Accreditation of a representative office of a foreign non-governmental organization
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Clients address us for assistance in registration of a separate subdivision or representative office of a foreign non-governmental organization in Ukraine (hereinafter referred to as a representative office). The purpose for registering a representative office may be different: from charity or international technical assistance to implementation of programs for development and stimulation of certain economic sectors or providing grants.
In any case, if a foreign non-governmental organization has a desire and need to carry out its activities in Ukraine, it is necessary to carry out state registration (accreditation) of its representative office.
Legal status of a representative office of a foreign non-governmental organization
Separate subdivisions of foreign non-governmental organizations, representative offices, branches of foreign charity organizations may be registered (accredited) in Ukraine without the status of a legal entity.
This means that in all legal relations between legal entities and individuals, the representative office serves as a certain intermediary, acting on behalf of the parent organization.
Usually representative offices are registered by non-governmental and charitable organizations for the following purposes:
- The common system of organizing and conducting activities, when there is a head office and representative offices in different countries. An elementary example is the Red Cross Society.
- Short-term implementation of certain projects. For example, educational, humanitarian, medical and other projects that are created and operate for a certain period of time on the territory of a particular country.
- Lack of opportunity to choose another convenient business structure. For commercial activities, the legislation of most countries allows a wide choice of organizational and legal forms. For non-commercial activities, the list of options is significantly less. A representative office is actually the only way of conducting the activity of a non-governmental or charitable organization, which is available in almost all countries of the world.
- Certain advantages in taxation. Read more about them below.
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Registration of a representative office of a foreign non-profit organization
State registration of a representative office is performed through accreditation in the Ministry of Justice. For this purpose, the applicant must collect and submit a package of documents as defined by law. The list of documents is available here.
Decision on establishment of a representative office is one of the most important documents. In our practice, there were cases when the client worked out the decision on establishment of a representative office independently without our consent and committed mistakes which had to be corrected later.
We recommend drafting the documents for registration of a representative office in accordance with the provisions of the statutory documents of the head office, as the Ministry of Justice will analyze these documents and in case of any discrepancies, it may decide to refuse the registration (accreditation).
The application for state registration (registration form 7) shall be signed by the head of the representative office (defined in the power of attorney). If the head of the representative office does not personally submit documents for state registration (accreditation) of the representative office, it is necessary to notarize the signature of the head (the notary does not check the accuracy of filling out the document, he only certifies the signature) on the Application for State Registration (Registration Form 7). In this case the head of the representative office will have to visit a notary in Ukraine.
Important point: The power of attorney for the head of the representative office must be issued before the signing (notarization of the signature) of the Application for State Registration of the representative office. Otherwise, it will be considered that the transaction is made without authority, which may lead to a denial of accreditation.
In case there is an ultimate beneficial owner of the legal entity, copies of passports of ultimate beneficial owners shall be submitted additionally. For a complete list of documents, please contact the Ministry of Justice. Our lawyers prepare their list and help with the package of documents based on the situation of each Client and the requirements of the Ministry at the time of accreditation of a non-governmental organization.
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A few tips to avoid mistakes in accrediting a non-profit organization
- All documents from the parent organization must be notarized and legalized in accordance with the procedure established by law. For some countries documents may be legalized through an apostille procedure, for others only through consular legalization. We will give advice on the specific country of the organization’s headquarters.
- The name of the representative office must be clearly defined in the documents for registration of the representative office, and the name of the representative office shall be defined equally in all the documents. Documents shall be created in accordance with the constituent documents of the head office. It is better to prepare, sign and certify all documents at once, so that there is no difference regarding the date of their creation.
- If the documents for accreditation of representative offices are submitted by representatives, it is necessary to additionally prepare a power of attorney for such representatives. The application for state registration must be signed by the head of the representative office.
- The package of documents must be complete. The charter or regulations on a separate subdivision shall be submitted if their availability is provided for by the decision on the establishment of the representative office.
- In case of changes in the information on the representative office, the documents for such changes shall be submitted within 20 days from the date of the relevant decision.
The accreditation procedure for a foreign institution is complicated, first of all, by the fact that it takes place in the state authorities of a foreign country. And these authorities require not only to follow the procedure precisely, but also to fill in all documents correctly, as they say, down to the last comma. Even simple grammatical mistakes will be grounds for refusal of accreditation.
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Tax accounting of a representative office of a non-profit organization in Ukraine
Besides, in case of establishment of a representative office, it is necessary to register the representative office for tax purposes. Starting from 2021, if the representative office by the essence of its activities in accordance with the Tax Code of Ukraine falls under the definition of a “permanent establishment” according to a number of criteria, the parent organization must be registered with the tax service.
In order to understand whether the representative office falls under the status of a permanent establishment, it is necessary to analyze the activities in Ukraine in more detail. In most cases representative offices of foreign non-governmental organizations will not be recognized as permanent establishments and are not subject to registration as payers of income tax, respectively, no tax liabilities will be accrued. However, the established representative office needs to register with tax authorities at the place of its registration.
The cost of accreditation can be found here. During the war period the prices may be adjusted.
Please see the cost of legal advice here.
If you are planning to go through the accreditation procedure of a non-governmental organization branch simply and safely – don’t hesitate to contact us.