• Tetiana Yashchenko

    PhD, Partner, EXPATPRO Law Firm

    Tetiana Yashchenko specializes in corporate law and business administration.

    Head of Corporate BA, Accountancy. Tetiana deals with most issues related to employment, work permits for foreigners in Ukraine. She specializes in legal consulting on mergers and acquisitions, business registration, reorganization and structuring (both internal and international) as well as providing legal support for the current business activity of clients in Ukraine (specifically for the Digital and IT sphere).

    Tetiana Yashchenko graduated from Taras Shevchenko National University of Kyiv; Law department; Master of Law, Ph.D. in Law.



48 Vozdvyzhenska Street, Office 7,

Kyiv, 04071, Ukraine,

Tel.: +380 44 339 9881

E-mail: welcome@expatpro.co

Web-site: www.expatpro.co

EXPATPRO is a leading boutique law firm in Kyiv that focuses on immigration to Ukraine and offers personalized, top quality legal services for expats. Our clients are foreign individuals, businesses and investors pursuing business, employment or personal opportunities in Ukraine. Through comprehensive knowledge of legal, political and business areas, our migration experts will walk you through the jungle of Ukrainian law.

Our team provides professional legal solutions on how to relocate, and reside, and how to start your own business in Ukraine in the readiest way, the applicable Ukrainian legislation. We strive for close communication and cooperation with our clients and continue to support them in their daily business activities and if their needs in Ukraine evolve. Whether you are considering relocating to Ukraine, starting a business there, or simply seeking advice on a work permit, visa, and residency issues, or have other expat-related legal needs, you can count on EXPATPRO.

In addition to immigration and corporate law, EXPATPRO’s practice areas include Ukrainian employment law, legal support for business, real estate due diligence and transactions, dispute resolution and litigation. So, whether you are an employer or employee who needs legal support in Ukraine, a real estate investor who is looking into options in Kyiv, or you have a private or business matter and need court advocacy in Ukraine, EXPATPRO looks forward to assisting you.

Business Relocation in Wartime

The year 2022 has changed the world. Being unpredictable it drastically erases the gains made in 2021 and challenges businesses on whether they are ready to react in the right way. Ukrainian business has been facing a test of strength this year. Once the initial shock had passed, we gave our team members time to find new places of safety (if possible) for themselves and their families and to absorb the new reality of Ukraine. In the history of mankind, there have been a good many wars and, as a rule, any warfare is followed by sweeping changes. This is what we have to be ready for.

Most industries put on hold their business activity in anticipation of cessation of the high-intensity battlefield. It is hard to assess the damage done to the infrastructure, real estate, and the exact number of victims. Some businesses are considering transferring their commercial activity to another (more stable jurisdiction) and reducing the number of (or terminating) their operations in Ukraine.

Business growth as one of the key goals for any leader becomes more difficult in ever-changing circumstances. It is critical to develop a cost-efficient structure and a stable business environment. Opening new branches and units is a challenge for any money-making endeavor.

However, business relocation burns out resources.

The war in Ukraine is a force majeure, but we are creating opportunities and supporting the efforts for launching a business here (especially, an IT business). The year 2021 was full of changes in the IT industry, particularly concerning the management of virtual assets and changes in tax regulations for IT companies.

Ukraine keeps maintaining its high ranking as an IT outsourcing center. However, Ukraine has implemented special procedures for IT companies if they consider relocating their business to Ukraine. In 2021, the Ukrainian Parliament adopted a specific regulation for IT companies, i.e. the Dia City regime.

Those companies claiming “resident” status under this special tax regime are not subject to payment of income tax. Instead, the tax on withdrawn capital is applied (at the rate of 9%). Also, the salaries of the Dia City resident specialists are subject to taxation under special terms (5% personal income tax instead of 18% is applied), and the employer pays the minimal unified social tax (instead of 22% of the minimum wage rate). The first applications for Dia City residency were successfully submitted in February 2022. A total of 345 companies were registered as Dia City residents between February and September 2022. The business relocation of an existing company to another jurisdiction with all of its staff, revenues, and expenditure is a time-consuming and costly process because, unlike a startup, in this case, there is no time to bounce back, since the process of work has been long-running, and any delay can lead to serious damages and financial losses.

