The computer games and eSports industry is one of the fastest growing markets in the world. Ukraine, with its strong IT base and talented community of developers and players, is becoming an attractive platform for creating companies in this area. However, for effective and sustainable work, the right legal and tax structure is necessary. In this article, we will analyze the key aspects of creating and managing companies engaged in game development and organizing eSports tournaments, with an emphasis on licensing, intellectual property protection and international tax planning.

General information about GameDev and eSports

Regulation of the activities of a game development or eSports company in Ukraine differs little from other IT companies. The main specifics are related to eSports, and especially in cases where games border on the gambling business. But about the gambling business – separately, not in this publication.

The eSports was officially recognized as a sport in Ukraine since 2020. You can read about the legal aspects of athletes’ activities at the link.

It is imperative to take into account and comply with GDPR and AML.

How to create a computer game development company in Ukraine?

Creating a computer game development company is no different from creating an IT company, which we wrote about in this article.

How to organize a tournament or community in eSports?

Depending on the scale and time plans, you can register a public organization (club, federation), sole proprietorship or LLC/JSC (links provide detailed information). We recommend consulting a lawyer on the issue of choosing an organization for a tournament or community in eSports.

The organization of tournaments is regulated by the Regulations on the conduct of sports competitions , as well as by the internal regulations of associations.

Do you need a license for a game development or eSports company?

No, if the company’s activities do not show signs of financial services or gambling, a license is not required.

Is permitting documentation required? for gamedev or eSports?

Age ratings: games must be classified according to the PEGI system or local equivalents to comply with the Law on Media.

Permission to hold tournaments : it is necessary to notify the Ministry of Youth and Sports or the relevant federation , and in some cases, obtain the consent of the Ministry of Youth and Sports if the event has the status of an all-Ukrainian or international event.

The Role of Contracts for Game Developers and Esports Participants

The legislation provides quite broad freedom to game developers and eSports participants in regulating their activities, therefore, correctly drafted and timely concluded contracts on various issues are the key to calm and successful activities.

We recommend that game development companies enter into the following agreements:

1. Contracts for work or provision of services with developers, designers, scriptwriters, etc.
2. Agreements with distributors, partners.
3. Employment contracts with staff.
4. License agreements for the software used and for the right to use games.
5. Etc.

Depending on the situation in the eSports industry, it is recommended to enter into the following agreements/policies:

1. Club/Federation Rules.
2. Contracts for work or provision of services with developers, tournament organizers, etc.
3. Agreements for participation in tournaments or agreements for the provision of services to ensure participation in a tournament.
4. Equipment lease agreements .
5. License agreements for the software used.
6. Etc.

What taxes does a game development or eSports company need to pay?

Ukrainian legislation does not provide for a special tax regime for game development or eSports companies, so we recommend reading our publications on this topic.

How are the intellectual property rights of a game development or eSports company protected?

The protection of intellectual property rights largely depends on the legally competent registration of such rights from the moment the intellectual property objects themselves arise: agreements with creators (authors, developers, scriptwriters, composers, employees), software licenses (if third-party engines are used (Unreal Engine, Unity), agreements on the transfer of intellectual property rights, license agreements, NDA, etc. Another important tool is the registration of TM (marks for goods and services). And, it is important to monitor compliance with your intellectual property rights and undertake appropriate legal protection (claim work, going to court, etc.).

In which country to open a game development or eSports company?

The choice of a country to open a game development or eSports company, a holding company or a distribution company is always individual and depends on many factors. In our article, we have revealed the main aspects that influence the choice of a country .

Common model:

• Registration of the main developer company in Ukraine (for example, an LLC on a simplified tax system or a resident of Diia.City);
• Establishment of a holding/IP company in a jurisdiction with a favourable regime for income from intellectual property (Cyprus, Estonia, Ireland);
• Transfer of distribution, marketing or franchising rights through foreign companies.

Advantages:

• Protection of intellectual property at the international level;
• Optimization of tax burden;
• Simplifying the process of attracting investment and concluding international contracts.

Important to note:
Ukraine has introduced rules on controlled foreign companies (CFC), so professional support is required for correct reporting.

 We recommend that you contact our specialists for advice on choosing a country for registering a foreign company.

How often do searches occur in a game development or eSports company?

If the company operates legally, then searches are unlikely. There are cases of abuse of power and illegal actions by government officials, but well-established work with lawyers minimizes such risks.

Recommendations from lawyers “Zilver”

1. Protect your IP at the start: register trademarks, patent unique technologies.
2. Check contracts : with developers, publishers, sponsors – avoid onerous conditions.
3. Structure your taxes : Use EU treaties and offshores to reduce the burden.
4. Automate compliance : implement KYC systems for tournaments and payments.

How we help at ZILVER

Law firm ZILVER offers comprehensive services for companies in the field of game development and eSports:

• Business registration in Ukraine and abroad;
• Support in the creation and protection of intellectual property;
• Development of license agreements and user policies;
• Building international corporate structures;
• Support of tournaments, events and sponsorship contracts;
• Tax planning and compliance with CFC requirements.

Why “Zilver”?

• Specialization in IT and gaming: we support projects from startup to IPO.
• International network: partners in the EU, US and Asia for seamless structuring.
• Full range of services:
  • Company registration and licensing.
  • Protection of intellectual property.
  • Tax audit and dispute resolution.

• We combine legal solutions with an understanding of the technological specifics of your business.

Want to take your gaming project or eSports business to the international level? The
ZILVER team will help you build the right legal framework.

The post How to open and manage a company GameDev and eSports first appeared on Zilver.

