We want to make sure you're kept up to date. Please take a moment to review these changes. You will not receive KPMG subscription messages until you agree to the new policy. Ignore and log out Continue. A permanent home in Ukraine. A permanent home in another country but with close personal and economic ties centre of vital interests in Ukraine. If it is impossible to determine residence using these criteria, physical presence in Ukraine is used, that is, whether the person is present in Ukraine at least days cumulatively during a calendar year.
If not, the citizenship criteria is used, that is, whether the person is a national of Ukraine. In addition, whether the individual's family members have permanent home in Ukraine, or whether the individual carries on business activities in Ukraine, may also be taken into account. What income tax and social security contributions must be paid by the employee and the employer during the employment relationship? Tax resident employees Taxes and contributions include:.
A temporary military contribution at 1. The employer acts as a tax agent for the employee in respect of employment income.
It remits payroll taxes on the employment income, and files quarterly tax returns. Non-tax resident employees The rates of tax and other contributions for a non-Ukrainian tax resident employee are the same as for tax resident employees. See above, Tax resident employees for tax payment and filing requirements.
From 1 December , the cap will increase to about EUR1, The unified social contribution is paid by the employer on the date of the salary payment. When is a business vehicle subject to tax in your jurisdiction? Tax resident business Ukraine recognises the concept of tax residence for business vehicles. A business vehicle is considered a tax resident of Ukraine if it is incorporated in Ukraine and operates under Ukrainian laws. Non-tax resident business A non-resident business vehicle is subject to tax in Ukraine if that business vehicle either:.
Has a permanent establishment in Ukraine such as a registered branch or a representative office. Has no permanent establishment in Ukraine but receives income from sources in Ukraine. What are the main taxes that potentially apply to a business vehicle subject to tax in your jurisdiction including tax rates? Ukrainian tax residents are taxed on their worldwide income. Non-Ukrainian tax residents are taxed only on income derived from sources in Ukraine through a permanent establishment or otherwise. Withholding tax is generally charged on Ukrainian income of a foreign company that is not attributable to its permanent establishment in Ukraine.
See Question 20 in relation to withholding tax on interest, dividends and royalties paid to foreign companies. Taxpayers are typically free to choose a reporting period for corporate income tax such as quarterly or annually. Import and export transactions and international transportations are also subject to VAT. There is also a real estate tax on residential and non-residential property of up to 1. Certain buildings are exempt from real estate tax for example, industrial buildings such as production facilities and industrial warehouses.
Real estate taxes are paid monthly or yearly, depending on the type of the tax. Excise Certain goods, such as spirits, tobacco products, fuel, electricity and cars, are subject to excise duty in Ukraine, paid mostly by producers, retailers and importers of the goods. The rate varies by type of goods and is primarily paid per item. For example, an excise for wine can be up to The excise duty is generally payable at the time of the sale of the goods, and reports are filed monthly.
Environmental tax Environmental tax is paid for:. Air and water pollution. Creation and storage of radioactive waste. It is calculated depending on the type of pollution and waste produced, and is paid on a quarterly basis. Dividends, interest and IP royalties. How are the following taxed:. Dividends paid to foreign corporate shareholders? Dividends received from foreign companies? Interest paid to foreign corporate shareholders?
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Intellectual property IP royalties paid to foreign corporate shareholders? Groups, affiliates and related parties. Are there any thin capitalisation rules restrictions on loans from foreign affiliates? Currently, there are no thin capitalisation restrictions as such. However, if a resident receives a loan from a foreign affiliate and the debt-to-equity ratio of the borrower exceeds 3. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your jurisdiction controlled foreign company rules?
Currently, there are no controlled foreign company rules. A draft law on prevention of tax base erosion and profit shifting has been prepared but has not been passed or come into effect. Are there any transfer pricing rules? The Ukrainian transfer pricing rules, which were first introduced in , apply to the following types of transactions controlled transactions:.
Cross-border sales of goods involving non-resident agents. Transactions by Ukrainian taxpayers with non-residents registered in low-tax jurisdictions or jurisdictions with no treaty on exchange of information with Ukraine the list of these jurisdictions is approved by the Cabinet of Ministers of Ukraine. Transactions by Ukrainian taxpayers with non-residents that:. Taxable income from a controlled transaction must equal its arm's-length value.
The following transfer pricing methods are used to determine compliance with the arm's-length principle:. Comparable uncontrolled price method the primary method used. How are imports and exports taxed? Imports and exports of goods and services are subject to VAT in Ukraine. Is there a wide network of double tax treaties? Ukraine has a large tax treaty network with most treaties following the Organisation for Economic Co-operation and Development model.
Double tax treaties are in place with more than 85 countries, including:. Are restrictive agreements and practices regulated by competition law? Is unilateral or single-firm conduct regulated by competition law? The competition laws apply equally to Ukrainian entities and foreign entities doing business in Ukraine.
