Starting a Business in the EU: What Ukrainian Entrepreneurs Need to Know

To start a business in the EU, simply registering a company is not enough. An entrepreneur must choose the country and company form, prepare the founders’ documents, determine the registered office and director, register the business, complete tax registration, open a bank account, and, where necessary, obtain licenses.

At the same time, the process of starting a company abroad depends on what the company will actually do. For example, an entrepreneur plans to sell clothing in Poland through their own website. In that case, it is necessary not only to register a Polish company, but also to determine where the goods will be stored, formalize relationships with the warehouse and carriers, check labeling rules, register for VAT where the relevant grounds exist, and prepare the terms for sales and returns.

If, however, the entrepreneur creates a company to provide marketing services to European clients, a warehouse and product-labeling rules are unnecessary. But the company must properly structure its contracts, determine the VAT treatment, organize accounting, and be able to explain to the bank where its funds will come from.

Therefore, the country and the process for starting the business should be chosen based on the specific activity, not only on the cost and speed of registration.

What criteria should be used to choose a country for doing business abroad?

There is no single company form or uniform incorporation procedure across the European Union. Each country sets its own requirements for share capital, documents, taxation, reporting, and business management. Small and medium-sized businesses most often choose an equivalent of a Ukrainian limited liability company. Such a company is a separate legal entity, and, as a general rule, its members are not personally liable for the company’s debts.

In practice, the choice of country can be illustrated with several examples.

Poland

In Poland, a common form is a limited liability company—spółka z ograniczoną odpowiedzialnością.

The minimum share capital for this type of company is PLN 5,000. The company can be formed using standard articles through an electronic system or under individually drafted articles with the involvement of a notary. Poland is worth considering if the entrepreneur plans to:

• sell goods on the Polish market;
• open a store, café, salon, or another establishment;
• rent a warehouse;
• hire employees in Poland;
• work primarily with Polish counterparties.

The standard corporate income tax rate is 19%. A 9% rate may apply to new and small businesses if the statutory conditions are met, including where their revenue does not exceed the limit established by law. In 2026, that limit is EUR 2 million, but eligibility for the reduced rate must be checked separately because additional conditions and exceptions apply.

Estonia

Estonia is often chosen by companies that provide remote services, develop software, or work with clients in different countries.

An OÜ—Estonia’s equivalent of a limited liability company—can be registered through the electronic business register. An Estonian electronic identification method is required to submit documents and sign applications. The member also specifies the business activity, amount of capital, composition of the management board, and the company’s registered office.

A key feature of Estonia is that, as a general rule, company profits are taxed when they are distributed, including as dividends. If the profits remain in the company and are used to develop the business, no tax on distribution arises. Since 2025, distributed profits have been taxed at 22%.

Germany

Germany is worth considering if the business is focused on the German market and plans to open an office, production facility, store, or hire local employees there.

A common company form is the GmbH—a limited liability company. Its minimum share capital is EUR 25,000. At least EUR 12,500 must actually be contributed before registration. The articles are notarized, after which the company is entered in the commercial register.

A simplified version of this company—the UG—may be used for a small business. It can be formed with capital starting from one euro, but part of the profits must be allocated to a reserve until the capital reaches EUR 25,000.

Germany’s tax system is more complex than a single corporate income tax rate. A company pays corporate income tax, a surcharge on that tax, and local trade tax, the amount of which depends on the municipality. The overall burden averages about 30%.

Germany can therefore be a justified option for a Ukrainian business genuinely entering the German market, but it is not always suitable for an entrepreneur who is simply looking for the cheapest way to register a foreign company.

Accordingly, when choosing a country, you should compare not only tax rates, but also:

• where the clients will be located;
• where the goods will be stored and sold;
• where the employees will work;
• how much accounting, a registered office, and reporting will cost;
• whether personal presence in the country is required;
• what permits are required for the specific activity;
• where decisions concerning the company’s operations will actually be made.

What requirements arise depending on the type of activity?

After choosing a country, you need to determine what exactly is required to begin the selected activity.

