REP OFFICE AS A GROUND FOR TEMPORARY RESIDENCE
Updated: Nov 14, 2019
A representation office (hereinafter the “Rep Office”) can be registered in Ukraine for an oversea company.
It can both carry out commercial operations and pay taxes as well as be non-profitable and so be exempted from taxation.
A foreigner, who is Head of the Rep Office does not need to get a work permit.
A Rep Office is not a legal entity and so its mother company bears all liability and responsibility for its Rep Office’s activities.
Functioning of representative offices is poorly regulated by Ukrainian legislation that results in some difficulties with day-to-day activities, usage of bank accounts, taxation and liquidation of representative offices.
In some case registration of a Rep Office is a better and cheaper option than registration of a company or a private entrepreneur in Ukraine. E.g. foreign individuals who manage Rep Offices do so under power of attorneys and do not need to obtain work permits in Ukraine to get Ukrainian residence. Although the foreigners employed by representative offices should obtain a so called “Staff Certificate”, the obtaining procedure of such staff certificates is formal and is not complicated.
Another case when a Rep Office is used is when a foreign company owns some asset that it needs to use in Ukraine but that cannot be transferred to their Ukrainian daughter company. For example, a foreign airline needs to open its office in Ukraine but it does not want to obtain a separate air transportation license for its Ukrainian daughter company. In this case a Rep Office is a perfect choice.
There are other cases. To be able to decide on which option (Rep Office or LLC) is better for you, your Ukrainian lawyers need to take into account many important aspects.
It is interesting that for many years registration of Rep Offices has been regulated by the Instruction On the Order of Registration of Representative Offices of Foreign Commercial Entities in Ukraine. Yet recently this process was amended slightly (simplified) by the Regulation of the Cabinet of Ministers of Ukraine On Some Matters of Registration of Representative Offices of Foreign Commercial Entities in Ukraine. Now these 2 documents contradict to each other.
The following documents should be submitted to register a Rep Office:
Extract from the commercial (bank, court, etc.) register of the country where the headquarters of the parent company is registered in.
Statement from the bank servicing the parent company’s bank account.
Power of attorney for representation of the parent company’s interests in Ukraine.
Permit of the domicile country to open the representative office in Ukraine (if necessary under the legislation of the domicile country).
All of the documents should be notarized, legalized/apostilled and translated into the Ukrainian language.
Registration time: up to 20 working days.
Registering authority: Ministry of Economy of Ukraine.
State registration fee: UAH 1921.00
Contact Legal Ideas law firm to get advice on your personal case.