How does a foreign company open a branch or representative office in Ukraine?

What a branch and a representative office are

A філія (branch) and a представництво (representative office) are both a відокремлений підрозділ (separate subdivision) of a foreign company in Ukraine. Neither is a separate legal entity. Each one acts on behalf of the company that created it.

This format lets a foreign company have a presence in Ukraine without founding a Ukrainian ТОВ (limited liability company, LLC). Liability stays with the parent. Whatever the subdivision commits to in Ukraine, the foreign company itself answers for it. How to choose between a representative office and other business forms is explained in the article on LLC, FOP or representative office.

What changed in 2023

For a long time, representative offices of foreign companies were registered with the Ministry of Economy under the Law on Foreign Economic Activity. Law No. 3257-IX of 14 July 2023 changed that procedure. Separate subdivisions of legal entities formed under the law of a foreign state are now registered in the Єдиний державний реєстр (Unified State Register, ЄДР) under Law No. 755-IV, in the same way as Ukrainian companies.

Older instructions about accrediting a representative office at the ministry are therefore out of date. Check the date of any material you rely on, and compare it with the current version of Law No. 755-IV. A broader overview of doing business in Ukraine as a foreigner is in the guide to business for foreigners.

Who files the documents

Here the law sets an important restriction. Documents for registering the creation of a separate subdivision on behalf of a foreign company can be filed only by one of the specially designated primary financial monitoring entities that work on a sole basis. An ordinary power of attorney issued to an employee or an acquaintance does not work for this step.

In practice, the parent company cannot simply send its own manager to the registrar with a letter of authority for the initial registration. Later registration actions for a subdivision that already exists are a different matter. When changes are recorded, for example, the subdivision's representative can act as the applicant.

Documents

Article 22 of Law No. 755-IV lists the documents for registering the creation of a subdivision:

Documents issued abroad are legalised or apostilled and then translated into Ukrainian. The article on apostille and legalisation explains how to tell which procedure applies to your country.

Several items on this list, including the register extract and the decision, are prepared by the parent company abroad. The lawyer's experience section below explains how to time them.

• an application for state registration of the creation of a separate subdivision;
• the foreign company's decision to create the subdivision;
• a decision of the National Bank on accreditation, if the subdivision is being created by a foreign bank;
• a document confirming the foreign company's registration in its home country, such as an extract from the commercial register;
• the foreign company's ownership structure, if the register does not hold an up-to-date one;
• a copy of the document confirming the identity and citizenship of the ultimate beneficial owner (UBO);
• the regulations or another founding document of the subdivision;
• proof of payment of the administrative fee.

Tax registration

Paragraph 64.5 of the Tax Code requires non-residents that operate in Ukraine through separate subdivisions, including permanent establishments, to register with the tax authority. The application goes to the tax office at the subdivision's location after the subdivision is registered, within the term set by the Code.

Banking depends on this step. The same paragraph requires the non-resident to register for tax purposes before opening an account with a Ukrainian bank. So the usual order is subdivision registration first, then tax registration, then the bank account.

How the subdivision is taxed depends on whether it carries on business activity. That question is best settled with an accountant. The overall picture is in the article on taxes for a foreign entrepreneur.

Foreign employees

The main migration advantage of a representative office concerns its staff. Part six of Article 42 of the Law on Employment of the Population lists employees of branches and representative offices of foreign legal entities among those who work without a дозвіл на роботу (work permit).

Work at a representative office is also a separate ground for a посвідка на тимчасове проживання (temporary residence permit, TRP). The TRP application is supported by a submission from the representative office. The details are in the article on the TRP for a representative office employee.

This is a significant difference from a subsidiary LLC. Foreigners who work for a Ukrainian company need a work permit, even if that company is wholly owned by a foreign group. The comparison below uses only the points covered above.

Changes and closure

Changes to the subdivision's details are registered in the same register. The filing consists of an application, a decision of the head of the subdivision or of the company's governing body, a document from the foreign authority on changes to the company's details if those have changed, and a new version of the regulations. Closure of the subdivision is also registered in the register, after which the subdivision is deregistered with the tax authority.

For foreign employees, closing the representative office means losing the ground for their TRP. Plan the closure together with the question of what ground the employees will rely on to stay in Ukraine afterwards.

Lawyer's experience

Foreign companies most often come to us with instructions for registering a representative office at the ministry, the ones that applied before 2023. The first thing we explain is the new procedure through the Unified State Register and the restriction on who may file the documents.

My second piece of advice concerns the parent company's documents. The register extract, the decision and the powers of attorney are prepared abroad, so it makes sense to order and apostille them at the same time. That way the extract stays recent while the other documents are being prepared.

If you are planning a representative office in Ukraine, at a migration law consultation we will go through the registration and the residence permits for your employees.

Frequently asked questions