Apparently, not everyone is interested or can afford to operate a big business in Ukraine. If you're one of those, then Ukraine is the best location for you!
The government made it possible for individuals who want to engage in simple businesses to register as Private Entrepreneurs. You will find the registration process very easy compared to the LLC business type.
Who can register as a PE?
The good news is that both locals and foreign citizens can register as PEs in Ukraine! And also, they can all use the Simplified tax regime (on conditions provided).
However, before a foreign citizen can be registered as a PE they have to get a Tax number and provide information such as their address in Ukraine. They won't be asked for a residence permit and address registration.
Points to note for foreign citizens
- You cannot use a PE registration as a basis to get a temporary residency in Ukraine;
- If you register as a Private Entrepreneur you will automatically become a tax resident of Ukraine;
- Again, if you register as a Private Entrepreneur, you will become subject to all the banking rules that affect locals;
Below are the key characteristics of the PE business structure.
- Only an individual (not legal entity) is allowed to register as a PE;
- The applicant bears full responsibility for all the business risks;
- The PE business can freely do business, have bank accounts, and hire workers.
- In the event of insolvency, the PE can be regarded as bankrupt;
- If the PE doesn't surpass 7 millionUAH, the owner can benefit from the Simplified Tax Regime;
- Since the property of a PE is equal to that of a natural person, by law the owner should get his wife's consent in the event that he wants to dispose of some of his property.
Advantages of a PE business
A PE business in Ukraine has the following advantages:
- Simple registration process;
- Simple maintenance;
- Low costs;
- Attractive tax savings
Disadvantages of a PE business
- The owner is responsible for all liabilities related to the business;
- The business has no perpetual existence, it's only functional when the owner is alive and strong enough to run it;
- The business has a poor perception among clients;
- The business is hard to sell
Although a PE business is a great choice for people who are running low-risk businesses, it's not a suitable choice for startups or businesses that aim to grow and have bigger risks and liabilities.
Registration of PE
The registration of a PE must be done with the Companies Register. The registration process is done for free and can be completed within 24 hours after the application.
For the registration you need to submit the following documents:
- The tax ID and passport of the private individual;
- A completed application form (as approved by the Ministry of Justice);
- Information on the registered address of the person;
- Information on business activities;
- Letter of consent from guardians (if the individual is a minor below 16years of age);
- The application of PE registration as a Unified Tax-payer - to pay your taxes on the Simplified Tax Regime (optional);
- Application on PE registration as a VAT payer (optional);
NB: If a representative is used in filing for the application, a power of attorney, tax number, and passport of the representative should be provided.
When the filing is finished, the Company Registrar will produce a receipt that shows all the documents that have been submitted plus the application filing number. You will use this number to check the status of your PE registration using the Ministry of Justice's online service.
Once you have successfully registered your PE business, you should get an Extract that confirms your PE registration from the Companies Register. You can also get a hardcopy of the document.
The Companies Register will also inform the Tax and Pension fund authorities about your business. You and your business partners plus third-party individuals will have access to information on the PE on the Companies Register's website.
You can always opt for a PE business if you're a self-employed specialist (e.g. IT specialists) or rather a sole trader who wants to benefit from the favorable tax regime in Ukraine. This business type has become so popular in Ukraine and you shouldn't hesitate to try it out!