1. The application must be created and operated in compliance with copyright and intellectual property laws: the developer must be the owner of the intellectual property (code, images, sounds, trademarks, etc.) in the application or have the rights to use it appropriately. Accordingly, the owner of the application or the distributor of the application must have proof of acquisition of the intellectual property rights or have the appropriate licences. Registered trademark rights must also be provided.
2. Confidentiality, including protection of personal data: Confidential information and personal data must be processed and protected in accordance with privacy laws (e.g. banking secrecy, etc.), data protection laws such as GDPR (EU), CCPA (California) or similar regulations, as well as in accordance with the internal privacy and personal data protection policies developed and in force for the Application. Accordingly, the owner (distributor) of the application must develop and publish a privacy and personal data protection policy. In addition, in certain cases (e.g. in the EU) it is necessary to appoint an authorised representative for personal data as required by local legislation. In addition, personal data may only be collected with the explicit consent of the user.
3. Child protection: If an application is intended for children, it must comply with child online protection laws, such as COPPA in the United States.
4. Terms of use: Terms of use applicable to the application must be developed and published.
5. Ensure and demonstrate compliance with financial laws: If the application is paid for or can be used to transfer money, it must comply with laws regarding electronic payments, including refund obligations, and consumer protection. Information on costs and payment terms must be clear and understandable.
6. Compliance with morals and ethical standards: should be regulated either by the terms of use or a separate policy. 
7. Restrictions:
   1.  Age restrictions: if the application has age restrictions, this must be stated in the terms of use and the restriction must be technically supported.
   2. Prohibited content: The application must not contain any illegal, offensive or inappropriate content (e.g. 18+ material or promotion of violence).
   3. Local legal restrictions: Applications in certain areas (e.g. gambling, cryptocurrency, healthcare, etc.) must comply with the relevant laws in each country, including obtaining licences. Such restrictions may also relate to encryption or the use of certain categories of apps (e.g. VPN-related).
8. Legal Notices: The application must include all required notices (such as disclaimers).
9. Advertising: If the application contains advertising, this must be clearly stated and the content of the advertising must comply with local laws.
10. Availability of a licence agreement (EULA): The application must include a user agreement that defines the rights and responsibilities of users and developers.
11. Business registration: The owner (distributor) of the application must confirm its tax status and, in some cases, the status of the registered business on whose behalf the application is published and operated.
12. Separate rules are set for the App Store in the App Store Review Guidelines and for Google Play in Google Play Developer Policy Center.

These requirements may vary depending on the specifics of the application and the countries in which it is published. As in any other area, we recommend that you seek individual legal advice when preparing the documents for publishing an application in the App Store and/or Google Play, which will provide a higher level of business protection.

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As for the legislation of Ukraine, it allows a person to freely choose where and how much to work (with some exceptions, such as civil servants, etc.). For example, this right in one wording or another is enshrined in Art. 4 of the Human Rights Convention , Art. 43 of the Constitution of Ukraine , Art. 5-1 of the Labor Code of Ukraine . At the same time, if a programmer is a private entrepreneur (in everyday life in Ukraine called “FOP”), and concludes development contracts in this status, then this all the more implies the freedom of choice of customers (for example, Article 5 and Article 6 of the Commercial Code of Ukraine ).

In addition, it is better for private entrepreneur and their customers that the private entrepreneur fulfills the orders of several companies, and not one, otherwise there is a risk of recognizing him as an employee of the corresponding IT company with all the consequences (fines, etc.).

As for the restrictions. They can be set in the contract, and in some cases – in the policies of the IT company. We are talking about private (not public) companies in this article. In any contracts, there may be restrictions of varying complexity on working for other customers: it makes no sense to consider all kinds of them. But the main question is how such restrictions can be applied.

Contracts usually establish two types of sanctions for such violations: termination of the contract and a fine.

With the termination of the contract, everything is simple: most likely, if the company wants, it will terminate the contract (we will not consider exceptions).

If the developer works under an employment contract (is on the staff of the company), then penalties (in the form of fines, penalties) cannot be applied to him! Any provisions on fines in an employment contract are invalid, since the labor legislation of Ukraine provides for only 2 types of penalties: reprimand and dismissal (Article 147 of the Labor Code of Ukraine ).

If the developer works under a gig contract or other contract for a resident of Diya City, the parties may conclude in accordance with Art. 27 Law a special “non-competition” treaty, according to which, among other things, the developer must receive a separate remuneration for refusing to compete. Although this provision in the legislation is new, it can be expected that penalties for violation of such an agreement will be applied by Ukrainian courts, especially given the already existing position of the courts in similar cases (case No. 761/15245/18).

If the developer works under a civil (economic, foreign economic activity) contract, then penalties may well be established by the contract and applied to the contractor. However, it is quite difficult to make a private entrepreneur liable for violating the provisions of the “non-competition” agreement: we wrote about this in more detail in the article. Based on the current legislation and judicial practice of Ukraine, private entrepreneur may do not worry much about working for several companies simultaneously, except when such an agreement complies with the above-mentioned Art. 27 of the Law. But the fines associated with violation of confidentiality rules or violation of intellectual property rights that accompany work for two or more companies are quite real and there are already legal precedents in this field. Therefore, it all depends on the wording of the contract and the specific case. Lawyers of IT companies also think about how to protect the customer and draw up contracts accordingly.

However, if the customer company is a non-resident and the contract states that the applicable law to the contract is not Ukrainian, and the place of arbitration under the contract is in another country, it is quite possible that such a company will be able to obtain a decision to impose a fine on the private entrepreneur. And then it is not known how and when this solution will be used against the violating developer.

And we should not forget that when concluding an agreement with a “second” company, the developer can sign a guarantee that he/she is not contracted anywhere else. And the 2nd company will be able to fine the violator without any problems (if there are such provisions in the contract), and even complain to law enforcement agencies.

And separately the issue of notifying the first company about concluding a contract with other customers: in the legislation there is no responsibility for such actions (or rather, inaction), and in contracts there are extremely rare provisions with penalties for such violations. Moreover, even if there are such provisions in the contract, their application in the Ukrainian legal system is unlikely. However, such a dispute can ruin the reputation of the developer.

All of the above applies to fines that are established in the contracts. A separate issue of administrative and criminal liability, compensation for damages, however, in most cases, work for 2-3 companies will not entail such consequences in itself, so we will not consider them now.

General recommendation regarding the work of developers for 2-3 companies: carefully read the contract (if possible, consult with a lawyer) and approve this issue with your customers. And if you already want to “quietly” earn extra money somewhere else, then you need to be prepared for litigation (if the contract is drawn up in favor of the customer), even without good chances for win. And of course, working for multiple companies should not involve violating the intellectual property rights or privacy rules of either party – such violations clearly entail negative consequences, regardless of applicable law.

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There are several approaches to the form of certification of such agreements in the world, of which 2 can be distinguished in a very generalized way:

– any electronic signature (e-signature) is enough to conclude an agreement, which is considered concluded until the party disputed the fact of its conclusion;

– an electronic signature (e-signature) is recognized in any form, but a qualified signature is preferable, and in certain cases mandatory.

The second approach prevails in Ukraine.

According to the provisions of the Laws of Ukraine “On electronic trust services” and “On electronic commerce” electronic signatures are not improved, improved and / or with a one-time identifier, qualified. The difference between them lies in the way the signer is identified and the degree of protection of such a signature.

Accordingly, a simple electronic signature (not improved) can be done as a simple scan of the signature or a “tick” in the signature section (variations may be different, an example is given for understanding). It is better not to use this type of electronic signature for significant transactions. However, if the two sides will sign an (or with the use of a qualified digital signature) agreement on the use of digital signatures, it will avoid misunderstandings and disputes concerning the use of this type of signature (Art. 12 of the Law of Ukraine“On Electronic Commerce“.

