Registering a company in Ukraine https://fortiorlaw.com/ offers several key advantages: the process is simple, transparent, cost-effective, and requires minimal initial investment. Depending on the company type, the registration can be completed in as little as 1 to 14 days. Both Ukrainian citizens and foreigners enjoy the same rights to establish and operate businesses in Ukraine. Additionally, during martial law, tax rates can be as low as 5% or even 2%.

Which Business Structure Should You Choose?

Sole Proprietorship

A sole proprietorship is an ideal choice for entrepreneurs looking to start a business without forming a legal entity. This structure is particularly suited for those who intend to offer services or sell goods directly to consumers.

The registration process for a sole proprietorship is quick and can be completed online within 10 minutes if you have a scanned passport, a Ukrainian identification number, and a confirmed address in Ukraine (such as a residence stamp in your passport or a temporary residence certificate for foreigners).

Benefits of this structure include simplified tax reporting, no need to draft articles of association, no requirement for share capital, no obligation to hire a director or accountant, and flexibility in managing business income as it comes in. However, the sole proprietor is personally liable for all business obligations, meaning personal assets could be at risk.

Limited Liability Company (LLC)

An LLC is the most common business structure in Ukraine, ideal for those who want to operate a business with others. There is no minimum share capital requirement, and liability for business debts is limited to the company’s assets.

An LLC can be formed by one or more individuals or legal entities. Members contribute to the share capital, which can include money or property, and the size of each member's share determines their management rights and profit entitlements.

Initially, only a Ukrainian citizen can be appointed as the director of an LLC. If the owners wish to appoint a foreign director, they must first appoint a Ukrainian citizen and then apply for a work permit for the foreign national. Once the permit is granted (usually within two weeks), the foreign director can be officially appointed.

Joint Stock Company (JSC)

A JSC is suitable for larger enterprises. In this structure, the share capital is divided into equal shares, represented by stocks, which can be owned by individuals or companies. The minimum share capital required for a JSC in Ukraine is approximately UAH 8,375,000 (about US$282,996).

Representative Office

A representative office is not a separate legal entity but operates under the control of the parent company. It acts based on regulations set by the parent company, can own property, open bank accounts, and is responsible for tax obligations. The parent company is liable for any contracts the representative office enters into.

Foreign companies may establish representative offices in Ukraine, though the registration process is more complex and time-consuming than setting up a local company.

Other Business Structures

Ukrainian law also recognizes several other business structures, including:

• Additional Liability Company: Similar to an LLC, but members have additional liability with their personal assets.
• General Partnership: Members have subsidiary liability with all their personal property.
• Limited Partnership: General partners have unlimited liability, while other partners’ liability is limited to their contributions.
• Private Enterprise: Operates based on private ownership by an individual or a company.

Best Options for Foreigners Registering a Business in Ukraine

For foreign individuals or companies, an LLC is often the most practical choice for operating in Ukraine. Key benefits include:

• Ease of registration: Can be completed within 24 hours through an authorized representative, free of charge.
• No minimum share capital requirement: However, since the share capital amount is publicly available, a very low amount (e.g., US$100) might raise concerns about the company’s reliability.
• Low tax rates.

Alternatively, a foreign representative office in Ukraine is a viable option, especially if the business requires foreign employees. A representative office can also offer tax advantages when repatriating income to the parent company. Additionally, conducting business through a representative office might instill more confidence in business partners compared to a newly established local company.

Steps to Take Before Registration

• Obtain an Identification Number: Necessary if the company owner is an individual. Foreigners can obtain this in person or through a representative within two days.
• Select a Unique Company Name: The name should be in Ukrainian, though an additional name in a foreign language can be chosen.
• Prepare Registration Documents in Ukrainian: These documents can also be prepared in a foreign language if needed.
• Determine the Company’s Legal Address: This must be specified in the registration application. The address can be the owner’s residence, confirmed by a residence stamp or temporary residence certificate, the company’s property address, or a leased office address, supported by relevant documents.