Employer Of Record in Ukraine
We make it easy and painless to expand your business into Ukraine. Forget about dealing with local regulations, confusing tax laws and international payroll management. We take care of all that so you don't have to.
Accelerate your growth into Ukraine Compliantly and hassle-free
How we can help you expand in Ukraine
As your EOR in Ukraine we’d help you expand by hiring employees and running their payroll without establishing a local branch office or subsidiary.
Your candidate is hired by a PEO in Ukraine provider in accordance with local labor laws and can be onboarded in days instead of the months it typically takes. Shortly after, your new employee will be working for you, just like any other member of your team.
Expand to Ukraine with Serviap Global
Through our PEO and EOR services, you can hire qualified talent in your industry without the trouble of opening your own legal entity.
In just a few days, you can easily and safely build a presence in Ukraine being sure that your staff will be hired in compliance with labor and tax regulations.
Table of Contents
Ukrainian Hryvnia (UAH)
Ukraine Country Facts
Ukraine is an emerging free market economy with prominent service, industrial, and agricultural markets. It has distinguished itself as a technological hub for Europe but its industrial products are coal, metals, machinery, and chemicals. Its agricultural products are grain, sunflower seeds, and vegetables. Ukraine’s currency is the Hryvnia (UAH) and the major cities are Kyiv, Kharkiv, Donetsk, Odessa, Dnipro, Zaporizhzhya, and Lviv.
Unfortunately, economic growth in this country is affected by regional and political conflicts with Russia. The International Monetary Fund (IMF) has helped stabilize the economy, but economic reforms remain slow. Although there are issues with local and government corruption, Ukraine is working to transition toward a closer tie with the European Union, making the Union a major trading partner. This partnership is boosting Ukraine’s economy and is making it an interesting place to invest. In fact, it is known for having a low-cost well-educated workforce.
Ukraine stands at the heart of Europe and is a good connection to Russia and the Middle east. Furthermore, Ukraine is home to the largest plane in the world—the Antonov An-225.
Ukraine was the second most productive country during the Soviet era, behind Russia. Its strength was agriculture and industry. Those strengths have remained the pillars of the Ukrainian economy, with agriculture in the south and the west producing an amazing amount of wheat and manufacturing in the east producing iron and steel. Those products makeup the bulk of Ukrainian exports.
Ukraine is the 5th largest world producer of corn; the 8th largest world producer of wheat; the 3rd largest world producer of potato; and it is the world’s largest producer of sunflower seed.
This country has a strong reputation as a technological leader, in fact it ranked fourth in the world in the number of certified IT professionals. This makes Ukraine a technological growth center for the world. More than 13 research and development centers from global companies have relocated to Ukraine ranking it among the top 25 countries in the world for software development and the 8th most popular tourist destination in Europe.
Small and Medium Businesses
Small and medium businesses (SME) make up about 60% of GDP in Ukraine. The bulk of the impact in this sector are the medium size companies which add 44% of the value-added–the small size contributes about 17%, and the micro enterprises about 5%.
SMEs make up 81.5% of jobs and 37% of tax revenues for Ukraine. Therefore, the government has taken steps to improve the opportunities for small businesses to grow by minimizing the documents required from companies, simplifying tax law, and creating a single information resource for entrepreneurs.
Starting a Business
Any person from any nationality may start a business in Ukraine and the process for starting a business is simple, only taking a few days. Most foreign investors use a limited liability company to start a business.
Although dealing with construction permits and getting electricity remains somewhat of a challenge at times, registering property and getting credit is now easier than ever. The government is currently working to provide a fairer legal environment to help foreign investors; enforcing contracts has become an easy process.
The Unified Social Contribution (USC) provides the regulations for payroll.
Employees contribute 22% of their monthly income. For disabled employees, it is 8.41% for the private sector and 5.5% for the public sector. The payroll contribution cap is set at 25 times the average monthly cost of living. For the employer, the Personal Income Tax is 18% and is submitted quarterly. Salaries are typically paid twice a month. Overtime is usually paid at a double rate.
The normal weekly hours worked is 40 hours a week.
|6000 Ukrainian hryvnia a month
|13th Month Pay
|This is not required by law and is considered gratuity. Most employers also offer performance based bonuses.
|Overtime hours more than 40 hours a week are paid at an overtime com- pensation rate of 200.00% of an employee’s regular hourly rate.
Leaves of Absence
Employees have the right to paid absences for the following things:
• Vacation leave:
Employees are entitled to 24 days off a year. Those disabled, or over 55, or a carer are entitled to 3 extra days.
