Registration of an individual entrepreneur for a foreigner in Ukraine in 2023

In February 2020, we were contacted by a British citizen who studied in Ukraine and wanted to work here as a sole proprietor.

This is not the only case of registration of a sole proprietorship for a foreign citizen, so we decided to provide general information on the issue, including the answers that we gave to our Client during the consultation.

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What does a foreigner need to register as a sole proprietor?

According to Part 1 of Article 18 of the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations”, if the person has reached the age of majority, it is enough just to submit a completed application of the established sample to register a sole proprietorship.

This application shall contain the following information:

• Passport data and identification number of a sole proprietor;
• His/her place of residence;
• Types of  economic activity according to the classifier.

Since a foreign national does not have a Ukrainian identification (tax) code, it must be obtained before the registration procedure.

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An important point will be to correctly specify the types of  economic activity according to the classifier and choose exactly those types of activities that you will need for your business. It’s worth remembering that penalties may be charged for conducting activities that do not comply with the sole proprietor’s registration data.

Submission of documents and the identity document during the registration of a sole proprietorship for a foreigner

You can personally apply for the sole proprietor registration. And although it is not provided for in the aforementioned law, you must have an interpreter.

If a person does not want to visit the state registrar in person, he/she shall also submit a notarized power of attorney with the application. For its issuance, the notary will ask you to provide a document confirming your identity and legal stay in Ukraine. Such document is a residence permit.

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When obtaining the permit, you should be careful, because often after getting the plastic card foreigners do not even guess that it should be submitted together with a residence registration certificate. If there is only a plastic card without a certificate, the notary may refuse to issue a power of attorney.

The fact is that a sole proprietor must be registered with the tax authorities at the place of registration. You can’t register without a specific address. The legislation spells it out quite indirectly, where one follows from another. That is why it is important to know and take into account all the above points.

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Can a foreign sole proprietor become a single taxpayer?

Yes. If its activities do not include such, which are incompatible with the use of the simplified taxation system. These are, in particular, lotteries, currency exchange, trade in excisable goods. The single tax shall be paid at 5% of income (if excluding VAT), which is almost the lowest business tax in Europe.

After the consultation, the Client finally decided to register as a sole proprietor in Ukraine, and our experts have undertaken all the procedural aspects.