How Тo Open A Branch In Ukraine?
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Opening a branch, or as it would be more accurate to say, a representative office of a foreign company in Ukraine, can give your business the following advantages:
Opportunity to develop your business and tap a completely new market;
Possibility of duty-free import of goods and equipment required for the representative office;
Ability to employ foreign employees in Ukraine without obtaining work permits (these employees must get service cards to work in the representative office);
No taxes on the transfer of funds to the branch office from the parent company.
However, we are talking about a full-fledged business registration, as well as the entry into a market in a foreign country, which has not only its own rules of law, but also local rules of trade, business development.
When registering a branch office, you may face a lot of questions, ranging from whether you need a physical office for a branch in Ukraine, and ending with questions about how to optimize the taxation of the representative office, or how to withdraw money from the representative office to the parent company.
We offer you the assistance of our team of qualified lawyers in registering a branch office of a foreign company in Ukraine on a turnkey basis.
We will help you not only to pass all the stages of the representative office registration, but we can also take over the accounting and personnel accounting of the business for a start to avoid problems with the local tax authorities.
You may also like: Who Can Become a Head of the Representative Office in Ukraine?
Legal advice on registration of a branch of a foreign company in Kyiv
The first thing to remember is that a representative office/branch in Ukraine is not a legal entity. We have already explained here what it is better to choose, registration of a company or a representative office.
To register a foreign branch in Ukraine, you will need to take the following actions:
To effectuate the decision of the parent company on establishment of a representative office in Ukraine;
To fill in and correctly execute the application for registration of the representative office in Ukraine (our lawyers will help you with this step);
To obtain a registration document of the parent company at the corresponding authority in the country of registration;
To execute a power of attorney for the representative in Ukraine who will conduct registration (we will provide you with the draft power of attorney and tell you how to properly sign and certify the document);
To submit documents for registration in Ukraine;
To pay state fee for registration of the representative office in Ukraine (we’ll tell you when and how to do it or we’ll personally make the payment);
To register the representative office with the local tax authorities.
Please note! At the time of writing, as of March 2021, some changes were introduced to the procedure for registering a representative office in Ukraine. One of the innovations is the need to register the non-resident founder of the representative office, i.e. the parent company, with the tax office.
If the activity in which you are going to be engaged in Ukraine, is subject to licensing according to local laws, the representative office will need to obtain the appropriate license. We can help you with this, since we have been obtaining licenses and permits for business for more than 14 years.
Please note! The representative office will not be able to get the license for certain types of activity, or the licensing process will be very problematic. In such cases we can recommend other variants, for example registration of a Ukrainian LLC.
Documents for registration of a representative office shall be submitted to the Ministry of Economic Development, where they are considered within 20 business days (60 business days for representative offices of Russian companies). Our lawyers are able to coordinate the documents with the specialists of the Ministry of Economic Development, which greatly reduces the risk of rejection for formal reasons.
Many Clients ask whether it is possible to operate without an actual office, for example, to conduct IT-activities. You can do without an actual office, but you have to provide an address for registration. This is a so-called registered office address, and we can provide it to you for the registration of a representative office via separate arrangement.
The cost of registration of a branch office of a foreign company in Ukraine in our company starts from UAH 18,000 and depends on the set of services you will need. For example, we can offer the services of a temporary nominee director for the period of registration of a branch in Ukraine, which will simplify the registration procedure, if you subsequently want to appoint a trusted foreign employee as a head of your representative office.
You can choose a package of services that meets your needs in terms of cost and content here.
Please note: Previously, the official registration fee had to be made in dollar currency from the account of the foreign company. Now payment shall be made in Ukrainian currency, UAH.
Thus, if a foreign company has no hryvnia account, this may complicate the process. The best option is that someone in Ukraine makes a payment on your behalf. That is why you should get the support of local specialists in advance, who will not only prepare and submit documents, but also take care of the whole registration procedure.
Which type of a representative office in Ukraine to choose?
Representative offices can be divided into two types:
- A permanent representative office is one that carries out all or part of its business activities on a permanent basis. For example, a branch, office, factory;
- A non-permanent representative office is characterized by the fact that it can’t conduct the same business activity as the parent company located outside of Ukraine, but has an auxiliary character. For example, it may be a warehouse used to hold a certain amount of goods or products belonging to a non-resident directly for storage.
The key differences between these representative offices are as follows:
- The activity of a non-permanent representative office is not subject to taxation;
- A non-permanent representative office can’t conduct any entrepreneurial activity and receive any income.
Accordingly, you should clearly understand the purpose of your representative office in Ukraine: business activity or auxiliary office.
Where do you submit the documents for registration of a representative office in Ukraine?
In order to register a foreign representative office, it is necessary to submit a list of documents to the Ministry of Economic Development and Trade of Ukraine, which is located at: 12/2 Grushevskogo St., Kyiv, 01008, Ukraine.