• Sick Leave:
Sick leave is based on how long the employee has been with the company. 60% of pay for less than 5 years. 80% for 5-8years and 100% for more than 8 years. The first 5 days are compensated by the employer, the rest is paid by the Social Security Fund of Ukraine.
• Maternity Leave:
• Females are entitled to 70 days maternity leave prior to the expected delivery date, and 56-70 days after the baby has arrived. A woman is also entitled to partial pay until the child reaches 3.
• Paternity Leave:
There is no paternity leave.
• Family Emergency:
Marriage or death in the family allows for 7 extra days leave.
|The national health care in Ukraine is considered poor and so most employers offer health insurance. Meal vouchers are also an optional benefit in Ukraine.
The corporate income tax in Ukraine is 18%. Investors are taxed on their Ukrainian-sourced income. Fright services payments are subject to a 6% tax. There is a 3% rate for insurance activities, 20% for residents who make payments to non-residents for advertising production (this tax will be eliminated for 2022). The standard value added tax is 20%, but only 14% for certain agricultural products and 7% for certain medical products.
Renewable energies make up 4% of its domestic power generation. This is a small number, but it is growing at a rapid rate. Many solar power stations have been created and Ukraine now boasts one of the largest solar parks in Europe. Ukraine also uses wind energy. According to the Global wind energy council, 40% of Ukraine is suitable for wind power.
Ukraine has a unique business culture which merges an entrepreneurial impulse with the backdrop of a soviet legacy.
- Be Friendly
Ukrainians are warm and friendly. They value business relationships, but they can also be firm, direct, and sincere, in their feedback.
- Build Relationships
Relationships should be developed at both the personal and the corporate level.
- Refrain from Praise
Praising people in front of others may be seen as manipulative, so it is better to remain dignified, calm, and sometimes quiet until you are asked to speak.
- Firm Handshakes
When first meeting someone, a firm handshake while looking in the person’s eyes is the most common way to greet that person. Also, it is typical to exchange business cards.
The Ukrainian diet is based on simple peasant dishes. Bread, vegetables, meats, and potatoes make the base of Ukrainian foods.
Ukraine is known as the “Breadbasket of Europe” and provides quality wheat products such as breads and pastries.
They are known for creating the “Varenyky”, which is a dumpling typically filled with potato, cheese, and onions. A favorite drink is the “Horilka”, which is a type of vodka. During the summers, many drink “Kompot”, which is made of fresh fruit.
The national language is Ukrainian, but many also speak Russian, some even speak Romanian, Polish, or Hungarian. The greater population practices Orthodox Christianity; but some follow the Kiev patriarch, while others follow the Moscow patriarch. A smaller number of people are catholic, protestant, Jewish, or Islamic. There are about 44 million Ukrainians who have a high literacy rate of 99.7% and about 70% of people live in Urban areas
Ukraine is located in Eastern Europe and it borders the black sea. The south of the country has a Mediterranean climate while the north is more continental and the west part of Ukraine receives the most rain. Indeed, Ukraine experiences four distinct seasons. People enjoy going to the black sea or the Carpathian Mountains for vacation.
This city located in Ukraine was said by Forbes magazine to be one of the best cities to do business in. This is due to the transparency of local authorities, high levels of business activity, transportation, security, ecology and the perception of the city by locals and attractiveness for migration.
This city was ranked third in the Ukraine for developing a business. This is due to the economic potential, 7
local authority support, the talent pool, the smart city development and the general quality of life that can be enjoyed here.
Kyiv is the capital of Ukraine, and is pronounced Kiev. It is also the most populous city in Ukraine, which is the second largest country in Europe. This is an important place for industrial, scientific, educational and cultural development.
Num. States / Province
There are 24 oblasts and one autonomous republic, the Autonomous Republic of Crimea. Cherkasy, Chernihiv, Chernivtsi, Dnipropetrovsk, Donetsk, Ivano-Frankivsk, Kharkiv, Kherson, Khmelnytskyi, Kiev, Kirovohrad, Luhansk,
Lviv, Mykolaiv, Odessa, Poltava, Rivne, Sumy, Ternopil, Vinnytsia, Volyn (its administrative center is Lutsk), Zakarpattia, Zaporizhia, and
|Thousands Separator Format
|Country Dial Code
|Ukraine is bordered by Belarus, Russia, Moldova and Romania, Hungary, Slovakia, and Poland.
|January 1 to December 31
|6,000 Ukrainian hyrvnia monthly
|Taxpayer Identification Number Name in the country
What you need to know about employing personal in Ukraine:
Laws and Agencies that regulate labor relationships
The Ukrainian government, the Verkhovna Rada governs labor laws. There are several draft laws under consid- eration which outline laws for employers and their employees.
|Constitution of Ukraine 1996
|This is the constitution for the Ukrainian people.
