Registration offices of foreign companies in Ukraine

The noncommercial representation of the subject of economic activity is not a legal entity and does not carry out independently an economic activity, in all cases it works for and on behalf of the foreign subject of economic activity indicated in the certificate on registration and carries out its functions according to the legislation of Ukraine. The representation of the foreign subject of economic activity in Ukraine can carry out the functions connected with the performance of the representative services, only in interests of the foreign subject of economic activity indicated in the Certificate.

Permanent representation – a constant place of activity, through which the economic activity of the nonresident in Ukraine is carried out completely or partially, in particular: place of management; branch; office; factory; workshop; installation or a construction for the investigation of natural resources; mine, an oil / gas well, a pit or any other place of extraction of natural resources, a warehouse or a room, which is used for delivery of goods, a server.  For the taxation, the term "permanent representation" includes a building site, construction, assembly or installation object  the related supervising activity, if the duration of works, connected with such platform, object or activity exceeds six months rendering of services by the nonresident (except the services in rendering staff), including consulting, through employees or other staff, employed for such purposes. But if such activity is carried out (within the limits of one project or the project which is connected with it) in Ukraine during the period or the periods which general duration makes more than six months, in any monthly period; the residents having powers: to act on behalf only of such nonresident (negotiation concerning the essential conditions and/or the formation of agreements (contracts) on behalf of this nonresident), that leads to the rise of civil rights and duties at this nonresident; and/or to keep (to store) goods reserves belonging to the nonresident from which composition it is made a delivery of goods on behalf of the nonresident, except the residents having the status of a warehouse of temporary storing or a bonded licensed warehouse

Enterprise with foreign investments – the enterprise (organization) of any organizational and legal form created according to the legislation of Ukraine the foreign investment in the authorized capital, at its existence, makes not less than 10 percent.  The enterprise gets the status of the enterprise with foreign investments from the date of transfer of foreign investment on its balance.

Constituent documents PII(EFI) have to contain the data provided by the legislation of Ukraine for the corresponding organizational and legal forms of the enterprises, and also data about the state accessory of their founders (participants)

The property is exempted from taxation, if it is imported into Ukraine as a contribution of the foreign investor to an authorized capital of the enterprises with foreign investments (except goods for realization or own consumption)

Registration of representations of foreign subjects of economic activity with issue of the certificate is carried out in the Ministry of economic development and trade of Ukraine

PII (EFI) can be created and work in any organizational and legal form provided by the current legislation

PII (EFI) have the right to act as the founder of the enterprises, to create branches and representations in the territory of Ukraine and beyond its limits, with observance of requirements of the legislation of Ukraine and the legislation of the relevant states

PII (EFI) is registered in EGR (USR) in accordance with general practice. 
Foreign investments are values, which the foreign investors put in objects of investment activity according to the legislation of Ukraine for receiving profit or achievement of social effect

Registration of II (FI) passes through two stages:

1 Customs registration of the goods imported into Ukraine as a contribution of the foreign investor to an authorized capital of the enterprise with foreign investments is carried out in a prime order

2 For registration of foreign investments in Ukraine the foreign investor or the person authorized by him in accordance with the established procedure (further - the applicant) submits certain documents to territorial authorities of internalrevenue service in the place of implementation of investment

Registration of foreign representations is carried out:
- for all countries except for the Russian Federation - within twenty working days after the submission of all documents for registration. State duty for registration is 2270 UAH (about $ 82)

- for the Russian Federation - within sixty working days after the submission of all documents for registration. State duty for registration is 68100 UAH (about $ 2450)

Registration of PII (EFI) – 1-3 w.d. The tax is not collected for the state registration of the enterprise

The availability of the bilateral convention for the avoidance of double taxation between Ukraine and the country of registration of the company, and the certificate of residence, is the main condition to consider that a representation is noncommercial. The tax authorityissues   this document in the country of registration of main company - nonresident and confirms that the company is the resident of the foreign state.

In case of implementation of economic activity by representation in the territory of Ukraine, such representation has to be registered in tax authority on its location within 10 calendar days from the date of the state registration (accreditation, legalization) in the order established by the central tax authority of Ukraine and to receive the status of permanent representation.  It is obliged to submit to supervisory authority the application for registration of permanent representation of the nonresident as a payer of income tax in a form No. 1-RPP, the copy of the document confirming assignment of the EGRPOU (USREOU) code; copy of the document of registration, legalization, accreditation, creations, etc.