The advanced digital signature is a special method for the identification of the signatory and ensures the protection of the free expression of the will of such a signatory. At the same time, we are not talking about a special form of signature encryption by authorized certified institutions, but only about the services that are provided by the platform on which the contract is signed. As in the case of the unimproved electronic signature, the Law requires a paper agreement on the use of the improved digital signature by the parties (except for the electronic signature with a one-time identifier).

An electronic signature with a one-time identifier (hereinafter – “EPOI”) software is essentially a type of advanced digital signatures, although the Law of Ukraine “On Electronic Commerce” is not naming it that way. Its essence lies in the use of one-time messages (passwords, codes, confirmations) by telecommunication means. Most often, SMS, messages in instant messengers are used as confirmation of the will of the signer. EPOI is widely used, for example, in the field of microcredit. The validity of the conclusion of contracts in this way has already been repeatedly confirmed in the judicial practice of Ukraine: Resolution of the First Judicial Chamber of the Civil Court of Cassation of the Supreme Court in case No. 524/5556/19; The ruling of the Kiev Court of Appeal. However, EPOI can only be used in the field of electronic commerce, as defined by the Law “On Electronic Commerce“, and is not allowed for use in relations with government agencies, in notary, gaming, etc. At the same time, since a one-time identifier (SMS) comes to a phone number that may not belong to the signer (if the phone number is “not contractual”), judicial practice takes into account the data of registers, other open registers, which make it possible to confirm that the corresponding number the phone is used by this particular person. As in previous cases, the parties can sign an agreement on paper to use the EPOI for further transactions.

A qualified electronic signature (hereinafter referred to as “CEP”) differs from other signatures in that it is generated, verified and controlled by specially certified (state) institutions. These can be certain centers (Diya, the Center for Certification of Keys “Ukraine”, the Ministry of Internal Affairs of Ukraine and others), as well as banks (JSC CB “PrivatBank”, JSC “Ukrsibbank”, etc.). A detailed list can be found at the link.  Only this type of electronic signature can be used when submitting reports to the tax authorities as well as in the preparation of primary documentation (see Art. 9 of the Law of Ukraine “On accounting and financial reporting in Ukraine” between business entities. According to part 2 of Art. 17 of the Law of Ukraine “On electronic trust services” CEP is mandatory for documents, the signing of which must be carried out with your own hand.In fact, any contract requires a handwritten signature.

Which digital signature should I use?

According to Part 3 of Art. 18 of the Law of Ukraine “On Electronic Fiduciary Services”, an electronic signature cannot be invalidated, therefore any electronic signature can be used and may give rise to legal consequences. As a consequence, any contract signed with any digital signature cannot be invalidated on this basis. Note: but it can be recognized as not concluded if there are not sufficient mechanisms for identifying the signatory (legal peculiarities, the essence of which: there are risks depending on the details).

The details are important and they are as follows.

CEP is the only type of signature that can be used in government documents and is required to sign documents that require a wet signature. Only the CEP allows avoiding (with rare exceptions) disputes regarding the identification and free expression of the will of the parties. The disadvantage of a CEP is that non-residents most often do not have a CEP, since in order to receive it, one must personally apply on the territory of Ukraine (the situation may change in the future).

EPOI is also a reliable means of signing documents on the Internet (with the exceptions mentioned above), however, it requires the use of special telecommunication systems and software (SMS, etc.). The disadvantage is not such a guaranteed way of identifying the signatory as when using the CEP, because it is not always possible to identify the signatory by the phone number. Also, EPOI is not always convenient to use in contractual relations with non-residents.

Not improved and improved electronic signatures, although they are not invalid, can lead to a dispute about the identity of the signatory. Thus, they will complicate the proof in court of the fact of the conclusion of the contract. This type of signature can be used in Ukraine, but it is better to verify in advance the identity of the second party, and, if possible, sign a paper agreement on the use of an electronic (digital) signature in the future.

The Zilver Law Firm team recommends you carefully check the Terms of Service, public offers on websites, including if you need to go through full authentication using a passport photo or other documents.

If you have any questions regarding the creation, use or appeal of electronic contracts signed using an electronic signature, our team of professional lawyers and lawyers will wait for a call at: + 38 050 140 95 60, e-mail: info@zilver.com.ua.

We also offer the following legal advice and sample documents for reading:

Creation of an IT company in Ukraine

Prohibition of work with a competitor

Sample contract with the developer

Invoice sample

Checklist: IT contract

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Please note that the Ukrainian legislations does not require the execution of the contract between Customer and the Executor. However the bank of the IT-developer may ask it, moreover the contract may be useful for the lawyers if dispute arises.

The template of the contract with the Ukrainian IT-developer may be found here. 

Рахунок/ Invoice № ___

Київ/Kyiv, Україна/Ukraine                                                                      «__» ________ 202_

Виконавець/ Сontractor:   Адвокат/Attorney

Замовник/ Customer:         Юрист/Lawyer

Договір/ Contract № ___ от/as of «__» ________ 202_

Перелік наданих послуг/Services subject:

Період надання послуг/ Timeframe of services performance:

Кількість годин надання послуг/ Amount of time services performance:

Вартість наданих послуг / Fee for the performed services: _____ USD

Термін здійснення платежу / Payment due date:

Інтелектуальна власність / Intellectual property:  Всі виключні права інтелектуальної власності на об’єкти інтелектуальної власності, створені під час надання послуг за інвойсом, передаються Виконавцем Замовнику в день повної оплати Послуг Замовником відповідно до інвойсу. Підписання даного інвойсу свідчить про згоду Виконавця передати відповідні права інтелектуальної власності Замовнику / All exclusive intellectual property rights to the Objects, which were created as a result of services performance, are transferred by the Contractor to the Customer at the date of full payment for the Services by the Customer in accordance with the terms of the invoice. Issuance of this invoice verifies the consent of the Contractor to transfer the appropriate intellectual property rights to the Customer

Приймання-передачі / Transfer: Оплата Послуг у відповідності до інвойсу свідчить про факт відсутності у Замовника претензій щодо наданих Послуг / Payment for the Services in accordance with the terms of the invoice indicates the fact that the Customer has no claims regarding the Services provided.

Банківські реквізити/ Bank account details:

Підпис / Signature _________________

The lawyers of the law company Zilver may assist you the IT-company formation, drafting of the IT-contracts etc. Our contacts:  + 38 050 140 95 60  and email: info@zilver.com.ua.

You are welcome to read some more legal information about:

Legal issues of how freelancers work in Ukraine 

How to establish the IT-company in Ukraine 

Non-compete provisions in IT-field in Ukraine 

E-signature in Ukraine

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This, of course, poses the question: How shall I work hereafter? After all, the customer does not provide a list of IT companies in which it is prohibited to work, but in fact, prohibits working in general in the IT market as a whole.

