How to provide Refundable Financial Aid for your business in Ukraine?

For full functioning of your company in Ukraine you need finances: purchase of equipment, office rent, salaries to employees - all these are company expenses, which can be difficult to cover at the very start of your business or during a crisis.

Consider the following situation: You want to register a company in Ukraine and you understand that you may need an additional financial contribution to start it up. Does a foreigner have a possibility to credit your business in Ukraine? And is it profitable?

Related article: Business immigration to Ukraine

How to deposit money into a company in Ukraine from abroad?

One of the options for financial support of a new company is the provision by the owner of a repayable financial (loan) to his firm.

Financial aid is a transfer of a certain amount of funds for use for a specified period of time on a repayable (with an obligation to return) or irrevocable (without such a debt) basis.

Why do we recommend this option?

The provision of financial aid, unlike other financing methods, has an extremely favorable tax regime for the operation. However, we are talking here in terms of a refundable loan.

Except for rare nuances, for tax accounting purposes, the granting of a refundable financial aid or its return does not cause any tax consequences for either the borrower or the lender.

Why can't I just give non-repayable financial aid and rest on that?

The provision of non-repayable financial assistance is inherently a gift and therefore subject to taxation.

Important! Refundable aid must be returned on time, because in the case of failure to return even part of it, the unreturned (or "overdue") amount is included in the tax base of the relevant tax.

Related article: Legal assistance to foreign companies in Ukraine: personnel issues

How to properly formalize the provision of financial repayment assistance to businesses?

You can provide financial assistance to your business in Ukraine through a loan agreement with the condition of non-accrual of interest for the use of borrowed funds.

The contract can be made in writing or orally (but with a receipt from the recipient indicating the amount of aid). We do not recommend concluding an agreement in oral form, as it may be difficult to prove later the fact of its conclusion. Moreover, in case of financial aid from abroad, the written form of the contract is obligatory.

Essential terms of the contract:

• loan amount;

• condition of interest-free use of funds;

• term of repayment.

Today, in order to conduct such an operation it is necessary to perform a departmental registration of the agreement with the NBU (actually apply to your bank, providing information about the agreement: the amount of aid, the terms of settlement, the parties, etc.). As before, these actions should be carried out before the actual receipt of funds.

Of course, we can fully assume the development and legalization of the contract in Ukraine, as well as the organization of the financial return aid for your company.

Our company offers not only services for registration of any kind of business in Ukraine, but also tax consulting, which will help you avoid problems with the Ukrainian tax authorities.

We can turn your idea into reality, the idea into a functioning business. Call us!