner.

    (iv) LLC’s address.

    The address should be in Ukraine of course. You are free to pick up any address you like and have a right to use for this purpose (owned or leased). Just note that it is not recommended to use residential premises for your LLC’s office and addresses.

    If you do not have any address in mind, then there are many nominee address offered. In Kyiv, for example, a nominee address costs around UAH 1500 per year. There are cases when it is not advisable to use a nominee address (i.e. if you want your company to be registered as a VAT payer or as a non-profit organization). But if you are planning to do something like that you should consult with a lawyer first. In other cases a nominee address should suffice.

    (v) LLC’s charter capital.

    As you already know, an LLC’s charter capital is formed in Ukrainian Hryvnias and can be as small as UAH 1 and as big as you want. My advice is to stipulate your LLC’s charter capital somewhere around UAH 10000 – 20000. Such an amount allows to pay director’s salary, pay for the office and to cover other initial and day-to-day expenses at the beginning of existence of your LLC. In future you can either decrease or increase the charter capital.

    That is all. Following guidelines provided here and using my templates you are able to register your LLC in a free, short and easy way. Of course you need to consult with experts for further in-depth analysis and understanding which taxation status to choose for your LLC, whether it also needs special licenses or permits, etc.

    If you do not understand something after reading this post, then feel free to contact me and I will clarify everything if that will be a general matter not requiring a specific analysis of your particular case.
     
  9. GreyKyiv

    GreyKyiv Member

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    Do you really need a representative office in Ukraine?

    Do you really need a representative office in Ukraine?

    Often people ask how to register in Ukraine a representative office of their overseas company. The reality is that in Ukraine having a representative office is usually more complicated than having a separate legal entity. There are only few cases when a representative office might be better. Below you can read about main peculiarities of setting up and operating a representative fund.

    -Registration fee: USD 2,500.00.
    -Other expense: expenses for legalization/apostillization, translation and notarization of documents.
    -Registration time: up to 60 working days.
    -Registering authority: Ministry of Economy of Ukraine.

    Documents to be submitted: 1) application; 2) extract from the commercial (banking) register of the country where the headquarters of the company is registered in; 3) statement from the bank servicing the company’s bank account; 4) power of attorney for representation of the company’s interests in Ukraine; 5) permit of the domicile country to open the representative office in Ukraine (if necessary under the legislation of the domicile country). If necessary, all of the documents should be notarized, legalized/apostilled and translated into the Ukrainian language.

    Managing authority: foreign individuals manage representative offices under power of attorney without obtaining a work permit. Although the foreigners employed by representative offices should obtain a so called “Staff Certificate”, the obtaining procedure of such staff certificates is formal and is not complicated.

    General information: The representative office is not a legal entity. Functioning of representative offices is poorly regulated by Ukrainian legislation that results in many difficulties with day-to-day activity, usage of bank accounts, taxation and liquidation of representative offices.

    In order to carry out business operations a representative office should be registered with the State Tax Service of Ukraine and pay taxes in Ukraine.
     
  10. Cyrilexpat

    Cyrilexpat Administrator
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    Yes indeed, you explained it well. No need to set up a company as there is a FOP status available. :thumbup:

    I have reformatted some of yours messages for more space and highlight key words.
     
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  11. Kydalov&Partners

    Kydalov&Partners New Member

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    The most common form of starting business in Ukraine are limited liability partnership and sole proprietorship, according to current legislation of Ukraine, which provides a number of legal forms for the establishment of the enterprise.
     

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