You need to understand that such restrictions are more inherent to the American market, although European companies are willing to use them in contracts for IT services. In this article, we will consider the features of such clauses on restrictions in Ukraine, since the legislative framework and judicial practice in the United States or EU countries require individual detailed attention.

According to the provisions of the Constitution of Ukraine and a number of legislative acts of Ukraine, each person has the right to freely choose the object and type of his/her activity, freely get employed or choose the customers to perform tasks (for example, in software development). This position is also supported by some Ukrainian courts in their decisions.

Therefore, any restrictions in contracts that prohibit the conclusion of other contracts for the software development, either with Ukrainian or foreign IT enterprises, are, in fact, those that limit the constitutional rights a person. Consequently, they cannot be implemented through legal proceedings. In other words, an IT company will simply not be able to justify its requirements to the developer by such contract clauses.

However, legal professionals interpret the contractual clauses on restrictions in such a way that makes them legally applicable. This path has been also followed by the judicial practice, according to which the conclusion of a contract or work for another IT company is considered through the prism of confidentiality clauses.

In particular, if an IT company can prove in court that a developer’s work for another company violates the confidentiality rules, then such a developer may be subject to penalties. The following court decision can regarded as an example of such a decision.

At the same time, judicial practice on issues of “non-competition” in the IT sphere is at the development stage, and the opinion of the Supreme Court of Ukraine is yet to be obtained; however, some courts are already directly applying the restrictive clauses of contracts without any references to confidentiality.

Therefore, a general recommendation to all Ukrainian developers who change their customer or create their own start-up is not to violate the intellectual property rights and confidentiality rules of your previous customers, and in such case you will have good chances of defending yourself in court. Under this condition, you can change the IT companies for which you work.

To obtain the legal advice on working in the IT field, to check the contract for development or to obtain professional defense by a lawyer in courts, you can contact the Law Firm «Zilver»: + 38 050 140 95 60 or info@zilver.com.ua.

How IT-freelkancers work in Ukraine (legal issues)

Template of the contract with the IT-professional in Ukraine. 

About legal issues of establing IT-company in Ukraine.  

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According to the Tax code of Ukraine all goods, works and services, supplied on the territory of Ukraine shall be subject for VAT (20%).

However, p. 26-1 of subsection 2 section XX of the Tax code of Ukraine grants a relief from the VAT until January 1^st, 2023 any supply of the software or any works with the software, if the payment for such supply does not deem as a royalty payment (pp. 14.1225 p. 14.1 Art. 14 of the Tax code of Ukraine).

Hence, if the Ukrainian IT-company develops software and sells it to another company, such deal shall not be subject for VAT.

If the Ukrainian IT-company grants license on its software to another company (i.g. publisher) for further sublicense, it shall be taxed by VAT as a royalty income.

Meanwhile, if the Ukrainian IT-company sells licenses on its software to the end-customers (users), it shall not deem as a royalty income and is excluded from the VAT.

Moreover, worth mentioning that any additional services, which are not related with development or amendment of the software, are not subject for exclusion. Therefore, customers support shall be subject for VAT. The best solution in such situation would be to use Private Entrepreneur with 5% “simplified tax”.

If you have further questions concerning legal aspects of the IT-business in Ukraine or  need help of out lawyers, please apply to the law firm Zilver: + 38 050 140 95 60, info@zilver.com.ua.

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In particular, the financial result is now increased by 30% of the value of goods (including non-current assets), works and services (except for controlled ones) sold to the benefit of:

1. Non-residents registered in the list established by the Cabinet of Ministers of Ukraine.
2. Non-residents whose organizational and legal form is included in the list approved by the Cabinet of Ministers of Ukraine.

• It should be noted that these lists are reviewed from time to time.

It means that if certain conditions coincide, the sale of the software to your controlled company in the State of Delaware (USA) or Estonia will mean a mandatory additional accrual of profits amounting to 30% of the sale amount. Thus, the legislator tries to exclude the possibility of accumulating profit abroad without its taxation in Ukraine.  

It means that if a Ukrainian Limited Liability Company sells software to an Estonian company for resale in the EU, or to a Delaware company for resale in the USA, the received profit will have to be multiplied by the coefficient of 1.3 when charging corporation tax.

At the same time, there are several “BUTs”:

1. Actually the first list is clear as in most cases the offshore jurisdictions (including the Republic of Cyprus, an EU member state) are stated there, but the second list requires more detailed study. This list mainly includes partnerships and limited partnerships that are exempt from taxation. However, the list includes such forms as:

– Lepinguline investeerimisfond – Republic of Estonia;

– Limited liability partnership and Limited liability company – the states of Delaware, California, Nevada, New Jersey, New York, Texas, Florida.

That is why it is reasonable for you to check your company to see whether its organizational and legal form is in the approved list. In most cases, IT-companies use other organizational and legal forms, which means that the new paragraph of the Tax Code of Ukraine shall not be applied and additional corporation tax shall not be charged.

2. If the organizational and legal form from the list coincided with the form of your company, to avoid additional accruals you should have a confirmation that the price is formed in accordance with the arm’s length principle. A lot has been written about this principle, it can be briefly described as the “market price principle”. In other words, it is necessary to prepare and have proof that the price is fair, not undervalued.

Since the price formation in the IT-sphere is not always subject to an objective assessment by an outside party, it is undesirable to let the situation get to the stage described in Clause 2. Any disputes with fiscal authorities regarding the cost of a certain software will be complex, costly and time-consuming. In most cases, the case will lead to an appeal to the court, and thus to the expenses on lawyers and experts.

Conclusion: check your business structure and exclude work with enterprises from the above lists. If this is not possible, you will have to change the structure of the IT-business. 

If you need the help of an international lawyer, tax lawyer, IT-lawyer, our team of experienced attorneys and lawyers will help you to change the structure of the business to optimize the tax burden and protect the property and income. You can contact the team of the Zilver Law Company by phone: + 38 050 140 95 60, e-mail:  info@zilver.com.ua.

The post Is it the end of the Delaware and Estonia times in Ukrainian IT-business? first appeared on Zilver.

We strongly recommend to execute contracts with Ukrainian subcontractors only with help of Ukrainian lawyers, but if you want to use some sample of the contract, you may use following one.

CONTRACT

about provision of services (performance of works) in the field of informatization

Kyiv, Ukraine                                                                                   May __th, 2020

IT-WORLDWIDE-GROUP, the legal entity registered and acting under laws of _____, duly represented by director ____________ acting on the basis of the articles of association, hereinafter referred to as “The Customer ” on the one hand, and

Private entrepreneur Developer QA, acting under laws of Ukraine, registration number (“The Contractor”)

Have agreed to execute this Contract about provision of services (performance of works) in the field of informatization (“The Contract”)

the parties agree as follows:

1. SUBJECT OF THE AGREEMENT

1.1. In accordance with the terms of this Contract, the Contractor, on the instructions of the Customer, undertakes in person to provide services (to perform works) in the field of informatization including, but not limited to:

• computer programming services;
• services in the development of standard software;
• other services in the field of software development;
• advising on informatization issues;
• work with databases;
• QA;
• data processing, information placement on Web sites and Web portals, and related activities;
• other services (work) in the field of information technology and computer systems required by the Customer.

