CONTENTS:
- Registration of foreign representative offices.
- New Rules for Registering Foreign Representative Offices.
- Representative Office or Legal Entity?
- What is the difference between a representative office of a foreign company and a legal entity in Ukraine?
- Types of foreign company representations.
- Lawyer services for registration of a representative office or branch
- Registration Stages.
- Cost of registration of Foreign Representative Office in Ukraine.
- What documents are required to open a representative office or branch of a foreign company in Ukraine?
Foreign Representative Office in Ukraine
The registration of a foreign representative office is a legal procedure that allows foreign companies to officially open a branch or representative office in Ukraine to conduct business activities, establish business contacts, and promote goods or services.
A foreign representative office in Ukraine enables foreign businesses to operate without establishing a separate legal entity, offering cost optimization and flexibility in business management.
New Rules for Registering Foreign Representative Offices
In 2023, changes were made to the Law on State Registration of Legal Entities and other legislative acts in Ukraine, significantly altering the procedure for registering foreign company representative offices.
From September 2024, the Ministry of Economy, which had handled this process for many years, will no longer be responsible for the registration of foreign representative offices. Instead, state registration entities will now carry out this process.
A foreign company can choose between two types of separate divisions to register in Ukraine: a non-resident representative office or a branch.
The status of a separate division means that a foreign company’s representative office or branch in Ukraine is not a legal entity. They operate with assets received from their parent company.
The activities of the foreign legal entity’s separate division are regulated by the provisions or other documents in accordance with the legislation of the foreign country where the legal entity is established and operates.
The head of the branch or representative office is appointed by the foreign company’s decision. The powers of the representative office or branch manager are usually defined by the provisions and a power of attorney issued by the parent company. Other documents may also specify the manager’s powers, depending on the legislation of the parent company’s country of origin.
Representative Office or Legal Entity?
Foreign companies wishing to conduct business in Ukraine often face legal challenges even during the early stages of formulating their business strategy. One of the key decisions that the foreign parent company must make is choosing the appropriate organizational form for operating in Ukraine. The options are:
- A new legal entity: either a joint-stock company (JSC) or a limited liability company (LLC).
- A representative office or branch of a non-resident, neither of which are separate legal entities.
If the client is unsure which form to choose for their activities in Ukraine, the lawyers at WinnerLex will provide the necessary consultation and detailed information to assist in making this decision.
What is the difference between a representative office of a foreign company and a legal entity in Ukraine?
| Foreign representative office / branch | Legal entity in Ukraine | |
| Legal status | Part of a foreign company, not an independent legal entity | An independent subject of government activity |
| Partnership / Corporate rights | Attracting partners into the capital is not possible. Corporate rights, as an object of ownership or an investment instrument, are absent | It is possible to establish the entity either individually or with multiple founders-partners, defining the terms of future partnership and company management. The foreign company-founder owns and manages corporate rights in the legal entity established in Ukraine |
| Basis for Establishing | The decision of a foreign company to establish a separate subdivision in Ukraine | The decision of a foreign company (or multiple founders) to establish a legal entity in Ukraine |
| Authorized capital | Absent | It is determined and formed by the founder(s) / partners |
| Founding documents | Regulation or other document in accordance with the legislation of the country of incorporation of the foreign company | Charter |
| Authorities | Management bodies of the foreign company and the head of the branch | The governing bodies are determined by the Charter, taking into account the requirements of Ukrainian legislation for the corresponding type of legal entity |
| Manager | The appointment is made by the decision of the foreign company in accordance with the legislation of the country of incorporation of the company. The powers are defined and limited by the charter and power of attorney from the foreign company | The powers are defined and limited by the legislation of Ukraine, the charter, and the decisions of the management bodies of the Ukrainian legal entity. The head of the Ukrainian legal entity independently carries out the operational activities of the company within the scope of their powers |
| Assets | There is no ownership of assets. The foreign company transfers property to the subsidiary for use. During its operation, property is acquired in the name and ownership of the foreign company that created the subsidiary | It is the owner of the property received as contributions from the founders or acquired during the course of its activities. It can independently dispose of the property received from the founder |
| Obligations | The foreign company is directly responsible for its obligations | The foreign parent company is not responsible for the ongoing duties of a legal entity created in Ukraine |
Types of foreign company representations
A foreign representative office may either not engage in business activities in Ukraine, such as when it is created solely for customer service for clients located in Ukraine. Alternatively, the representative office may be authorized to conduct business activities. In this case, the permanent representative office must register for tax purposes as a profit taxpayer.