Draft Laws Considered
|On Amendments to Certain Legislative Acts of Ukraine on Deregulation of Labor Relationships, On Amendments to Certain Legislative Acts of Ukraine, On Regulation of Some Atypical Forms of Employment, On Amendments to Labor Code on Definition of Labor Relationships and Signs of their Existence, On Amendments to Certain Legislative Acts regarding Improvement of Legal Regulation of Distant Work, On Amendments to Certain Legislative Acts regarding Regulation of Domestic Workers, On Promoting the Development of Digital Economy in Ukraine.
|United Nations, United Nations Economic Commission for Europe, World Trade Organization ,European Bank for Reconstruction and Development, International Monetary Fund, World Bank Group, International Bank for Reconstruction and Development, International Finance Corporation, Multilateral Investment Guarantee Agency, International Centre for Settlement of Investment Disputes, International Development Association, Organization for Security and Co-operation in Europe, NATO Partnership for Peace, Euro-Atlantic Partnership Council, Council of Europe, Energy Community, Baku Initiative, Central European Initiative, Commonwealth of Independent States, GUAM Organization for Democracy and Economic Development, Black Sea Trade and Development Bank, Organization of the Black Sea Economic Cooperation, Black Sea Naval Co-operation Task Group, Common Economic Space, Community of Democratic Choice, Black Sea Forum for Partnership and Dialogue, Organization of Central Asian Cooperation, Eurasian Economic Community, Stability Pact for South Eastern Europe, Southeast European Cooperative Initiative, Council of the Baltic Sea States, Francophonie, Non-Aligned Movement.
The Labor Code of Ukraine is the national code of laws about labor, and
was ratified in 1971.
|Social insurance and social assistance system.
Key Tax and Labor Authorities
|State Fiscal Service of Ukraine
|This replaced the ministry of revenue in 2014
The Tax Code of Ukraine
|The Tax Code of Ukraine shall regulate the relationships with regard to the taxation in Ukraine and define the legal foundations for the construction and functioning of the taxation system.
|Hiring Foreign Employees
|A foreign employee must have a work permit issued through the Employment Center which lasts for one year. The employer must prove that a Ukrainian citizen cannot fill the role in the foreign employee’s place.
The general rule is indefinite contracts for employees. It’s not legally required to have this contract in writing, but it is strongly recommended. This contract must be in the local language, and include:
• Terms of employment
• Termination Requirements
Before this an offer letter is written and this must contain a salary and compensation amounts in Ukrainian Hryvnia.
|The standard work week is 8 hours a day and 40 hours a week. Additional hours are considered overtime and are subject to 100% pay over normal salary. Overtime cannot exceed 2 hours a day in any two day period of 120 hours per year.
Annual Taxable Income
Income tax in Ukraine applies to both residents and non-residents. They are taxed at an 18 percent personal income tax rate. In addition, income is subject to temporary military tax at 1.5 percent rate.
Corporate Tax Rates
Ukraine has a standard corporate tax rate of 18%, which they call the CIT. WHT at a rate of 15% applies to most passive income payments to non-residence, unless a double tax treaty is in place.
The Labor Code provides for public holidays that are observed in Ukraine.
|New Year’s Day
|Eastern Orthodox Christmas
|International Women’s Day
|Victory Day over Nazism in World War II
|Independence Day of Ukraine
|Ukraine Defender Day
Probation in Ukraine can last for up to 3 months.
Type of Termination
A justified dismissal is based upon mutual agreement, expiration of a fixed-term contract, if the employee must enter military service, transfer of the employee to another position, refusal to move or work by the employee, employee imprisonment, or termination based on stipulations in the contract. Because of the high cost for terminating an employee for reasons other than resignation or mutual agreement, it is recommended the employer get a lawyer.
If the employee is part of a union, the employer must receive their permission in all cases.
Dismissal Without Cause
The employer cannot dismiss an employee if they are on sick or annual leave. Changes in the organization, employee unsuitability, reinstatement of an employee who used to hold the position, absence from work for being sick for more than four months, or during probation.
The employee may voluntarily leave their position.
In the case of redundancy the employer must give the employee two months notice. With multiple redundancies the employer must notify the State Employment Centre two months prior.
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