1.2. The Parties confirm that during the execution of this Contract the Contractor acts as an independent contractor in accordance with the current civil law of Ukraine and in no case may be considered as a hired employee of the Customer or as its agent or representative.

1.3. For the provision of services (performance of works) within the framework of this Contract, the Customer shall provide the Contractor with the Technical Tasks (in writing or orally) containing the list, scope, timing and procedure for the provision of services (performance of works). The Terms of Reference may also include the price of specific services (works) and the procedure for their payment. Services are provided (works performed) by the Executor solely in accordance with the Customer’s Technical Tasks, which become an integral part (in writing or orally) of this Agreement.

1.4. The Customer provides the Contractor with all information necessary for the provision of services (performance of works) under this Contract.

2. PRICE OF SERVICES (BUSINESS) AND PROCEDURE OF CALCULATIONS

2.1. The total price of this Agreement is defined as the sum of the value of all services rendered (performed works), in accordance with the Acts of acceptance and transfer of services rendered by the Parties signed by the Parties (performed works) under this Agreement during its term of validity.

2.2. The cost of the Services (works) of the Contractor is determined by the Parties in the respective Terms of Reference.

2.3. The parties may agree on a partial or full advance payment for services (work).

2.4. The Parties have agreed that the Customer in any case makes an advance payment (prepayment) for this Agreement in the amount of XXXX Euro (XXXX Euro 00 eurocents) by transferring funds to the Contractor’s current account within 10 (ten) Banking days from the date of signing by the Parties to this Agreement

2.5. Additional cost of services (works) payable under this contract is pre-estimated by the Parties in proportion to the volume of work and their complexity and shall  be agreed upon by the Parties additionally in accordance with the Act of acceptance-transfer of services rendered (performed works.

2.6. The settlements between the Parties are made exclusively in Euro

3. ORDER OF IMPLEMENTATION AND RECEIVING SERVICES (WORKS)

3.1 The Contractor renders services (performs work) to the Customer at his own risk and in person. At the same time, the Contractor has the right, with the consent of the Customer, to engage in the provision of services (performance of works) of other persons (subcontractors) while remaining responsible to the Customer for the result of their work. The involvement of other persons (subcontractors) in the provision of services (performance of works) should be carried out in full compliance with the terms of this Contract.

3.2 Transmission of the results of the Services (works) of the Contractor shall be made solely on the equipment provided by the Customer in order to respect the confidentiality of the information being transmitted. Such equipment remains the property of the Customer, and can not be used by the Contractor for purposes other than transfer of results of work.

3.3 In order to confirm the fact of the provision of services (performance of works) by the Contractor as a whole or the execution of a specific stage for a certain date, the Parties shall draw up an appropriate Acceptance Certificate for the services rendered (performed works), which is a sufficient basis for making settlements with the Contractor.

3.4 The Contractor shall provide to the Customer two copies of the signed Acceptance-Transfer Service (performed work) within 15 (fifteen) calendar days after the completion of the provision of services (performance of works) as a whole or the completion of the execution of a specific stage in accordance with the Terms of Reference.

3.5 The Customer undertakes to sign two copies of the Acceptance-Transfer Service (performed work) submitted by the Contractor not later than 10 (ten) working days from the date of submission of their originals to the Customer by the Contractor and within the aforementioned time period provide one signed copy of the Acceptance-Transmission Act of the Services rendered ( executed works) to the Contractor or to provide a reasoned refusal to sign this Act within the above term. In case of failure to provide to the Executor of the signed Act or the reasoned refusal, the services (work) in the aforementioned period will be deemed accepted, rendered in a proper manner and such that are to be paid by the Customer. In the case of a motivated refusal of the Customer of the Party within a period not later than 5 (five) working days from the date of receipt by the Contractor of a motivated refusal of the Customer, sign a protocol containing a list of significant deficiencies and the terms for their elimination. The Contractor shall, at his own expense, eliminate such shortcomings in the time indicated by the Customer. Acceptance of services (works) and signing of the corresponding Acceptance-Transfer Service (services performed) by the Customer shall be performed after the elimination of all deficiencies.

3.6 The quality of the services provided (performed work) must meet the requirements, standards, specifications, and other technical documentation applicable to this type of software products and services. The quality requirements for the results of the services provided (works performed) can be specified in the Terms of Reference.

4. RIGHTS AND OBLIGATIONS OF THE PARTIES

4.1.The Customer is obliged:

• To pay timely for the Services/ Works.
• To accept timely the results of the Services/ Works.
• To assist the Contractor in the provision/ performance of the Services/ Works.

4.2. The Customer has the right:

4.2.1. To monitor progress and /or quality of Services/Works provision/performance by the Contractor. The Customer has the right to entrust the conduct of such control to the third Party, in advance warning of the Contractor.

4.2.2. To receive from the Contractor all necessary information about the Services/Wworks provided.

4.2.3. To demand from the Contractor eliminating the defects and/ or deficiencies of the provided/performed Services/Works that are revealed during the work completion and acceptance period and next 12 (twelve) month  after execution of the Acceptance Certificate .

4.3. The Contractor is obliged:

4.3.1. To provide/perform the Customer with the Services/Works specified in this Contract in a timely manner and on a highly skilled level.

4.3.2. Upon termination or in case of early termination of this Contract, to transfer to the Customer all materials, IPI, documents received from the Customer or created during the execution of this Contract, including, but not limited to: source materials, reports, graphic elements, source code, object code, source code, formula, specification, hardware design, business and commercial data, know-how, formulas, processes, designs, thumbnails, pictures, plans, drawings, technical requirements, sample reports, models, lists customers, price lists, researces, received data, computer programs, inventions, ideas, etc.

4.3.3. Not to use the results of the provision/performance of Services/Works under this Contract, including but not limited to: IPI received (created) in the execution of this Contract, for their own purposes and / or for the purpose of Third parties.

4.3.4. When creating an IPI  not to use without any prior written consent of the Customer any objects of legal protection, copyright (including exclusive) right to which he does not belong. Terms of use of intellectual property rights of third parties will be agreed by the Parties in the Additional agreements to the Contract.

4.3.5. Not to install any software on the Customer’s Equipment without the prior written consent of the latter; not to use the provided Equipment for the development of computer programs with signs of viruses, not to distribute and / or store materials in any form that contradict the principles of public morality (for example, materials of violence or pornography).

