Ukraine is an Eastern European nation. It is Europe's second-biggest nation, behind Russia, which borders it to the east and northeast. Ukraine also has borders with Belarus to the north, Poland, Slovakia, and Hungary to the west, Romania and Moldova to the south, and a coastline along the Azov and Black Seas. It has a population of roughly 40 million people and an area of about 600,000 km2 (230,000 sq mi). Kyiv is the nation's capital and biggest city. Ukrainian is the official and national language, while most people are also conversant in Russian.
During the Middle Ages, the region was a major center of East Slavic culture under Kievan Rus', which was eventually devastated by the Mongol invasion in the 13th century. The territory was fought, partitioned, and governed by foreign forces throughout the following 600 years, including the Polish–Lithuanian Commonwealth, the Austrian Empire, the Ottoman Empire, and the Tsardom of Russia. The Cossack Hetmanate formed in Central Ukraine in the 17th century, but it was divided between Russia and Poland before being absorbed entirely by the Russian Empire. Ukrainian nationalism grew in the nineteenth century, notably in Galicia, which was then part of Austria-Hungary. Following the Russian Revolution, a Ukrainian national movement resurfaced, and the Ukrainian People's Republic was established in 1917. This short-lived state was forcefully recreated as the Ukrainian Soviet Socialist Republic, which joined the Soviet Union (USSR) in 1922. Millions of Ukrainians were slain during the Holodomor, which lasted from 1932 to 1937. The Soviet Union took Western Ukraine from Poland in 1939, four weeks after Germany and the Soviet Union signed the Molotov–Ribbentrop Treaty and one day after the Soviet Union's Supreme Soviet ratified the pact. Ukraine was the most populated and industrialized republic after the Russian SFSR from 1922 and 1991.
With the breakup of the Soviet Union in 1991, Ukraine regained its freedom. Ukraine has been administered as a unitary republic with a semi-presidential government since its independence. It proclaimed itself a neutral state in 1994, forging a limited military collaboration with Russia and other CIS nations as well as a relationship with NATO. Mass protests and rallies known as the Euromaidan erupted in 2013, developing into the Revolution of Dignity, which resulted in the formation of a new government. These events triggered Russia's annexation of Crimea and a conflict in Donbas against Russian-backed rebels, culminating in a Russian invasion in February 2022. Despite the continuing conflict with Russia, Ukraine has continued to pursue deeper economic, political, and military connections with the West (especially NATO).
According to several international observers, Ukraine is one of the poorest nations in Europe and suffers from extensive corruption. However, thanks to its vast fertile territory, pre-war Ukraine was one of the world's major grain exporters. It belongs to the United Nations, the Council of Europe, the OSCE, GUAM, the Association Trio, and the Lublin Triangle.
Employees are guaranteed at least 24 calendar days per year and two days per month.
Days that are not utilized accrue and can be utilized at a later time. It is calculated using the average pay for the previous 12 months.
Ukraine recognizes 17 national public holidays.
Employees have the right to four months of paid sick leave every year. The employee receives their entire wage for the first five days, followed by a portion of their salary from social security beginning on the sixth day. An employee may be dismissed by the company after four months of continuous sick absence.
Female workers are entitled to 70 days of maternity leave before the birth of their child and 56 days thereafter. If the woman has twins or multiples, her maternity leave is prolonged. While on maternity leave, the mother receives her full wage from social security funds.
Paternity leave is not available. However, fathers can take advantage of the mother's maternity leave if she has returned to work. To be granted leave, the father must submit an application to his employer, together with a copy of the child's birth certificate, a document showing familial links, and a certificate from the child's mother's place of employment stating that she returned to work before her leave ended.
On request, a parent or other adult caring for a kid may also take paid childcare leave until the child is three years old. Employers may opt to give extra paid or unpaid childcare leave to female workers.
Study leave. The length of the leave depends on the duration of the exam period.
Marriage leave. The length of the leave could go up to 10 days.
Bereavement leave (unpaid). The length of the leave could go up to 7 days.