Trade in goods

To open a physical store or an online store abroad, you need to:

• identify suppliers and the origin of the goods;
• arrange the import of goods into the EU if they arrive from Ukraine or another non-EU country;
• check product safety, composition, and labeling requirements;
• determine where the goods will be stored;
• organize delivery and returns;
• prepare the terms of sale;
• address VAT registration requirements.

If the company sells goods to consumers in several EU countries, VAT may be payable at the rates of the countries where the customers are located. The special OSS scheme can be used for such sales.

OSS is a system that allows a business to file one return for relevant sales in different EU countries and pay VAT through the tax authority of one member state. However, it does not eliminate every case where separate registration is required. For example, if the company stores goods in a warehouse in another country, additional VAT registration may be required there.

Provision of services

A company that provides consulting, marketing, design, or information services needs to:

• define the list of services;
• prepare contracts with clients;
• establish the procedure for acceptance and payment of services;
• determine the VAT treatment;
• properly document rights to created materials or software;
• organize the accounting of income and expenses.

For example, if a Polish company provides marketing services to a German company registered for VAT, VAT generally may not be charged on the invoice, while the obligation to account for the tax is shifted to the client. However, the customer’s tax number must be verified and the invoice must be prepared correctly.

If the company will work regularly with European clients, it is worth establishing not only a contract template, but also a process for performance, acceptance of services, and documenting the result. We discuss this in more detail in our material on setting up contract management.

Activities requiring a permit

For healthcare, transportation, financial services, construction, food service, education, security services, and a number of other sectors, company registration alone is not enough. For example, opening a dental practice may require you to:

• select premises that meet sanitary and fire safety requirements;
• formally hire employees and submit the required information to the relevant public authorities;
• enter into contracts for waste disposal and maintenance of the premises.

If the premises are rented first and the applicable requirements are checked only afterward, the entrepreneur may fail to obtain the required permit or may have to carry out additional renovations.

Employment

As a general rule, employment, tax, and social security obligations should be checked under the law of the country where the employee actually works. Special rules apply to temporarily posted employees and individuals who work in several EU member states, so the need to register the employer and pay contributions must be determined separately.

If a Polish company opens a store in Poland, the employees working in that store are hired under Polish rules. If, however, a manager of a Polish company works in Spain on a permanent basis, Spanish law will generally apply for social security purposes, and the company may need to register as an employer in Spain and pay the relevant contributions there. At the same time, the employment and tax consequences of such work must be analyzed separately, and special rules may apply to a temporary posting or work in several EU member states.

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What steps are required to open a company in the EU

In practice, starting a business in the EU consists of several consecutive stages.

1. Preparing the company structure

Before filing documents, you need to determine:

• the founders and the size of their ownership interests;
• the director and the scope of the director’s authority;
• the company name;
• the registered office;
• the business activities;
• the amount of share capital;
• the procedure for distributing profits;
• the rules for decision-making between the partners.

If there are several founders, it is advisable to agree from the outset who will finance the business, which decisions require the consent of all members, and what happens if one of them exits the company.

2. Preparing the documents

Registration usually requires:

• passport details of the founders and director;
• proof of their residential addresses;
• the articles of association or incorporation agreement;
• documents relating to the registered office;
• a resolution to establish the company and appoint the director;
• a description of the business activity;
• information about the beneficial owner.

A beneficial owner is an individual who ultimately owns or controls the company.

Ukrainian documents may require translation, notarization, or an apostille. An apostille certifies the authenticity of the signature, the capacity in which the signatory acted, and, where applicable, the seal or stamp, but it does not certify the accuracy of the document’s contents. Whether an apostille is required depends on the country and authority where the document will be submitted, the type of document, and the applicable international treaties.

Worth reading: Apostille or Consular Legalization: Which One Is Required for Your Documents?

3. Registration and tax registration

After the incorporation documents are signed, the company is entered in the relevant commercial or court register. It must then obtain a tax number, report information about its beneficial owner, and, where required, register for VAT and as an employer.

At this stage, it is important not to miss additional notifications. For example, after a Polish company is registered, additional information must be provided to the tax authority, including information about the business address and bank accounts, and beneficial ownership information must also be reported.