4.3.6. Not to install unlicensed software on the Customer’s Equipment; not to use unlicensed software on the Equipment of the Customer; in case of detection of unlicensed software on the Customer’s Devices, notify the Customer within two business days from the date of such detection.

4.3.7. To comply with the information security rules when fulfilling the Contract.

4.3.8. Upon request of the Customer to inform about the current state of the provision/performance of Services/Works in the terms and manner established by the Customer (by telephone, fax, by e-mail, etc.).

4.3.9. install on the equipment used for fulfillment of Orders, upon request of the Customer, the software for data protection, use such software during Orders execution, comply with the data protection requirements defined by the Customer if they do not contravene the provisions of this Contract.

4.4. The Contractor  has the right:

4.4.1. To request the Customer the information needed for the provision/performance of Services/Works within the framework of this Contract, while the Customer has the right to refuse to the Contractor to provide such information in order to protect the confidential information of their clients and/or partners. In case of impossibility of provision/performance of Services/Works due to failure to provide such information, the Contractor shall immediately notify the Customer thereof.

4.4.2. To independently determine the place of provision/performance of Services/Works.

4.4.3. To install and use on the Equipment of the Customer such software that meets the license requirements for free or Conditional Free Software.

4.4.4. To demand payment of the provision/performance of Services/Works in accordance with the terms of this Contract.

5. RESPONSIBILITY OF THE PARTIES AND SOLVING DISPUTES

5.1. In the event of failure or improper performance of the obligations provided for in this Agreement, the Parties shall be liable in accordance with the laws of the Ukraine, unless otherwise specified in the relevant additional agreements to this Agreement.

5.2. The Parties shall not be liable for any lost profits related to breach of obligations under this Agreement.

5.3. For violation of the requirements of clauses 6.1, 6.3 and 6.6 of this Agreement, the Contractor is obligated to pay a fine of 10 000,00 (Ten Thousand euros, 00 euro cents) to the Client.

5.4. In case of disputes concerning the issues stipulated by this Agreement, the Parties will take all measures to resolve them by negotiation.

5.5 In the event that these disputes can not be resolved by negotiation, they are settled by Ukrainian courts in accordance Ukrainian legislation.

6. CONFIDENTIALITY

6.1. The Parties undertake not to disclose to third parties any information that became known to them in connection with the signing of this Agreement and fulfillment of its obligations without the prior written consent of the other Party. The confidentiality obligations entrusted to the Parties by this Agreement are valid throughout the term of the Agreement and within the next 3 (three) years after the termination / termination of its validity. Not considered a violation of the provisions of this section of the Agreement, providing information to third parties with the consent of the Customer, for the implementation of paragraph 3.1. this Agreement.

6.2. Confidential information means any information provided to the Executor by the Customer in a document (in paper, electronic or oral form) including but not limited to: scientific, business and commercial data, know-how, formulas, processes, designs, sketches, photographs plans, drawings, technical requirements, sample reports, models, customer lists, price lists, research, data obtained, computer programs, inventions, ideas, as well as any other information provided in the framework of this Agreement; information contained in this Agreement and information on the conclusion and existence of this Agreement.

6.3. The Contractor undertakes, at the request of the Customer, in particular, in case of termination of this Agreement or expiration of its term, to return and / or destroy all the documentation, programs, data, source code of the programs, results (protocols) of testing from all information carriers transferred to him.

6.4. The information will not be considered confidential and the Contractor will not be bound by such information if it meets at least one of the following conditions:

– already known to the Contractor before the conclusion of the Agreement;

– Received legally from a third party outside the context of this Agreement;

– disclosed publicly by the Customer;

– disclosed by a substantiated written request of a state body whose authority in obtaining such information is determined by the current legislation of Ukraine;

– is allowed to be distributed with the written consent of the Customer.

In each of these cases, the Contractor shall provide the Customer written explanations in each case of disclosure or leakage of information with documentary evidence of the legality of their actions within 10 calendar days from the date of receipt of a written request from the Customer.

6.5. The relations of the Parties under this Privacy Contractual Agreement are governed by the Agreement on Confidentiality, which the Parties conclude at the same time as the conclusion of this Agreement. The Contractor, for the purpose of protecting confidential and commercial information about the economic activities of the Customer, without the Customer’s consent, undertakes not to have direct or indirect (through third parties) contacts with any Customer’s clients (including potential – legal entities or individuals – entrepreneurs , which engage in activities similar to those of the client of the Customer), if such contacts cause or may harm the financial or other interests of the Customer, to reduce the expected profits.

6.6.The Contractor shall not have the right to enter into commercial relations with the Customer’s contractors without the Customer’s prior consent during the term of the Contract and for the next 3 years after its termination.

7. RIGHTS TO INTELLECTUAL PROPERTY OBJECTS

7.1. The parties have agreed that all exclusive property rights to objects of intellectual property that will be created in the course of execution by the Contractor of this Agreement, namely:

 the right to use the object of intellectual property,

– the exclusive right to authorize the use of an intellectual property object;

 the exclusive right to interfere with the unlawful use of the object of intellectual property, including prohibiting such use,

 as well as other rights that exist today or will exist in the future,

belong to the Customer.

7.2. The exclusive right to use an intellectual property object allows the Customer to use it in any form and in any way and without any conditions.

7.3. The exclusive right of the Customer to permit or prohibit the use of an object of intellectual property that will be created under this Agreement gives him the right to authorize or prohibit:

1) reproduction of the object of intellectual property;

2) public demonstration and public display;

3) any re-disclosure of an object of intellectual property, if it is carried out by another organization than the one that made the first disclosure;

4) translations of the object of intellectual property;

5) processing, adaptation, arrangement and other similar changes to the object of intellectual property;

6) the inclusion of the object of intellectual property as an integral part of other objects of intellectual property;

7) the alienation of an object of intellectual property in any way or by way of lease or lease, or through another transfer to the first sale of copies of an object of intellectual property;

8) alienation by any method of the original or copies of the object of intellectual property;

9) import, export of copies of the object of intellectual property,

and any other uses that exist today and those that will exist in the future.

7.4. The exclusive proprietary rights of the Customer for the objects of intellectual property, created in the course of execution by the Contractor of this Agreement, extend both to the finished object of intellectual property and to the materials received during its development, the resulting audiovisual displays, regardless of language and form Expression, including source text and object code.

7.5. The author’s remuneration for the use of intellectual property objects (results of work) and the transfer of the author’s exclusive property rights to them to the Customer is taken into account in the amount of payment for services (works).

7.6. The possession of the Exclusive Property Rights by the Customer shall remain valid for the whole term of copyright in all territories, including other states.

7.7. Developed in the course of implementation of this Agreement, the ideas, know-how, methods and other information developed by the Contractor in any way can be used indefinitely by the Customer in their own activities without any obligations regarding the Contractor.