Employers may dismiss an employee under an indefinite contract for business reasons unrelated to the employee, such as firm liquidation or reorganization, or for employee performance reasons. Employees who are terminated for business reasons are generally entitled to two months' notice.
Employers must adhere to specified protocols when terminating an employee for performance reasons or redundancy. Employees who are laid off due to redundancy are entitled to severance pay. Severance pay is typically one month, but may be increased in very limited instances.
If the employer initiates the termination, the employer must provide two months notice prior to the termination date. If the employee initiates the termination, it must be in writing 14 days prior to the termination date. If the termination is mutual, no notice period is required.
Probation periods are limited to one month for unqualified employees and three months for specialists and managers.
Severance pay is tantamount to a one-month salary, on average.
Eight hours per day and forty hours per week, spread over five days, is the standard work period. Employers may also establish a six-day workweek with days lasting no more than seven hours. Employees who work in hazardous or difficult conditions, as well as young workers, are entitled to workweek reductions.
Overtime is permitted only in the event of an emergency or an immediate need and is limited to four hours per day for two consecutive days and 120 hours per year. Employees are compensated extra for working overtime.
Additional overtime work may be required in exceptional circumstances, such as when production is disrupted by an accident or to avoid downtime.
Pregnant women and women with children under the age of three are not permitted to work overtime. Employees under the age of 18 and those enrolled in school are also prohibited from working overtime.
Women with children aged 3 to 14 and people with disabilities are permitted to work overtime with their explicit consent.
Overtime pay is 200 percent of the regular hourly wage on weekdays. It cannot be made up for by adding another day of rest. Working on rest days is compensated at 200 percent of the regular hourly wage or by providing an additional day of rest. Working on holidays is compensated at a rate of 200 percent of the regular hourly wage. It cannot be made up for by adding another day of rest.
The minimum salary level in Ukraine is now UAH 60,000 per month.
Employers in Ukraine often offer private health insurance coverage due to the low quality of the public health system.
In Ukraine, meal coupons are an optional bonus.
Corporate income tax (CIT) is levied on taxable earnings generated by resident and non-resident companies in Ukraine and overseas, as well as non-residents having a PE in Ukraine. Residents are taxed on their global earnings. Non-resident entities are taxed on income derived from Ukraine.
The average CIT rate in Ukraine is 18%.
The bulk of passive income payments to non-residents are subject to WHT at a rate of 15%, unless an exemption or lower rate is granted under a double tax treaty (DTT). Ukraine has 75 operational DTTs. Simultaneously, Ukraine signed and ratified the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI). As a result, if Ukraine and another nation opt to apply the MLI to their DTT, the MLI laws should alter the DTT requirements.
Residents are taxed on their global income, subject to any relevant double tax treaty limitations (DTT).
Non-residents are liable to Ukrainian taxation solely on income derived in Ukraine (this includes income received by the individual from their employer, either resident or non-resident, in relation to employment exercised in Ukraine).
Tax inhabitants and non-residents are usually subject to the same tax rates (with certain exceptions).
The normal tax rate of 18% applies to pay and other benefits earned under employment and civil agreements, overseas income, and any income not covered elsewhere.
Taxable income obtained from overseas is subject to an 18% tax rate.
Unless otherwise stated by a specific article, the 18 percent rate also applies to any passive income (e.g., interest, dividends, royalties, investment profit). Dividends paid by resident CIT payers (with the exception of mutual investment firms) are taxed at a rate of 5%. Dividends paid in Ukraine by non-residents, mutual investment funds, and non-payers of CIT are taxed at 9%. Dividends that are not 'ordinary dividends' are taxed in the same way as salary (i.e. 18 percent ).
Unless otherwise stated by the Tax Code, income generated by tax non-residents from sources in Ukraine shall be taxed in the same sequence and rates as income obtained by tax residents.
VAT is levied at three different rates: 20%, 7%, 14%, and 0%.
Except for particular transactions entitled to 7% or 0% VAT, the rate of 20% applies to all transactions subject to VAT.
Import and supply of certain agricultural products (items of animal origin such as live cattle and pigs, sheep, whole milk; products of plant origin such as maize, soybeans, sunflower seeds, and some other commodities) in Ukraine are subject to a 14 percent tariff. The 14 percent tax will be in effect beginning March 1, 2021.
