Ukraine has been growing as a popular tech destination, fuelled by recent digital developments. These make the country an attractive destination for investments in Europe.
Ukraine has been integrating the latest policies for economic transformation. A few of these include reassuring foreign businesses to operate as per English law, a strategy to avoid nationalizing foreign businesses, and the like. All of this makes the country an attractive hub for investments. Ukraine’s public services are digitized to improve efficiency, transparency, and accessibility. “Diia City,” an innovative framework, has been set up in Ukraine to allow entrepreneurs to work on innovative ideas.
Ukrainian Labor law promotes state support for investment projects above the 20 million euros mark. Moreover, foreign investors consider Ukraine a destination with the necessary infrastructure because of tax exemption, elimination of import duties for equipment, and better land use-related rights.
The country ranks 64 in the World Bank Ease of Doing Business Report 2020 regarding starting a business and protecting minor investors. The World Bank also ranks Ukraine as second over the last decade in terms of speed plus the depth of business climate improvement.
Being a Special Administrative Region and free market economy Ukraine attracts companies to establish their businesses.
Setting up a sole proprietorship in Ukraine offers a solid way to expand businesses globally. Here are all the details to register a sole proprietorship in Ukraine.
Who can be a Sole Proprietor in Ukraine?
There are no restrictions if you wish to start a sole proprietorship in Ukraine, even for foreigners. Residents and non-residents start a sole proprietorship in Ukraine by following the right registration process. Rules for setting up a sole proprietorship are simple and need no capital or stock-mandated fulfillment.
- If you wish to start a sole proprietorship in Ukraine, you can be an entrepreneur or a freelancer.
- The basic criterion for opening a sole proprietorship in Ukraine is registration with the Companies Registrar.
Benefits of Sole Proprietorship in Ukraine
Once you register a business in Ukraine and want to choose sole proprietorship as the company form, you get access to a slew of advantages-
- Sole proprietorships registered in Ukraine have a simple tax structure that follows the income tax slabs for personal income.
- No difference is seen between any business or personal income for the sole proprietor.
- Sole proprietorships in Ukraine need no minimum paid-up capital, board formation, or share structure.
- The proprietorship has no mandate to audit or maintain annual financial books and usual tax filings.
- There is no extra liability applicable to sole proprietorships.
- Establishing a sole proprietorship in Ukraine is easy in terms of registration.
Documents Required for Registering Your Business in Ukraine
The documents you need to register a sole proprietorship in Ukraine are mentioned herewith:
- Identity proof, mainly a passport
- Ukrainian mailing address
- Application to the State Registrar of Legal Entities and Sole Proprietors of Ukraine
- Tax Code application
- Authorization for signatory without the power of attorney
Other Criteria for Registering a Sole Proprietorship in Ukraine
For starting a business as a sole proprietorship in Ukraine, you will have to ensure obtaining-
- A local bank account
- Registered tax number
- Choice of tax structure
- VAT registration
Post-registration compliances
Tax structure
There are two standard types of tax regimes for a sole proprietorship in Ukraine to pick from. The goal is to make the most of these structures instead of mere savings on taxation.
- One structure to pick is the tax on profits, wherein a flat rate is paid on the profits after expense deductions.
- The other structure is a tax slab applicable as per the overall revenue the sole proprietor earns annually.
Taxation
For a sole proprietorship in Ukraine, the following taxes are payable-
Corporate tax
The Corporate Tax rate in Ukraine is 18%.
VAT
The VAT applicable on goods and services in Ukraine vary as per category between 0%, 7%, 14%, and 20%.
Personal income tax
The rate for income tax on personal income in Ukraine is 18% if the profit model is chosen. The rate becomes 5% for the revenue model.
How to Register a Sole Proprietorship in Ukraine
For any foreign investor, registering a sole proprietorship in Ukraine is necessary to forge a legal relationship with the country. Read this step-by-step guide that helps out with how to register a sole proprietorship in Ukraine. You can approach the process for application of registration of sole proprietorship either online or physically offline.
Step 1- Registration mode
- Visit. diia.gov.ua Create a registered account by entering your name and email ID. You may do the same via the portal iGov. This gives you access via a login ID.
- For the online process, an electronic signature is mandatory. The other steps are common for both online and offline modes.
- For the latter, you must visit Ukraine’s State Registrar of Legal Entities and Sole Proprietors. You have to fill out Application No. 10 in the Ukrainian language.
Step 2- Identity proof
- Enter the name and surname fields as per the translation from the passport.
- Ensure submitting proof of citizenship.
- Enter the date of birth.
Step 3- Address and business activity codes
- You need to have a local address (sole proprietors’ address) as a mailing address.
- Choose the business activity code available from the EU’s NACE website.
Step 4- Confirmation
- If all information submitted is found to be correct, you will receive a confirmation of registration within three days.
- Submit all records of the business to tax authorities.
Step 5- Tax related formalities
- Pick a tax regime you want to enroll for.
- Make a choice and submit the application to the State Registrar.
- The State Fiscal Service will provide a tax code.
- Register your income ledger with the State Tax Inspectorate in the country.
Step 6- Banking
- Open a local bank account for convenience and easy tracking of transactions.
- Your tax ID and passport are the mandatory proofs required at the bank to open an account.
How Multiplier can Help?
For setting up a sole proprietorship in Ukraine, you must meet the set guidelines and adhere to the relevant structures first. You can outsource the compliance meeting and standard establishment procedures to Multiplier. Multiplier is a trusted global employment solution provider helping businesses scale up overseas.
When you begin business operations in Ukraine, Multiplier eases all worries around EOR solutions while solving recruitment woes.