7.8. The Contractor guarantees that the services (works) provided to the Customer do not violate the copyright and patent rights, trade secrets and other rights of third parties, and in case of violation of such rights, it undertakes to resolve all claims and / or at its own expense on its own account and / or at its own expense. the claims of such third parties.

8. FORCE MAJOR

8.1. The parties shall be released from responsibility for failure to fulfill and / or improper fulfillment of obligations under this Agreement in the event of circumstances of force majeure such as: adoption by the state authorities of regulatory acts that significantly impede the implementation of the Treaty, earthquakes, floods, fires, typhoons, hurricanes, hostilities, massive diseases (epidemics, epizootics), traffic constraints, the prohibition of commercial operations with individual countries as a result of the application of international sanctions, as well as other similar circumstances that is dependent on the will of the Parties (hereinafter – the “force majeure”).

8.2. A party that has been subjected to force majeure circumstances is obliged to notify the other Party within five days from the date of occurrence of such circumstances.

8.3. In cases of force majeure circumstances, the terms of fulfillment by the Parties of obligations under this Agreement shall be extended in proportion to the time during which such Force Majeure Circumstances and / or their consequences are in force.

8.4. The party referring to the Force Majeure Circumstances shall, in support of such influence, be obliged to provide a document issued by the competent state authority or the relevant Chamber of Commerce and Industry or its branch.

8.5. If Force Majeure circumstances last more than six months, each Party shall have the right to terminate this Agreement by returning to the other Party all property or cash received in advance for the execution of this Agreement by the end of its term. Neither Party has the right to demand other compensation for possible losses.

9. PERSONAL DATA

9.1. The Contractor hereby agrees to collect, process and transfer his personal data (in particular, to receive, add to the database, distribution, transfer to third parties, addition or other modification, destruction and other actions that the Customer may make with his personal data in writing ( electronic, and other forms, including, but not limited to, the following: name, surname, patronymic, date of birth, passport details, identification number, data Extracts from the unified state register of legal entities and sole proprietors, in inc. with respect to the topic of taxation, qualification information, communication number, electronic identification data (IP-address, telephone, e-mail), residence data, as well as other data voluntarily provided by them in order to ensure the implementation of civil law and economic legal relations, conducting settlements with the Contractor, accounting and tax accounting, for communication and contractual relations with state authorities, counteragents and other third parties in the course of economic activities, as well as for other purposes that are not violating current legislation. The Contractor hereby acknowledges his agreement that, if necessary, his personal data may be processed and provided to third parties.

9.2. The parties undertake, in accordance with the requirements of European legislation on the protection of personal data, to ensure adequate protection of personal data from unlawful processing as well as against unlawful access to them, including taking necessary measures to prevent disclosure of personal data by employees and / or other authorized persons of the Parties, by whom such personal data was entrusted or became known to them in connection with the performance of duties under this Agreement.

9.3 The Contractor agrees that the Customer is not responsible for any processing, failure to ensure access and protection of personal data by the Contractor by third parties, including employees of the Customer, if the provision of access to such personal data (or other action that created the possibility of further unauthorized processing by third parties) was made by the Customer or another person at the permission of the Contractor outside the performance of duties under this Agreement for personal purposes or for other purposes not related to the performance of duties under this Agreement. Om, using technical means or other materials / equipment customer.

10. TERM OF THIS AGREEMENT

10.1. This Agreement shall come into force on the date of its signature by the Parties and shall expire on December 31, 20XX, but not before the full and proper fulfillment by the Parties of their obligations under the Treaty.

10.2 Upon expiration of the Agreement, the Agreement shall be automatically extended for each subsequent calendar year unless either Party notifies the other Party of its wish to terminate the Agreement no later than 30 (thirty) calendar days before the date of termination of the Agreement.

10.3 Each Party has the right at any time to terminate this Agreement, in writing (by registered letter), warning the other Party within 30 (thirty) calendar days before the desired date of termination. The date of receipt of the letter from either of the Parties is deemed to be the moment of notification. Accordingly, the date of termination of the Agreement shall come to an end 30 (thirty) calendar days from the receipt of the letter of termination by the Party.

10.4 The Customer has the right to terminate the Agreement unilaterally without observing the terms established in clause 10.3 of this Contract if:

4. a) The Contractor has violated clauses 4.3.1. – 4.3.6. this Agreement;
5. b) The Contractor has sustained losses or violated the Customer’s commercial interests.
6. c) If there are valid reasons, such as further disadvantage or termination of the Customer’s project, changing the conditions in the market of software products, changing business plans of the Customer, lack of funds to finance works, etc. In this case, the Customer undertakes to pay to the Contractor the services (work) provided (executed) and unpaid to the moment of termination of this Agreement, and the Contractor, if he receives a prepayment for the services (work) in accordance with clause 2.3. of this Agreement, undertakes to reimburse the Customer over-paid by the Customer in full within 10 (ten) working days after the termination of this Agreement.

11. OTHER CONDITIONS

11.1. The amendments, supplements and appendices to this Agreement are an integral part thereof and are valid if they are stated in writing and signed by the authorized representatives of the Parties.

11.2. In case of any changes: legal status, tax system, location and registration, bank or other details, contacts, the Contractor is required to file a written statement about this to the Customer within 10 days from the moment of their occurrence. In case of late communication, the Contractor shall indemnify the Customer for all losses incurred by the Customer in connection with such untimely communication.

11.3 This Agreement is drawn up in Ukrainian and English in duplicate, each of which has the same legal validity.

12.DETAILS OF THE PARTIES

CUSTOMER

CONTRACTOR

For detailed consultations concerning legal issues of contracting Ukrainian developers (any other IT-specialists), for drafting and execution of contracts with Ukrainian IT-specialists please contact the Law firm Zilver: + 38 050 140 95 60or info@zilver.com.ua. Or you may meet our lawyers in Kyiv, Dnipro or Cherson. Lawyers of the Law firm Zilver speak English and German.

Please read more:

Questionnaire for IT company founders in Ukraine

How IT-freelancers work in Ukraine (legal issues)

About legal issues of establing IT-company in Ukraine.  

How non-compete provisions of the IT-contract apply in Ukraine? 

Invoice sample for the  Ukrainian IT-developers  

Template of the Ukrainian LLC shareholders meeting minute 

Representative office in Ukraine 

Filling (annual) information about beneficial owner of Ukrainian companies

E-signature in Ukraine

Taxation of Ukrainain companies (LLC)

Checklist: IT contract

Intellectual Property Law in IT

Zilver law company on Facebook

Zilver law company on Instagram

Zilver law company on LinkedIn  

Zilver law company in Telegram

The post Sample of the contract with IT-contractor (Ukraine) first appeared on Zilver.

