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Articles
Open a Branch in Ukraine
Updated on Friday 04th February 2022
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The branch is an extension of a foreign company that wishes to be present on the Ukrainian market. Along with the subsidiary, it is one of the two ways in which a foreign legal entity can start its business operations in the country.
The steps required to open a branch in Ukraine are different than those for opening a subsidiary, as the branch is not seen as a resident company which follows the general incorporation steps. A rather simpler registration is available, however, the branch will still need to be properly licensed in order to engage in activities in certain business sectors.
Our company formation Ukraine team lists the main traits of the branch in this article. Read below to find out more and decide if the branch is the preferred manner to set up the business in Ukraine.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) |
Ukraine laws |
|
Best Used For |
Banks and other financial institutions |
|
Minimum share capital (YES/NO) |
No, however, certain requirements apply in case of banks |
| Time frame for the incorporation (approx.) |
7 days |
|
Management (Local/Foreign) |
Foreign |
|
Legal representative required (YES/NO) |
Yes |
|
Local bank account (YES/NO) |
Yes |
|
Independence from the parent company |
No |
| Liability of the parent company |
Full liability |
| Corporate tax rate | 18% |
| Possibility of hiring local staff (YES/NO) | Yes |
The main characteristics of the Ukrainian branch
A branch is often a choice for companies in the financial industry. Foreign banks, when entering the Ukrainian market, will choose to set up a branch that will function in complete accordance with the parent bank’s already established guidelines. When this is the case, the branch will need to be under the control of the Banking Supervision, operating under the National Bank of Ukraine.
The branch may be suitable for financial companies, however, all branches share a number of characteristics that deserve close attention:
-
- Liability: the foreign company opening an Ukrainian branch is fully liable for the debts and obligations incurred by this branch;
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- Activities: the branch can only engage in the same business operations as the foreign company; this makes it suitable for financial companies such as banks, however, it may be limiting in other cases;
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- Registration: the branch does not prepare its own Articles of Association and Memorandum for registration; the ones of the parent company are used;
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- Others: the branch will need to have an appointed representative in Ukraine; the identification details will be included in the branch registration documentation.
Our team of company formation agents in Ukraine can help interested investors set up their branch in the country. We can give you additional details about licensing and control.
Frequently asked questions about branches
It is common to have more questions about a chosen business form before committing to registration. Our team has answered some of the most common questions about branches and we can answer additional ones upon request.
Are there any requirements to be present in the country when opening a branch in Ukraine?
As previously stated, the branch will need to have an appointed registered agent in the country, however, one does not need to be present in the country during the entire duration of the procedures. Our team can help those interested prepare the documents for the branch, as well as provide complete details on the documents of the foreign company that are required for this registration.
Are there any nationality restrictions?
There are no nationality restrictions in Ukraine and foreign companies can freely set up a branch in the country. The nationality of the appointed branch representative is not important. He will act in Ukraine based on the indications issued by the head office and based on a power of attorney, when applicable.
How long does it take to open a branch in Ukraine?
The usual company registration process (that for resident companies) is around 7 days and it is expected that the registration of the branch will take less, given the fact that there is no need to draft and sign the Articled of Association. Branches are registered with the Ministry of Economic Development and Trade and a registration fee is payable.
How is the branch taxed in Ukraine?
The branch is subject to the regular corporate income tax rate, however, this rate only applies on the income it derives from Ukraine. The branch is treated as a separate entity from its parent company for tax purposes, meaning that it is taxed the same way as a subsidiary. No branch profits tax is imposed. The following are the most important taxes for companies in the country:
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- 18%: the standard corporate income tax rate; the branch tax rate has the same value;
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- 0%: the withholding tax on dividends; a 15% rate applies when the dividends are paid to a nonresident company, however, a tax treaty can reduce this value;
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- 20%: the standard value-added tax; two lower rates of 7% and 14% also apply and some types of goods and services are subject to a 0% rate.
Contact us if you need more details about the Ukrainian branch. We can help you with complete services related to the registration of a foreign business in the country.
Meet us in Kiev
Call us now at +7(495)504-12-15 to set up an appointment with our lawyers in Kiev, Ukraine. Alternatively you can incorporate your company without traveling to Ukraine.
As a Herman & Smith law firm client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Ukraine.
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