General Legal Framework
Ukraine is a civil law country with a codified legal system. The primary legal acts governing business activities include the Civil Code, Commercial Code, Tax Code, and various sector-specific laws. The Constitution of Ukraine serves as the highest legal authority, and international treaties ratified by Ukraine form part of the national legal system.
Despite the ongoing full-scale war caused by the Russian invasion in 2022, Ukraine’s legal and economic systems remain functional. Courts, business registries, tax authorities, and financial institutions continue to operate, while legislative reforms aligned with EU standards are actively implemented.
Company Formation
Foreign investors may conduct business in Ukraine under the same conditions as domestic entities. The most common legal forms are:
- Limited Liability Company (LLC)
- Joint-Stock Company (JSC)
- Representative Office
- Sole Proprietorship (Private Entrepreneur – PE)
The company registration process is relatively straightforward and usually takes 1–2 business days. There are no restrictions on 100% foreign ownership of Ukrainian companies or on profit repatriation, subject to applicable tax and currency control regulations.
Foreign nationals are permitted to register as Private Entrepreneurs (PE) in Ukraine provided they legally reside in Ukraine (temporary or permanent residence permit). This form is commonly used for small-scale commercial activity, consulting, IT services, and freelance work.
Under the simplified taxation system, the most common option for foreign PEs is Group 3 taxation:
- Unified tax: 5% of gross income (without VAT) or 3% of gross income (with VAT registration);
- Unified Social Contribution (USC): payable monthly in a fixed minimum amount, regardless of income;
- Military levy: 1% of gross income (introduced for simplified taxpayers during wartime).
Taxation
Ukraine applies a competitive tax regime:
- Corporate Income Tax (CIT): 18%
- Value Added Tax (VAT): 20% (standard rate)
- Personal Income Tax (PIT): 18% plus 1.5% military levy
- Unified Social Contribution (payroll tax): 22% of gross salary (paid by employer)
Ukraine’s tax system is undergoing active reform under the National Revenue Strategy through 2030, with a focus on digitalization, transparency, and alignment with EU and OECD standards.
Employment and Salaries
Employment relations are governed by the Labour Code of Ukraine. Despite wartime conditions, Ukraine maintains a skilled and cost-effective workforce. Indicative gross monthly salaries (subject to market fluctuation and exchange rates):
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- Nationwide average: EUR 500–600
- Kyiv: EUR 750–1,000
- IT and technology sector: EUR 1,500–3,000+
Employers are required to conclude written employment agreements and comply with social security and tax obligations. Remote work and flexible employment arrangements are legally permitted and widely used.
Investment Climate
Ukraine offers substantial opportunities for foreign investment, particularly in:
- Agriculture and food processing
- Information technology and software development
- Renewable energy and energy infrastructure
- Defense and dual-use technologies
- Construction, logistics, and post-war reconstruction
The Law of Ukraine on State Support of Investment Projects with Significant Investments (“Investment Nanny” law) provides for state guarantees, tax incentives, and infrastructure support for large-scale investors. Ukraine has concluded more than 70 bilateral investment protection treaties.
War Risk Insurance
To mitigate risks associated with the ongoing armed conflict, Ukraine provides access to international war risk insurance mechanisms. Political and war risk insurance is available through international institutions such as the Multilateral Investment Guarantee Agency (MIGA), the U.S. International Development Finance Corporation (DFC), and programs supported by the European Bank for Reconstruction and Development (EBRD). These instruments cover risks including armed conflict, expropriation, and currency transfer restrictions.
Dispute Resolution
Commercial disputes in Ukraine are resolved by specialized commercial courts. Arbitration is also available, and Ukraine is a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, ensuring enforceability of foreign arbitration decisions.
Outlook
Despite wartime challenges, Ukraine remains open to international business. Continued legal reforms, tax modernization, and the EU accession process create a favorable long-term outlook. Post-war reconstruction is expected to generate significant opportunities for early-market entrants and strategic investors.
Author: Gennadii Suslov, Attorney and Managing Partner at Suslov & Partners Law Firm