Following forms of IT business are most popular in Ukraine:

1. Individual Entrepreneur (FLP in Russian (“ФЛП” in Cyrillic) FOP in Ukrainian (“ФОП” in Cyrillic). It may be any citizen of Ukraine or any foreigner with a permanent residence permit in Ukraine, registered in the register of the Ministry of Justice of Ukraine. They, most frequently, use the simplified taxation system – 5% of total income (+ unified social tax). It may work with foreign companies.
2. Limited Liability Company – LLC (“TOV” in Ukrainian (“ТОВ” in Cyrillic), “OOO” in Russian (“OOO” in Cyrillic). This is a legal entity, the founders (members) of which can be both individuals and legal entities. Citizenship also does not matter. LLC shall be run by its director (management), and separate issues shall be solved exclusively by its members. It shall be a payer of

– 5% single tax or

– income tax (18%) and VAT (20%).

Unlike Individual Entrepreneur, LLC (TOV) shall pay a salary to its director and other employees (including, at the same time, the payment of personal income tax, social security levy, and military levy).

3. A permanent establishment of a foreign company is used in extreme cases. The taxation system is unfavorable (relative to other forms); – it shall not be a payer of 5% single tax. It is used only by foreign companies. An advantage is the possibility of simplified visa support for its employees in Ukraine.

Which business models of IT companies are used in Ukraine?

1. Working through an Individual Entrepreneur under a service agreement.

A Ukrainian LLC (TOV) or a foreign company orders development services, testing, and other IT services from the Individual Entrepreneur (FOP). In such a case, an agreement shall be concluded between the parties, or, in general, any work shall be performed in accordance with an invoice. The developers may work at home or in the office, which may not be related to the customer.

Pluses: relatively low costs. Absence of social (labor) obligations of the customer.

Minuses: risks of being fined for violation of labor and tax laws, recognition of the Ukrainian office as a “permanent establishment”.

2. Working through an Individual Entrepreneur in an open space office environment.

The Ukrainian company rents out/ subrents its office to IT-employees (Individual Entrepreneur (FOP). In parallel with the Individual Entrepreneur, an agreement of software development shall be concluded. Ideally, the customer shall be another company, not the lessor.

Such a model avoids accusations that it is a permanent establishment and that IT employees have employment relationships with the customer.

Pluses: lesser risks of being fined.

Minuses: higher tax burden (the need to pay VAT in the context of (sub) renting the office); additional costs for the transit of money through the Individual Entrepreneur to pay rent, additional reporting.

3. Working through an LLC (TOV): only employees.

A Ukrainian LLC (TOV) may provide any IT-services to any Ukrainian companies and citizens, as well as to foreign ones. All developers, testers, HR and other employees shall be employed on a full-time basis, i.e., employment contracts shall be concluded with them.

Pluses: minimum risks of being fined for violation of labor laws, because the Individual Entrepreneur is not used.

Minuses: high tax burden (compared with other models), salary payments to employees only in UAH (currency losses), and need for a social package in accordance with the labor legislation of Ukraine.

4. Mixed model

In such a case, one part of IT services is ordered from a Ukrainian LLC (TOV) (being performed by its employees), and another part – from an Individual Entrepreneur (FOP).

Pluses: the possibility to take advantage of all other models.

Minuses: it requires more complex internal accounting and control.

5. Representative office

Representative office (permanent establishment) places orders with Ukrainian residents in accordance with the contracts.

Pluses: prestige, absence of labor relationships with developers.

Minuses: unfavorable tax burden, high cost of maintaining a permanent establishment.

       6. Unreported employment

Any work shall be performed by individual freelancers, any payments shall be effected through a bank or payment systems (for example, PayPal). It is appropriate for small projects.

Pluses: it is the least expensive model.

Minuses: it will be a high risk of being fined if inspection proves a systematic relationship with the freelancers.

Choosing the model of IT-business in Ukraine you should consider taxation of companies in Ukraine (please be advised that taxation of PEs is different).

Lawyers of the Zilver law company may assist you with choice of the businnes model for your IT-project. For this reason we would ask investor to fill in the questionaire (link here). 

What shall be done, from a legal point of view, to form an IT company in Ukraine?

The specific steps depend on the model you have chosen for your IT project. However, in general, it is necessary:

1. To form a company (by choosing the optimal tax system).
2. To conclude rental agreements for the office and for purchasing equipment, and to buy licenses for the required software.
3. To develop and approve the company’s internal security policies (at the request of the business owner).
4. To set up a payment system for settlements with its personnel.
5. To conclude agreements with its personnel (including mandatory provisions on the transfer of intellectual property rights to you).
6. To formalize an agreement with the customers/end users, taking into account the requirements of the Ukrainian legislation.
7. To register intellectual property rights to the product (if necessary).

You can contact the Zilver Law Company for any legal issues of formation of an IT company in Ukraine, drawing up agreements, registering and protecting intellectual property rights to the software, legal support for an IT company in Ukraine and abroad. Our lawyers have helped not only form IT companies starting from scratch, but also accompanied the opening of the offices of foreign IT companies in Ukraine, and they continue to provide legal services on a wide range of issues to such companies.

You can contact the Zilver law company (Kyiv, Ukraine) by phone: + 38 050 140 95 60 or meet with our lawyers at:  https://g.page/zilver-law-firm-kyiv.

Successfully executed projects (records starting from May 27th, 2023):

1. Incorporated LLC and registered NGO in Ukraine.
2. Registered NGO “KC” AYAX”.
3. New director of the NGO and the LLC.
4. Change of director in a charitable foundation (October 2024).
5. Corporate issues (Deember 2024).
6. Establishment of LLC with a foreign investor (February 2025).
7. Registration of a Ukrainian-Polish Company (July 2025).
8. Documents for LLC registration (July 2025).
9. Establishing a German-French Company in Ukraine (July 2025).
10. Registered a Startup and a Diia.City Resident (November 2025).
11. Legal Assistance: Acquisition of a Stake in an IT Company (Diia.City Resident) (December 2025).
12. Lawyers Supported the Sale and Purchase of a Stake in an IT Company (January 2026).

We also offer the following legal advice and sample documents for reading:

How IT-freelkancers work in Ukraine (legal issues)

Template of the contract with the IT-professional in Ukraine. 

How non-compete provisions of the IT-contract apply in Ukraine? 

Invoice sample for the  Ukrainian IT-developers  

Filling (annual) information about beneficial owner of Ukrainian companies

E-signature in Ukraine

Checklist: IT contract

How to open and manage a company GameDev and eSports

Law firm “Zilver” on Facebook

Law firm “Zilver” on Instagram 

Law Firm “Zilver” on LinkedIn  

Law Firm “Zilver” in Telegram

The post Launching IT Company in Ukraine: legal features first appeared on Zilver.