Comparison of LLC and representative office (RO) in Ukraine
Cost of services:
Reviews of our Clients
One of our first tasks within the services for starting foreign business in Ukraine is to help with the question, “What business structure is more profitable to start a business in Ukraine?”.
In most cases the choice comes down to two options:
-
Limited Liability Company (subsidiary) is a Ukrainian company, in which your foreign company will have part or 100% of the authorized share capital;
-
Permanent (commercial) representative office of a foreign company.
What business structure to choose in Ukraine depends only on you and on your situation. There are many nuances that will influence your decision:
-
Do you want to relocate your workers to work in Ukraine?
Procedurally, it would be easier to employ them at the representative office.
-
Do you need a license to work in Ukraine?
The fact is that there is a specific list of economic activities for which a representative office can hardly obtain a license.
-
Which taxation scheme would be more profitable for you?
The answer will depend on many aspects, in particular on your type of activity, the main contractors and volumes.
The lawyers of our company will analyze your situation and offer you the best option.
In this table you can see a comparison of the lawyer of the two most popular business structures in Ukraine for foreign companies:
LLC (subsidiary) |
Permanent representative office |
|
| Nature |
It's a legal entity, an independent participant in all relations |
It's not a legal entity, so in all relations it acts on behalf of foreign company (for expamle, in all contracts a foreign company is a party of a contract but not a Ukrainian office)
|
| Founder /owner | A foreign company is a founder. Ukrainian LLC (corporate rights) can be sold at any moment. Thus, LLC provides a possibility to sell subsidiary in Ukraine or its part. |
A foreign company is a founder but there is no chance to sell Ukrainian office. Lack of right to sell. |
| Acts due to | Charter There are powers of a head body and other aspects of work in a charter. |
Power of attorney or statute of the representative office (if there is one) A scope of powers of the head is stipulated in the letter of attorney. A statute can regulate procedures and other aspects of functioning. |
| Property in Ukraine | Ukrainian subsidiary is able to be an owner as well as foreign company. When Ukrainian LLC is an owner of the property a foreign office loose a possibility of direct control over it. |
Foreign company is an owner It can be often used as a way to protect the property. |
| Responsibility | Is limited to property of a subsidiary This minimizes risks of parent company. |
A foreign company is responsible This make a company to take serious risks. |
| License (permits) obtainment |
Can obtain licenses LLC has a possibility to execute licensed ecomonic activities. |
Can't obtain licenses There is no possibility to perform licensed activities. |
| Non-resident employees |
A work permit should be obtained for each foreigner It's quite uneasy and pricey procedure (it takes near 1 month, state fee - close to 600 USD). It lasts only 1 year. |
Special cards are issued for every employee The cards are easy to obtain without any state fees during 3 weeks. Moreover, the office can invite foreigner with provision of long-term visa. |
| Employment record book | Filled up by LLC |
Can't be filled up by workers of an office A contract with state agency should be signed with this aim. |
| Additional legal entities | LLC can establish another LLC The possibility can be useful with the aim of business structuring, risks minimization, tax optimization and other. |
Rep. office can not be a founder of legal entities |
| Regional structure | Has a right to create branches and representative offices in Ukraine There is a feasibility to spead activity into different regions of Ukraine lawfully. |
No branches and representative offices Presence in another region will demand one more pepresentative office. |
Separately, we would like to note that the registration of LLC is much easier and cheaper: it usually takes up to two weeks (together with the preparation of documents, their receipt from you, translation into Ukrainian and registration), the registration fee - none.
Registration of foreign representative office with the Ministry of Economy of Ukraine takes 20 business days (i.e. 1 month). The registration fee is one living wage for able-bodied persons, the amount of which is established by law on January 1 of the calendar year and rounded to the nearest 10 hryvnias.
You may also like: What to Consider When Buying an LLC in Ukraine?
In some cases, we offer our Clients simultaneous registration of a representative office and LLC, which helps, if properly organized, to use the positive qualities of both business structures and minimize the impact of the negative effects.
Of course, we help with the proper registration of activities and advise on how both business structures can operate simultaneously, within the norms of Ukrainian legislation.
If you doubt which way is better to achieve the goal and which business structure to choose — our specialists offer an introductory consultation, at which we will consider your case and tell you which option is better to choose.
Our lawyers will provide you with the following services:
-
Advising on the best business structure in Ukraine for your case;
-
Consultation of the tax lawyer;
-
Registration of representative offices in Ukraine;
-
Registration of an LLC in Ukraine with a founding foreign company;
-
Assistance with employment of foreign employees in Ukraine, including executives through obtaining service cards or work permits;
-
If necessary, we provide services of a Nominee Director for the registration of an LLC in Ukraine;
-
If necessary, we provide a legal address for business registration in Ukraine.
In addition, we offer comprehensive legal and accounting support of foreign companies in Ukraine.
If you want to start a business in Ukraine through registration of a foreign representative office or a company in Ukraine safely and efficiently, don’t hesitate to contact us.
Didn’t find an answer to your question?
Everything about Registration of the Representative Office of a Foreign Company in Ukraine here.
We are ready to help you!
Contact us by mail [email protected] or by filling out the form:
Services on the topic of this material
Our publications on this matter
Other publications
Do you generate energy from solar panels, wind turbines, or other installations? Here’s what you need to know to produce electricity without violating legal requirements.
How to increase the charter capital of an LLC in Ukraine for foreign founders? We consider the minimum capital requirement, the timeframes for formation, and the necessary documents for replenishment.
Learn which form of activity to choose: a charitable foundation or a public organization. We will explain the differences and provide legal support to Ukrainian citizens and foreigners who wish to operate in Ukraine.
Licensing is mandatory for importing certain types of goods. The main types of import licenses are listed in the Law on Foreign Economic Activity. What documents should be submitted to the licensing authority to obtain a license for the import/export of goods.
We are ready to help you!
Contact us by mail [email protected] or by filling out the form:Our other authors
