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Various types of representative offices in Ukraine

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Today we will talk about different types of representative offices of foreign companies in Ukraine - because it is one of the ways to enter the market of the country with your goods, services or even just for brand representation.

Understanding the difference between the registration procedures, and most importantly, what each type of representation gives, will help you to make the right choice with the least amount of time and money.

What types of representative offices can be registered in Ukraine?

Basically, there are only two types: permanent and non-permanent. Commonly they are called commercial and non-profit establishments.

Permanent representative office. It is a permanent location of company activity, where a non-resident runs his business activities. The most common examples are an office, a store, or even a factory.

Non-permanent representative office:

  • Construction sites, where the duration of related works is less than six months; 

  • Buildings and constructions used solely for the purpose of storing and/or displaying the products of a foreign company, etc.

The main difference and condition of work for different types of representation is that a non-permanent representation is not commercial. That is, it must not generate income or conduct activities that can be regarded as commercial. 

During registration you will have to fill out different types of applications, but they are all submitted to the tax authority of Ukraine. However, when registering a commercial type of representative office, we immediately recommend to understand how the activity will be taxed. Today, it is not the representative office itself that gets registered with the tax authorities, but its parent company.

Related article: Our lawyers have registered office of foreign company for doing business in Ukraine

Typical mistakes foreign companies make while opening representative office in Ukraine

1. Incorrectly executed company registration document.

In many countries, such as Poland and the Netherlands, a company registration document can be simply downloaded from the Internet and will be considered as legitimate.

But such a document is not suitable for the purposes of registration of a representative office in Ukraine. To be submitted to the Ministry of Economic Development, the registration document must be certified by the authority that issued it or has the appropriate authority to do so. In Poland, for example, private notaries can do it.

2. The document is not apostilled.

Although the apostille procedure in most countries is relatively simple, not everyone understands what an apostille is and what it looks like. Some people think that an apostille is an ordinary notary's seal.

An apostille is a stamp, sometimes a sticker, that certifies the authenticity of documents issued in the territory of the countries-participants of the Hague Convention.

3. Proceeding of the official payment for registration of the representative office.

The official payment for registration of the representative office today is 2500 US dollars. This amount should be transferred from the company's account to the account of the State Treasury of Ukraine.

Often, when transferring funds to the Ukrainian Treasury, not the entire amount is received, as the bank charges a commission. Then you have to pay more. Taking into account the fact that each payment takes about 4 days, double work delays the process. Therefore, before paying the official payment, you need to ask your bank about the amount of the commission and transfer the money including the commission.

Related article: Representative office in Ukraine: our practical experience and interesting aspects

As you understand, different type of activity, even just your plans concerning the process of doing business in Ukraine - all this will influence the choice of the type of representation. You should thoroughly weigh up the pros and cons, consider the terms of the registration procedure and the advantages that different types of representation will give you.

Moreover, you should consider opening a "subsidiary company" in Ukraine - i.e. register a local company where yours will be a 100% owner.

We will help you to make exactly that choice, which will be the most profitable and safe for you.

Views: 1617