Documents for the foreign representative office registration include:
- An application for registration;
- Extract from the trade/bank register of the country where the parent company is located;
- Certificate from the bank where the foreign company’s account is officially opened;
- Power of attorney for the future director/head of the representative office to act in a representative capacity.
There are a number of cases when the documents shall be certified by a notary at the place of their issue and respectively legalized in Ukraine.
If you decide to set up a permanent representative office in Ukraine, in addition to registration with the Ministry of Economic Development and Trade, you will need to register it with the tax office at the place of registration and get the appropriate status of a representative office.
Please note! The documents for registration shall be submitted not later than 6 months following the date of their issue in the country of the foreign parent company.
How long will it take to register a representative office?
The period of 1 calendar month is enshrined at the statutory level. However, in practice, the whole procedure takes 1-1.5 month
You may also like: Documents for Registration of a Foreign Branch Office in Ukraine.
Legal services for opening a branch office of a foreign company
Our law company offers you a range of services for the registration of a branch/representative office in Ukraine:
Advising on all issues of registration of foreign business in Ukraine: as a branch, representative office or a separate Ukrainian company;
Preparing documents for registration of a representative office in Ukraine: draft decision of the parent company on the establishment a representative office, application for registration, power of attorney, etc;
Filing all documents for the registration of a representative office in Ukraine to the Ministry of Economic Development;
Conducting the registration of representative offices in Kyiv on a turnkey basis.
We can also provide assistance in obtaining service cards for the employees of the representative office if you want to move your employees to Ukraine.
If necessary and for your greater safety, we offer the outsourced services of our accountant, who can take over the accounting and personnel accounting of the representative office under the supervision of a lawyer.
In January 2018, our company received a request from the U.S. company for legal support and assistance in opening its representative office in Ukraine. The Client inquired if the company’s representative had to come to Ukraine, how long the procedure would take and what documents the company had to provide. With extensive experience in registering the foreign company representative offices, our lawyers provided the Client with legal advice on the registration procedure, as the Client was interested in the entire process, and assured him that the company’s representative was not required to come to Ukraine to register a representative office of the parent company. Our specialists could perform all the necessary actions on the basis of a power of attorney. American employees might be required only to come to Ukraine to personally obtain work cards after the representative office would be registered.
Upon signing the Legal Services Agreement with the American company, our lawyers developed the company’s decision on the registration of a representative office in Ukraine and appointment of a head of the representative office, prepared a draft of the parent company’s power of attorney for the head of the representative office, so that he/she was entitled to act in its name and on its behalf, as well as to represent the company at all Ukrainian governmental and non-governmental agencies. Our specialists also prepared the parent company’s power of attorney for our specialists, so that we could register its representative office acting in the name and on behalf of the foreign company at the state authorities of Ukraine. Our lawyers informed the Client about the need to get a certificate from the financial institution verifying the opening of a parent company’s bank account, as such a document shall be also included in the representative office registration package.
Upon the receipt of the requested information and signed documents that were previously drafted by our employees, our lawyers proceeded to the registration of the representative office. The most time-consuming stage of the procedure is the registration of the representative office at the Ministry of Economic Development and Trade of Ukraine. It is interesting to note that there is no time limits stipulated by the law of Ukraine for the document processing by the Ministry. However, the law provides that the certificate of the representative office registration shall be issued no later than within sixty (60) working days after payment of the state fee. Therefore, we advised the Client to pay the state fee in advance so that we could submit the payment confirmation together with the main package of documents for registration. Thus, the confirmation of the state fee payment guarantees that the document processing time will not exceed sixty working days.
Due to the fact that our lawyers have extensive experience in registering representative offices, and always agree on all draft documents with the Ministry of Economic Development and Trade of Ukraine just prior to signing them, the certificate of registration was issued within a month and a half. This means the Client obtained the certificate of registration in about thirty working days after the documents were submitted to the Ministry. It’s almost half less than the maximum processing time stipulated by law.
Registration at the State Statistics Service of Ukraine and the State Fiscal Service of Ukraine took another three working days. Once that was done the representative office of the American company could legally start its business activity in Ukraine. Two weeks after receiving the representative office registration certificate, foreign workers’ work cards were waiting for their owners in the Ministry of Economic Development and Trade of Ukraine. Our lawyers cannot receive them on behalf of the parent company under the power of attorney, as these are identity documents. Therefore, the cards shall be obtained personally by those individuals (foreign workers) to whom they are issued, or by their representatives acting under a notarized power of attorney granted by each individual, but not the company. Although this issue is not stipulated by the current legislation, we informed the Client in advance that it is commonly practiced at the Ministry of Economic Development and Trade of Ukraine. The Client did not prepare power of attorneys from each employee, as each of them was ready to come to Ukraine and work there right after the registration of the representative office. Therefore, all the workers agreed upon the time with our English-speaking lawyer to visit the Ministry of Economic Development and get their work cards personally.
Do you want to open a branch office of your business in Ukraine? Don’t hesitate to contact us! We can help you register the business in the form you need, as well as organize relocation of your employees to Ukraine.
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