EXPATRPO law firm possesses expertise in relocating expatriate specialists to Ukraine for work in local IT, energy companies, etc. Our experts in the field of labor and migration law have been offering proven solutions specializing in the processing of labor relations with expatriate workers and providing full migration support.

However, business relocation is a challenge for managers, lawyers, and accountants, who have to organize and implement changes within the legal structure, and to run operational routine in such a way that it will have a minimal impact on the work of employees, as one of the essential features of this form of transferring a business is the goal of retaining foreign specialists and arranging their transfer to a new country.

Business Relocation Process

We have divided the entire relocation process into three stages: 1) creating the legal grounds for relocation; 2) supporting staff relocation; 3) relocating assets.

In the first stage, the legal team needs to carry out profound research in corporate, tax, and civil legislation on the issue of relocating a registered business to Ukraine. There is no single legislative act on companies in Ukraine, so it necessary to check the provisions of several legislative acts such as the Laws of Ukraine On Joint Stock Companies, On Limited Liability and Additional Liability Companies, On Business Associations, the Civil Code of Ukraine, the Commercial Code of Ukraine and treaties for avoiding double taxation.

It is also necessary to consider whether there are any specific regulations in Ukraine regarding the types of activities that the foreign business entity in question plans to conduct (e.g. special requirements for construction documents (On Collective Investment Institutions), regulations regarding requirements for obtaining special licenses or permits (On Financial Services and Financial Services Markets, the Tax Code of Ukraine).

It is easier to completely relocate the business for companies that provide services at a distance (designers, engineers), whose main asset is IP and the team. In addition, Ukraine has recently allocated special quotas for highly-qualified IT specialists, and employers can obtain work permits (as well as residence permits) for them on special terms.

Furthermore, it is quite easy for a foreign citizen to become an individual entrepreneur in Ukraine, which in some cases makes it possible to keep the original contracts with foreign specialists by making minor changes to them.

Each of these points makes Ukraine attractive as a new base for business, especially in the field of information technology.

It is worth noting that at the first stage it is necessary to enlist the services of a local accountant because of the peculiarities of accounting and tax reporting in Ukraine.

Changes in the payment schedule (tax reporting and tax due dates) can affect the initial business plan. Therefore, this must be agreed upon before approval of the final relocation roadmap.

The second stage is to prepare the grounds for the relocation of employees. This involves in-depth knowledge of the Labor Code of Ukraine, the Laws of Ukraine On Employment of the Population, On the Legal Status of Foreigners and Stateless Persons, as well as several resolutions of the Cabinet of Ministers of Ukraine.

Obtaining all the documents for employees requires strict adherence to the schedule and control of deadlines for preparation and submission of notifications to state authorities, payment of state duties, timely applications for visas, and legal paperwork.

Due to the peculiarities of this stage, we advise dividing it into 2 parts: a) obtaining work permits and employment (that is fully performed by employers and their authorized representatives); b) obtaining documents on the legal status of employees (the immigration stage).

Part A requires actions from the employer’s side: all the applications, notifications, and state fees are to be completed by a legal entity.

It is extremely important to pay attention to the deadlines for fulfilling each action, i.e. applying, responding (in the event that the State Employment Centre finds an error or a missing document), paying the state duty, signing the employment contract, and submitting a copy of the signed contract to the respective State Employment Centre. Each action and the terms are specified in the Law of Ukraine On the Employment of Population. And a failure to comply with the law leads to the cancellation of the work permit (irrespective of the stage at which the breach of the law occurred).

This is extremely important because a work permit is one of the grounds for an employee to obtain the D-type visa (if applicable) and a temporary residence permit. The termination of the work permit leads to the automatic revocation of all the subsequent documents obtained on the basis of it.

Work permits are now becoming differentiated on the grounds of the candidate`s citizenship: if a candidate is a citizen of Belarus or the Russian Federation, the Security Service of Ukraine shall conduct a special check/audition of the candidate. We understand the purpose of such a procedure, however, there are no rules/criteria specified in any legal action on that newly- implemented administrative procedure.