There is no criminal liability in Ukraine for violations of the competition laws. Restrictive agreements and practices Any agreements and other arrangements between undertakings that could prevent, eliminate or restrict competition are considered to be anti-competitive concerted practices and are generally prohibited.
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The following are examples of anti-competitive concerted practices:. Allocation of markets by territory, products, customers or suppliers, including exclusive dealing. Full immunity against fines can be available to the first applicant under the leniency procedure. The AMC is expected to adopt a Vertical Block Exemption Regulation later this year to provide guidance for the assessment of anti-competitive effects of vertical agreements based on Regulation of the European Commission No. This regulation contains a:. List of hardcore and other restrictions not covered by the block exemption.
Unlike the equivalent EU regulation, this regulation provides for an ex ante control of vertical restraints. Unilateral conduct Conduct by one or more undertakings that amounts to abuse of a dominant market position is prohibited. Similarly, a rebuttable presumption of a collective market dominance applies if either:. For example, the following behaviour can amount to abuse of dominance:. Charging excessive prices, imposing a pricing constraint or price discrimination. Tying imposing terms and conditions that have no connection with the subject of the contract.
Hindering market access for other companies or ousting them from the market. Unfair competition is another type of prohibited unilateral conduct under the Ukrainian competition law rules. This can take the form of spreading false, inaccurate or misleading information that may influence a customer's decision to buy a particular product or service to create an unjustified competitive advantage for a particular supplier.
Are mergers and acquisitions subject to merger control? The following types of transactions qualify as a concentration that can be subject to merger control:. Acquiring, directly or indirectly, control over an undertaking or a part of it. The same thresholds apply to foreign-to-foreign transactions, and there are no foreign exemptions in Ukraine.
Therefore, a transaction between non-Ukrainian entities with no subsidiaries in Ukraine can still require clearance in Ukraine. Outline the main IP rights in your jurisdiction. Patents Definition and legal requirements.
Doing business in Ukraine: overview
Products and methods processes can be patented in Ukraine as inventions or utility models respectively. For an invention to be patented, it must have novelty and an inventive step, and be capable of being applied industrially. A utility model must be new and capable of being applied industrially. The official websites of both http: A patent or other IP right can be enforced by its owner or by a licensee with the right to prohibit the use of the right under the terms of the licence.
Prohibitions on the performance of certain actions. Remedies that can be ordered by the court include:. Prohibition of the infringing activities. A patent for an invention is protected for 20 years. The protection can be extended by five years for patents in respect of medicines. A patent for a utility model is protected for ten years.
Trade marks Definition and legal requirements.
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A trade mark can consist of any words other than those prohibited by law , letters, numerals, patterns, colours, or a combination of verbal and graphic elements. It can be registered with the Ministry of Economic Development and Trade of Ukraine, unless registration would be against public order or principles of humanism and morality, and unless one of the grounds to refuse registration applies.
A trade mark application is rejected if, in particular, the trade mark: Depicts or imitates national coats of arms or flags, official country names, or names of international organisations. Is misleading as to the underlying product or service. Is confusingly similar to earlier registered trade marks. At the moment, a trade mark can be invalidated if it has not been used for three years since its registration.
Ukraine has an obligation under the EU-Ukraine Association Agreement to extend this period to five years. A person that uses an unregistered trade mark does not have the right to prohibit others from using that trade mark without his or her consent. But that person can file objections to someone else's registration application for that trade mark, and seek invalidation of the registration certificate in court. Length of protection and renewability. A trade mark is protected for ten years.
The protection can be renewed indefinitely for ten years at a time. An industrial design is a result of artistic activity of an individual in the area of designing. It must be new in order to be registered. A design is generally considered new if no identical design has been made available to the public. Under the Association Agreement, Ukraine will provide exemption to this rule for the disclosure by the designer during the month period preceding the date of filing of the registration application. An industrial design is protected for ten years. Although at the moment the protection can be extended only by up to five years, Ukraine has an obligation under the Association Agreement to ensure protection together with any renewals for 25 years in total.
Unregistered designs Definition and legal requirements. At present, legal protection is generally available only for registered designs.
An unregistered design may be protected as information constituting a trade secret to which confidentiality obligations apply. At the same time, under the Association Agreement, Ukraine has agreed to give the same rights for an unregistered design that was disclosed to the public, as for a registered design if certain conditions are met.
The owner of an unregistered design may be entitled to claim damages in the event of an unauthorised disclosure, particularly where such disclosure constitutes unfair competition. In addition, the law recognises an enforceable right of a previous, good-faith user of a design that is subsequently registered by another person to continue using that design free of charge. However, that previous user does not have the right to prohibit others from using the design without his consent. An unregistered design that forms part of a trade secret is protected for the duration of any applicable confidentiality obligations.
