From a legal point of view, IT company establishment in Ukraine is not fundamentally different from the formation of other types of companies. It entirely depends on the size of investments, the number of employees, the formula for work (customers – clients) and many other things. The Zilver lawyers will clarify all these issues with you first, and then they will recommend the most profitable business model.
There are 2 business models of IT companies in Ukraine:
- Working through an Individual Entrepreneur (FOP in Ukrainian (“ФОП” in Cyrillic), FLP in Russian (“ФЛП” in Cyrillic)). In such a case, developers, testers, designers, and others shall be registered as Individual Entrepreneurs. In this case, a foreign company acts as the major customer for the IT team in Ukraine, gives them tasks, pays money directly. In turn, the foreign company acts as a contractor to foreign customers (in the case of IT outsourcing companies) or consumers (in the case of product companies).
Individual Entrepreneur Registration is quite simple: a Ukrainian citizen fills out a registration form (perhaps, with the assistance of lawyers) and submits it to the registrar and the tax service.
- Working through a Ukrainian legal entity. This is often an LLC (TOV in Ukrainian (“ТОВ” in Cyrillic), OOO in Russian (“ООО” in Cyrillic)), founded by a foreign investor. However, a joint-stock company and another form of doing business may be also used. LLC (TOV) is the most popular form of doing business; it is simple and cheap to register. All developers, testers and other team members shall be hired under employment agreements. With this model, LLC (TOV) may also be used in relation to major customers (in the case of IT outsourcing company). Working through LLCs (TOVs) directly with consumers is possible for product companies, but it is not often used, because it is more profitable to make the holder of the right to the “product” from a foreign company. To register an LLC (TOV), you will need the data of its founders and director (before obtaining a work permit he/she shall be a Ukrainian citizen), address, amount of the authorized capital, data on its employees (more details: https://zilver.com.ua/en/how-to-incorporate-llc-in-ukraine/).
The choice between 2 business models given is individual. Working through an Individual Entrepreneur allows you to save on taxes and simplify the procedure for firing team members. Working through an LLC (TOV) attracts less attention from inspection bodies, but increases the tax burden by more than 30% and complicates firing employees.
The Zilver lawyers (Kyiv, Ukraine) will assist in building the best model of IT company in Ukraine, provide legal services for registering an IT company in Ukraine and prepare all the necessary agreements and permits. The office of the Zilver Law Company is located at: https://g.page/zilver-law-firm-kyiv