Legal services for registration of a representative office or branch:
- Providing oral and written advice on opening a representative office or branch of a foreign company in Ukraine.
- Preparing and submitting the package of documents to the state registrar for the registration of foreign company branches or representative offices.
- Assisting with the review process by the state registrar for the registration of a representative office or branch and obtaining the registration certificate for the representative office/branch.
- Registering the representative office or branch for tax purposes.
- Assisting in opening bank accounts for the foreign company’s branches.
- Legal outsourcing (legal subscription service) for the operation of foreign representative offices and branches in Ukraine.
Registration Stages
Cost of registration of Foreign Representative Office in Ukraine
|
Winnerlex Legal Services |
650 Euro |
|
Administrative fee* |
3028 UAH |
|
Translation of documents and notarial certification** |
400 UAH |
* administrative fee for registration actions to enter information about the representative office of a foreign legal entity into the Unified State Register (as of October 23, 2024) and bank commission.
** the specified average price for the translation and notarization of one page of documents into Ukrainian as of October 23, 2024 (documents to be translated include the founding company’s charter documents, documents on the ultimate beneficial owners of the founder, powers of attorney, the founder’s decision to create a representative office, and the representative office’s regulations).
What documents are required to open a representative office or branch of a foreign company in Ukraine?
- Application for state registration of a separate subdivision (branch or representative office);
- Decision by the foreign legal entity to establish a separate subdivision, including details about the name, location, manager (name, surname, patronymic, and start date), and information on the approval of the regulations or other founding documents for the subdivision;
- Decision of the National Bank of Ukraine on accreditation (for foreign banks);
- A document confirming the registration of the foreign legal entity in the country of its location (extract from trade, banking, or court registers);
- The ownership structure of the foreign legal entity, as well as documents about the ultimate beneficial owner. If no ultimate beneficial owner is identified, a note explaining this in the registration application;
- Copy of the document proving identity and nationality of the ultimate beneficial owner;
- Regulations or other founding document of the legal entity’s subdivision, written, bound, numbered, and signed by an authorized person;
- Proof of payment of the administrative fee (1 minimum subsistence level).
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A representative office of a foreign company is not a legal entity and, as a general rule, does not conduct business activities independently. However, if you want the representative office to have the right to conduct business activities in Ukraine, it must be registered for tax purposes at its location.
The manager of the representative office acts on the basis of a power of attorney issued by the foreign legal entity that established the permanent representative office. This power of attorney must be notarized at the place of issuance and legalized or apostilled according to the established procedure.
If there is a change in the name, legal status, or legal address of the foreign legal entity, the representative office in Ukraine must complete the state registration of the changes in the Unified State Register of Legal Entities.
If there is a change in the ultimate beneficial owner of the legal entity, the state registration of changes regarding the ultimate beneficial owners must be completed within 30 working days from the date the changes occur.
Yes, it can. A representative office or branch of a foreign company conducts business activities on behalf of and in the interests of the foreign company.
The current legislation of Ukraine defines a branch as a separate subdivision of a foreign legal entity located outside its main office and performing all or part of its functions. On the other hand, a representative office is a subdivision of a foreign company located outside its headquarters, whose primary role is to represent and protect the interests of the foreign legal entity.
Ukrainian legislation does not impose restrictions on the number of representative offices or branches a foreign legal entity can have in Ukraine.
The official payment for state registration of foreign representative offices or branches is one minimum subsistence level for working-age persons. As of January 1, 2024, this amount is 3,028.00 UAH.
State registration of a permanent representative office of a foreign company or its branch should be completed within 5 working days from the submission of documents to the state registrar.
Foreign nationals working at a foreign representative office or branch of a foreign legal entity must obtain a temporary residence permit from the State Migration Service of Ukraine for the duration of their work in Ukraine.