Copyright Definition and legal requirements. Copyright is a set of rights of an individual with regards to a work of art, literature or science. There is no express general originality requirement under Ukrainian law at the moment. However, Ukraine has an obligation under the Association Agreement to introduce such a requirement in relation to photographs and software.
Copyright covers only the expression of ideas and concepts. The Association Agreement requires Ukrainian law to recognise that the employer exclusively owns proprietary rights to any software created by an employee during the performance of their duties or as a result of following the instructions of the employer unless the employment contract says otherwise. Protection is awarded from the moment of creation of the work and does not require registration or other formalities.
During an enforcement procedure, a copyright owner can request remedies including:. Prohibition of infringing actions and cessation of the infringement. As of April , Ukraine has a notice and take down system that is similar to the US Digital Millennium Copyright Act in relation to online infringement of copyright. Proprietary rights are protected for 70 years after the death of the author some exceptions apply. Moral rights such as recognition of authorship are protected indefinitely. Under the Association Agreement, the length of protection of the proprietary rights will be reduced to 30 years for critical and scientific publications.
Other Related rights, geographical indications, varieties of plants, breeds of animals, topologies of integrated circuits and trade secrets are also protected as IP rights in Ukraine. Are marketing agreements regulated? Agency An agency relationship, particularly with a commercial agent, can be based on an agency agreement but can also arise under employment contracts, other types of agreements or a power of attorney.
Agency agreements, and representation in general, are regulated by the Civil Code. The law requires that certain essential terms are included in a commercial agency agreement, such as:. The type of services. The agent's remuneration and how it is paid. A commercial agent can be required to provide the services personally and not to use subcontractors. A commercial agent is generally liable for the entire amount of damages caused by its failure to perform, unless limitations on its liability have been agreed.
If the principal breaches the agreement, it must pay the agent's remuneration and can be liable for damages. If the principal wishes to terminate a commercial agency, it must to give at least a one month's notice to the agent. Distribution Distribution agreements are not specifically regulated by Ukrainian law. In the absence of specific regulation, an agreement can still be concluded based on the freedom of contract principle. General requirements for such agreements are mainly set out in the Civil Code and Commercial Code. Competition law rules are likely to be relevant. Certain industry-specific requirements for distribution agreements are set out in product safety, data protection, advertising and other laws.
Franchising Franchising agreements known as "commercial concession" agreements in Ukrainian law are regulated by the Civil Code and Commercial Code. A franchising agreement can provide for mutual exclusivity within the restricted territory, and for a non-compete undertaking for the franchisee. A franchisee who complied with the terms of the agreement is entitled to have the agreement renewed on the same terms. If a party wishes to terminate the franchising agreement, it is required to give at least a six months' notice to the other party. The requirement to have a franchising agreement registered was cancelled in Are there any laws regulating e-commerce such as electronic signatures and distance selling?
The newly adopted E-Commerce Law regulates execution of electronic transactions. In November the law was amended to improve mechanisms to control the validity of electronic signatures and registration procedures. Certain industry-specific laws, including those regulating insurance, banking and other financial services. Outline the regulation of advertising in your jurisdiction.
Advertising is regulated by the Advertising Law. An advertisement must be clearly separated from other information and specifically identified as an advertisement. The law prohibits the following in relation to advertising:. Distributing information about goods that are prohibited by law from production, circulation or import. Discriminatory or discrediting statements. Promoting actions in violation of the law or safety rules. The use of technologies that affect the subconscious mind.
Advertising that contains elements of cruelty, violence, pornography or other offensive content. Are there specific statutory data protection laws? If not, are there laws providing equivalent protection? There are several specific data protection laws, including the:. The Ukrainian Parliament Commissioner for Human Rights Ombudsman is, among other things, in charge of ensuring the protection of personal data. How is product liability and product safety regulated? Product liability and product safety are regulated by a number of laws, including the:.
Main business organisations State Registration Department W http: The State Registration Department: Oversees corporate registrations, registration of rights to real estate, registration of political parties and other registrations. Maintains various public registers, including the companies register. Performs certain functions with respect to the use of electronic signatures. MinEco is responsible for investments, public procurement, public-private partnerships and other matters. The NBU performs the functions of Ukraine's central bank, sets rules for the banking market, issues banking licenses and generally overseas the activities of Ukrainian banks.
The AMC is the national competition authority and is responsible for ensuring fair competition and consumer protection. Online resources Laws of Ukraine Database W www. This database of laws and secondary legislation is maintained by the Verkhovna Rada of Ukraine the Ukrainian Parliament. It is generally up to date but is for reference only and does not contain official printed versions of the law. Some of the content is in English. Laws of Ukraine Abstracts W www.