4. Opening a bank account

To open a bank account abroad for the company, the bank may request:

• registration and incorporation documents;
• information about the owners and director;
• proof of the source of funds;
• a description of the business activity;
• contracts or arrangements with clients;
• information about the countries involved in future payments;
• evidence of the business’s connection to the country of registration.

If an entrepreneur registers a company in Estonia, lives in Ukraine, works with clients in Germany, and plans to transfer funds to another country, the bank may ask for an explanation of this structure.

Therefore, even before registration, you should prepare a clear explanation of how the company will earn and use its funds.

5. Organizing ongoing operations

After the company is opened, it must regularly:

• maintain accounting records;
• keep contracts, invoices, and evidence of expenses;
• file tax and financial reports;
• pay taxes;
• document founders’ resolutions;
• update information in the registers;
• renew licenses;
• file reports even if there is no activity, where this is required by the law of the relevant country.

The procedure for making payments to the company owner must also be determined separately. Company funds are not the founder’s personal funds. They may be withdrawn only on a lawful basis, for example as dividends, salary, director’s remuneration, or reimbursement of properly documented expenses.

What obligations remain in Ukraine?

Registering a company in the EU does not automatically terminate its owner’s tax obligations in Ukraine. If you live or do business in several countries and are unsure where you remain a tax resident, you should first determine your tax status separately. This will affect both CFC obligations and the declaration of foreign income in Ukraine. We wrote more about this here.

If the entrepreneur remains a tax resident of Ukraine, at least three groups of obligations must be addressed.

Notify the tax authority about acquiring an interest in a company

In the cases provided for by Article 39² of the Tax Code of Ukraine, the acquisition of an interest in a foreign company must be reported to the tax authority within 60 calendar days.

A notification must also be filed if the ownership interest changes or is disposed of, or if factual control begins or ends.

File CFC reports

A CFC is a controlled foreign company, meaning a foreign company controlled by a resident of Ukraine. In particular, a company may be treated as a CFC if a resident of Ukraine:

• owns more than 50%;
• owns more than 10% if Ukrainian residents together own 50% or more;
• exercises factual control over the company regardless of the formal ownership percentage.

For example, if a Ukrainian resident opens a Polish sp. z o.o. as the sole owner, that person owns 100% of the company. The person’s obligations as a controlling person of a CFC must therefore be reviewed and complied with.

Important! A CFC report must be filed even when the company’s profits are exempt from taxation in Ukraine. An exemption from tax and an exemption from reporting are two different things.

In this context, you may also find this useful: How to File a Notification of a Controlled Foreign Company in Ukraine?

Declare income received

If the owner receives dividends, salary, or director’s remuneration from the foreign company, that income may be subject to declaration in Ukraine.

If tax has already been paid abroad, it may be credited in Ukraine in the cases and according to the procedure provided by the Tax Code and the applicable international treaty. For this purpose, a document confirming the amount of income and tax paid must be obtained.

Conversely, when you need to confirm to a foreign counterparty or tax authority that you are a tax resident of Ukraine, a certificate confirming tax residence may be required. We explain how to obtain it and what it is used for in a separate article. 

Therefore, taxes paid by a company in Poland, Estonia, or Germany do not replace the owner’s personal tax obligations in Ukraine.

How do we help clients start a business in the EU?

We help organize the establishment of a company in an EU country not as a standalone registration step, but as a complete business launch. To do this, we:

• determine what the company will do and where its clients, employees, goods, and premises will be located;
• compare operating conditions in several countries;
• determine the company form, founders, and management structure;
• review taxes, VAT rules, and reporting requirements;
• identify the licenses and permits required;
• prepare the documents and organize registration;
• help prepare for opening a bank account;
• prepare contracts and documents needed to begin operations;
• determine which notifications and reports must be filed in Ukraine.

As a result, you receive a clear launch plan: which country to establish the company in, what documents to prepare, what taxes and recurring costs to account for, and what must be done after registration.

If you plan to start a business in the EU, contact us. We will help you choose a country, register the company, and organize its operations taking into account European requirements and the owner’s obligations in Ukraine.

You can learn more about our service here.