The sums of profit of the nonresidents who are carrying out the activity in the territory of Ukraine through permanent representation are assessed with a tax in the general order. Thus, for tax purposes, such permanent representation is equate to the payer of a tax who carries out the activity independently of such nonresident. In case if nonresident carries out the activity in Ukraine and beyond its limits and thus does not define the profit of his activity, which is conducted by him through permanent representation in Ukraine,  then the nonresident makes a separate balance of financial and economic activity, coordinated with supervisory authority on location of the permanent representation and on the basis of it the sum of the profit which is a subject to taxation in Ukraine is defined.

In case of impossibility to define by direct calculation the profit got by nonresidents with a source of its origin from Ukraine, the taxable profit is defined by supervisory authority as a difference between the income and expenses determined by way of application to the sum of the earned revenue of coefficient 0,7.

PII (EFI) is the payer of income tax of the enterprises, also can be the payer of the VAT, excise tax, land tax and other taxes and fees.  PII (EFI) has certain advantages (privileges)

So, in particular, if import property out of the limits of custom border of Ukraine (except the goods intended for realization and own consumption) as a contribution of the foreign investor to the authorized capital of PII (EFI), such property is subject to release from payment of import duty.  At customs registration, PII (EFI) can delay the payment of import duty (on 30 c.d.) based on the promissory note which is given out to customs authority in the place of accreditation of the enterprise as the subject of foreign trade activities.  If in the period for which the payment delay is granted, the specified property is enlisted on balance of the enterprise and the tax inspection, on location of the enterprise makes a mark about it in a bill copy, the bill is discharged, and import duty is not collected.  One more privilege  it is possible to call the establishment of a particular (preferential) mode of investment and other economic activity for the projects, which are carried out by certain subjects of business activity of Ukraine with involvement of foreign investors within state programs of development of priority branches of economy, the social sphere and territories.

At alienation of such goods before three years since their transfer on balance, the import duty is paid in accordance with general practice.

Noncommercial representations have the right to open accounts like "N". Into the account like "N" can be enlisted: the money for the maintenance of representation, transferred by the nonresident company, the compensation of the VAT for acquisition of goods for own needs (in the cases provided by the tax law), the money received based on decisions of the courts.  Money from the account like "N" can be used for payment of the expenses connected with the maintenance of representation (rent, utility payments, compensation, etc.), charity, insurance of vehicles, life of employees, etc.  Noncommercial representations have the right to buy currency in the interbank market and to transfer it into the account of the nonresident company only in case of making decision on liquidation of representation.

The mode of use of the account like "P" for commercial representations provides a wide list of operations on transfer and uses of money.  For example, the money received by commercial representation from implementation of economic operations can be transferred into the account of the foreign company. However, the money directed by the foreign company for the maintenance of representation is considered as the income in understanding of the operating Tax Code of Ukraine.

PII (EFI) can open the actual, currency and investment accounts, accounts for formation of an authorized capital, the account with the special mode of use, current accounts with the right of the order them other legal entities.  Also PII (EFI) can operate money flows, carry out foreign exchange operations, register payments, open and serve accounts, pay services, etc.

The ministry issues to the foreign employees of representations of foreign subjects of economic activity the special office cards operating in all territory of Ukraine.

Thus, foreign citizens have the right to be officially employed in the representation without the need for observance of such formalities as obtaining permission to employment.

Companies with foreign investments for the employment of foreigners and stateless persons are required to obtain a work permit for foreigners in Ukraine. This provision does not apply to foreigners and stateless persons who have a permanent residence permit in Ukraine

Control

Control

Conducting the activity through such form allows keeping more effectively control over representation: its head exercises control based on the regulations on representation and properly issued power of attorney.  These documents contain that circle of powers, which the foreign company assign to the head of representation and which he cannot be beyond. Moreover, the opportunity to keep a uniform brand (the original name) — often one of the key moments for foreign corporations.  The representation has the right to use the registered trademarks of the foreign company without the need for registration of the relevant license contracts, as it is not an independent legal entity.

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Foreign noncommercial representation (without the right of conducting economic activity)

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Foreign representative
(with the right to conduct economic activity)

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