How to open the Ukrainian representative office of the foreign company?

Opening of the representative office of the foreign company in Ukraine can be a complicated process where numerous ins and outs must be taken into account. It may be full of unnecessary delays and worries for citizen of other countries, since they are not familiar with the requirements of the Ukrainian legislation. In addition, language barrier is also a subject for consideration. To avoid both time-consuming and financial problems, it is better to begin establishing a foreign representative office in Ukraine after obtaining relevant professional recommendations from an experienced and qualified Ukrainian lawyer.

According to currently valid articles of the Ukrainian laws, the representative office of the foreign company is not obliged to form an equity capital. Due to being a non-resident representative of Ukraine, the company does not possess a juridical status.

As a rule, representative of a foreign company begins obtaining its legal status from the moment it is added into the Unified State Register of Enterprises and Organizations of Ukraine. The next step towards legal opening of the foreign company’s representative is registration with governmental Tax authorities. Besides, foreign citizen who acts as a chief manager of the representative company should register in the appropriate governmental foundations, such as pension one, and receive a temporary residence permit. In view of the complications, it is often easier to designate a citizen of Ukraine for the role of a managing director.

For the cases when the company representative plans to carry on any commercial operations in Ukraine, he will need to obtain the appropriate documentation and allowances from the Governmental Revenue Body that operates in area of the representative registration. Moreover, it might be required from the representative of the foreign company to provide such documents like protocol or another document to prove the fact of representative opening and managing director’s designation, copies of his/her passport and earlier issued Personal Tax Reference Number, along with the agreement of renting a premise for the representative office in Ukraine. In the separate clause, the confirmation from headquartered office must provide detailed information and instructions for all the employees in the foreign representative, order of relations and communications with the main office of the company and other significant aspects of representative’s work procedures.

An advantage for the registration of representative’s foreign company is the fact of obtaining additional possibilities for activities at Ukrainian market, separate customs and tax privileges. For these purposes, the main office of the foreign company that plans to start its representative office in Ukraine issues a declaration on the following registration of representative in Ukraine. After its receiving, it is also necessary to apply for special permit from the National Bank of Ukraine in order to open the company representative’s bank account abroad.

The list of required for the representative’s opening documents includes the agreement on premise rent in one of the cities in Ukraine. It is an obligatory document for starting the representative office of the foreign company in Ukraine. Solution for the owner of the foreign company is in granting an assignee with letter of attorney with the right for premise renting where the main aspects of renting for assignee’s actions will be listed. This aspect is essential for consideration as the renting agreement mostly becomes “the weakest” one among all the documents for starting a foreign representative office. It is necessary to comprehend that each document from the list for an official registration of the foreign representative in Ukraine requires a legal Ukrainian translation and notarization at the place of receipt. All the translated documents are obligatory for certifying by stamp. The registration process for the representatives of the foreign companies in Ukraine as a rule are under responsibility of the Ministry of Economics of Ukraine, where all the necessary translated and notarized documents should be posted. The dates of issue for any document cannot be longer than six months. Each document should be essentially approved with apostil or verified via the consular legalization. Once the package of documents will be received for the further accreditation, a foreign citizen obtains the bank account details from governmental issuing body which are required to pay a governmental imposition. Payment of the imposition is an obligation prior to the consideration of all the potential representative’s documents. In this specific case, it is also recommended for the foreign company to apply for a professional advice from an experienced Ukrainian lawyer in order to ensure on correct execution, submitting of the list of the documents, and governmental duties paid to the issuing body. According to the practical numbers, length of the registration process for representative of the foreign company in Ukraine may take up to eight weeks if there is no professional lawyer’s support involved. In the case of an immediate application with all the required documents, terms of review process vary between three and four weeks. Such a significant difference is easily explained by negative influence of wrong documentation on the process of obtaining permission for the foreign representative in Ukraine.

Other positive points for starting a foreign representative office in Ukraine are the absence of the obligatory profits’ conversion, opportunity to pay Ukrainian employees’ salaries in foreign or local currencies, possibility of transferring funds from the import commercial operations with goods or services onto the bank accounts of other countries, absent obligation to obtain an official permission for Ukrainian employment process of non-residents and so on.

The representative of the foreign company in Ukraine will be considered to be legally valid since the day of its registration at the territory of Ukraine. It becomes possible if all the documents are executed according to the national standards and timely provided for the further procedure in the Ministry of Economics in Ukraine. In such a way, issued certificate on the registration of the representative of the foreign company contains such information as officially accepted name of the company, ordinal number in the Unified State Register, officially registered placement of representative and its potential sub-offices and also the number of legally employed persons within the company representative in Ukraine.

Author: Kateryna Bovan

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