The lower rate of 7% applies to qualifying medications and specified medical products, as well as medicines, medical goods, and medical equipment used in clinical studies. It will also apply to cultural/artistic activities, such as tours in museums, zoos, and reserves, visiting their lands and artifacts, distribution of films, adapted in Ukrainian for persons with visual or hearing disorders, and temporary accomodation services, beginning on January 1, 2021.
The 0% VAT rate applies to items exported and re-exported. The 0% rate also applies to international transportation services (verified by a single international shipping document), toll manufacturing services (if the completed products are subsequently re-exported from Ukraine), and certain other services.
The provision of services to a non-resident is not regarded as zero-rated. Depending on the location of supply as defined by the law, such services are subject to 20% VAT or deemed to be beyond the scope of VAT (essentially exempt with no input VAT recovery).
Employers of foreign citizens in Ukraine have few alternatives under Ukrainian immigration legislation. D visas are not required for citizens of Azerbaijan, Armenia, Belarus, Georgia, Moldova, Russia, or Uzbekistan. North Macedonian nationals are excluded from D visa requirements for particular reasons of stay, including as work and family reunification. The purpose of stay and visa classification determine the requirements, processing timeframes, work eligibility, and perks for accompanying family members.
For a short-term stay in Ukraine, business travellers normally need a C visa unless they are visa free due to their nationality. C visas often allow for single, double, or numerous entry. They are issued for six months or for the length of the desired visit, but not for more than five years. Business visitors are only allowed to remain for 90 days in a 180-day period. If they can demonstrate compelling reasons and proof of adequate means, they may request for an extraordinary extension of stay for a total stay of six months computed from the original arrival. The activities that are permissible under business visitor status are restricted.
The major work authorization kinds are Work/Temporary Residence Permit when the host entity is a Ukrainian firm and Accreditation Card/Temporary Residence Permit when the host entity is a foreign company's Ukraine-based representative office. Work permits are valid for one to three years, depending on the job, education, and pay of the foreign national, and may be renewed. Accreditation Cards are valid for three years and may be renewed.
A verbal or written agreement may be used to create an employment relationship, although a formal agreement is preferred. Instead of an employment contract, most Ukrainian workers engage into a formal employment agreement with their employer. The phrase "employment contract" in Ukraine refers to a certain, more flexible kind of employment agreement with a specified period that is only used when the law permits it.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Ukrainian Hryvnia
Answering questions about your firm and business objectives is the first step in learning how to set up a Ukraine subsidiary. Different areas of Ukraine may have different laws and regulations that affect your incorporation process. You should do study about the area where you want to locate your physical presence to verify that the culture and rules are appropriate for your business.
Your Ukraine subsidiary formation procedure is also influenced by the sort of organization you incorporate as. While the most common kind of subsidiary is a limited liability company (LLC), you may also incorporate as a joint stock company, a representative office, and more. The following are the stages to forming an LLC:
1. Providing the registrar with necessary papers, such as an application, business charter, and beneficiary owner information
2. Establishing a permanent bank account in the nation
3. Getting in touch with the state tax authority or the district tax office
4. Getting a VAT number
Ukraine's economic instability and periodic legislative changes provide several problems for businesses that must adapt to Ukraine's subsidiary legislation. Because Ukraine's bureaucracy is characterized by both complicated rules and regular corruption, we advocate devoting substantial time and money to studying the laws and resources required to properly establish a subsidiary.
Although rules differ depending on the business, LLCs need one director and one individual shareholder to complete the procedure. The minimum paid up capital need is little more than $1, but it's a good idea to budget $5-6,000 only to pay the expenses involved with establishing a subsidiary in Ukraine.
Before you may promote a business director, they must be able to work in Ukraine and receive a work visa. You have the option of promoting a current business executive or hiring a Ukrainian native who is already authorized to work in the nation. Despite this need, an LLC provides the most straightforward formation approach. As an LLC, you are not required to comply with any auditing procedures, which might save you time when paying taxes.
