Why Register a Company in Ukraine?

A company registration in Ukraine offers several advantages: the process is straightforward, transparent, affordable, and requires minimal investment. Depending on the type of company, registration can take anywhere from 1 to 14 days. Both Ukrainian citizens and foreigners have equal rights to establish and operate a business in Ukraine. During martial law, taxes can be as low as 5% or 2%.

What Type of Business Should You Choose?

Sole Proprietorship

A sole proprietorship allows an entrepreneur to conduct business without forming a separate company. This option is ideal for those providing services or selling goods directly to consumers.

Registering as a sole proprietorship can be done online in just 10 minutes, provided you have a scanned copy of your passport, a Ukrainian identification number, and a confirmed place of residence in Ukraine (either a residence stamp in your passport or a temporary residence certificate for foreigners).

Other advantages include simplified tax reporting, no need to draft articles of association, no share capital requirements, no obligation to hire a director or accountant, and the flexibility to manage income as it is received from clients.

However, the sole proprietor is personally liable for all business obligations, meaning their personal assets could be at risk.

Limited Liability Company (LLC)

An LLC is the most popular business structure in Ukraine. It allows multiple parties to operate a business together without any minimum share capital requirements, and the liability for losses is limited to the company's assets.

An LLC can be established by one or more individuals or legal entities. Members contribute to the share capital, which can include property or money. The size of each member's share determines their management rights and profit distribution.

Initially, only a Ukrainian citizen can be appointed as the director of an LLC. If the owners wish to appoint a foreign director, they must first appoint a Ukrainian director and then apply for a work permit for the foreigner. Once the permit is obtained (usually within two weeks), the foreign director can be officially appointed.

Joint Stock Company (JSC)

A JSC is suitable for larger enterprises. In a JSC, the share capital is divided into equal shares, with ownership certified by stocks. Both individuals and companies can hold these stocks. The minimum share capital required in Ukraine for a JSC is approximately UAH 8,375,000 (around US$282,996).

Representative Office

A representative office is not a separate legal entity but operates under the control of the parent company and is accountable to it.

The representative office acts based on regulations set by the parent company, and it can own property, open bank accounts, and is liable for taxes. The parent company is responsible for any contracts the representative office enters into on its behalf.

Foreign companies can open representative offices in Ukraine, but the registration process is more complex and time-consuming compared to company registration.

Other Types of Companies

Ukrainian law also recognizes other business structures, including:

• Additional Liability Company: A variation of an LLC where members have additional liability with their personal property.
• General Partnership: Members have subsidiary liability with all their property.
• Limited Partnership: General members have subsidiary liability with all their property, while other members' liability is limited to their contributions.
• Private Enterprise: Operates based on private ownership by an individual or a company.

Which Type of Company Should a Foreigner Choose?

For foreigners or foreign companies, the best option is usually to operate in Ukraine through an LLC. The reasons include:

• Simple registration process: Can be done by an authorized representative within 24 hours, free of charge.
• No minimum share capital requirement: However, be aware that the share capital amount is public information, and a very low amount (e.g., US$100) may raise concerns about the company’s reliability among partners.
• Low tax rates.

Another common option is to establish a foreign representative office in Ukraine. This is often chosen when there is a need to employ foreign nationals. Additionally, a representative office may offer tax benefits when repatriating income to the parent company’s home country. Finally, dealing directly with the parent company through a representative office can inspire more trust among partners than working with a newly established local company.

What Needs to Be Done Before Registration?

• Obtain an Identification Number: If the company owner is an individual, a foreigner can obtain it personally or through a representative within two days.
• Choose a Unique Ukrainian Company Name: Optionally, a name in a foreign language can also be selected.
• Prepare Registration Documents in Ukrainian: Documents may also be prepared in a foreign language.
• Determine the Company’s Legal Address: This must be provided in the registration application. The address can be the owner’s registered residence, the company’s immovable property address, or a leased office, as confirmed by relevant documentation.