How to open permanent representative office in Ukraine: step-by-step guide
Ukraine is quite a young country, with small and medium business on the rise. Recent changes in the law on currency regulation are aimed at making financial transactions more transparent, with encouraging entrepreneurs (including foreign ones) to make business in Ukraine and to invest in Ukrainian assets.
Non-resident companies, while applying to us for legal support, ask quite often the following question: which legal and organizational form is the most suitable to enter the Ukrainian market? According to the Ukrainian legislation, a legal entity may have the following legal and organizational forms:
- private enterprise;
- limited liability company;
- additional liability company;
- joint-stock company etc.
Apart from the abovementioned, non-residents incorporate enterprises also in the form of a permanent representative office. Such form of business activity in Ukraine has several advantages:
1. Simplified procedure for obtaining a work permit.
Representative office employees — non-residents are entitled to get employed officially without obtaining standard work permit since the issuing procedure takes quite a long time. It is enough to obtain a Service Card.
2. Parent company’s control over the representative office.
In the framework of its business activity, a permanent representative office relies on the Regulation of representative office and Power of Attorney issued in the name of its director. Such documents usually prescribe a clear and exhaustive list of rights, obligations, and authorities granted to the representative office director by the parent company.
3. Option to use parent company’s original name, trademarks, and brand.
Representative office is entitled to use parent company’s registered trademarks, without the need in drafting the appropriate license agreements.
Tax benefits are treated as one of the most favorable advantages. Both Residence Certificate and bilateral Double Tax Convention between Ukraine and the company registration state shows that representative office may be released from several tax duties in Ukraine, while parent company shall pay taxes in the registration state.
Having analyzed all the advantages, we strongly recommend our clients to start up business in the form of a permanent representative office in Ukraine.
A step-by-step plan for a business startup in Ukraine in the form of the company’s representative office is the following:
- To translate in Ukrainian all the documents required for registration;
- To draft and to submit a set of documents for representative office registration in Ukraine;
- To monitor data entry into registers and to control the process of issuing Registration Certificate;
- To submit the documents to state authorities for the purpose of data entry into registers;
- To draft and to submit documents required for issuing Service Card in the name of representative office director (for a non-resident of Ukraine);
- To open bank account and to issue signature cards;
- To draft Power of Attorney in the name of representative office director;
- To draft Regulation of representative office;
- To provide documentary support for representative office activities (changing director, opening accounts, etc.);
- To draft agreements and other supporting documentation required for representative office activities.