Part B requires the personal presence of the foreign employees who are submitting applications. A thorough background check on each foreign worker regarding his or her marital status saves time in the future as some papers (i.e. birth, marriage certificates) will be requested in the middle of the process (usually, the employee`s family members apply for the residence permits in virtue of the family reunification).

Consequently, each application shall be accompanied by legal support on an individual basis.

Migration rules have also changed due to the war. Since the introduction of martial law in Ukraine long-term visas have not been issued except for visas for volunteering or journalistic activities. As of now, visas are being issued on the old terms. In addition, in July 2022 the Ukrainian government introduced a visa regime for all citizens of the Russian Federation, but Ukrainian visas will not be issued to Russian citizens at all until the war has ended.

The procedure of processing the application for getting a temporary residence permit has become more sophisticated. All the data indicated in the application is thoroughly cross-checked by the Security Service of Ukraine and, if necessary, an applicant may also be invited to an interview with an officer of the Security Service. Unfortunately, we cannot predict the results and give any guarantees in the current circumstances. Applications from citizens of the Russian Federation for temporary and permanent residence permits are not accepted at all. Citizens of the Russian Federation, who have previously obtained permanent residence permits, may apply only for an extension of that type of permit.

Moreover, entry into Ukraine for citizens of Belarus and the Russian Federation has become more complicated. Citizens of these two countries can enter Ukraine only after an interview with the representatives of the Security Service of Ukraine directly at the border crossing. Citizens of Belarus can enter Ukraine if they have a work permit, family members, or property in Ukraine and can prove the purpose of their trip. Citizens of the Russian Federation can enter Ukraine without a visa only if they have a temporary or permanent residence permit in Ukraine, and they can prove the purpose of their stay in Ukraine.

The third stage covers financial issues, modifications in contracts, and, if applicable/required, work contracts performed or services rendered.

Compliance with data protection, non-competition policy, and transfer of intellectual property rights is extremely important in the work of IT companies.

The scope of work at this stage depends on the type of business that the relocated company plans to run in Ukraine, whether it is going to be a holding or operating company, what the company`s costs are, what funding is required, and in what amount, what the legal relationship of this local company is with the parent one. Undoubtedly, thorough work at the first stage will speed up the completion of this stage.

New Reality

At the moment, Ukraine is considered a risky jurisdiction to invest in and the following risks should be taken into account:

  1. safety;
  2. martial law;
  3. bank restrictions and currency regulation.

Martial law                                                             

Martial law has come into force in Ukraine since 24 February 2022, which significantly affects the functioning of business due to:

  • changes of terms (contract execution, administrative procedures, etc.)
  • changes in terms of employment;
  • mobilization.

The presidential decree on the implementation of martial law is a force majeure and in this regard, a special confirmation letter has been issued by the Chamber of Commerce and Industry of Ukraine. Business entities are exempt from liability for failing to comply with the requirements of Ukrainian legislation due to the war if they can prove that the above circumstances are the direct result of the consequences of war.

Since businesses have not been exempted from paying taxes for employees (the unified social tax rate remains 22% of the minimum salary rate), there are no special rates for personal income tax for  employees (18% + 1.5% as a military fee), our government allowed most commercial entities to apply for a special temporary tax regime (which is 2% of total turnover). This tax regime is not subject to application for some particular industries.

Employment in wartime

A special law was adopted to regulate the issues which impact businesses and private persons because of the war. Both penalties and fines are not being imposed on the employers in the event of violation of salary payment deadlines. No penalties and fines are imposed on employers in the event of violation of wage payment deadlines.

An employee can resign immediately (or on the date specified by the employee in his/her resignation notice) in the event the business is located in a zone of military activities.

The standard labor hours were increased to 60 hours per week. There are no public holidays for the duration of martial law.

An employer may temporarily “suspend” the legal validity of the employment contract (in case the enterprise is located on territories of active military actions, as the list is approved by the Cabinet of Ministries of Ukraine). This means for this period the work cannot be performed and salaries are not paid. It is assumed that the employees will receive compensation for their salaries for this ‘period’ from the Russian Federation.


Ukrainians can be mobilized to the armed forces (men, aged 18-60 and women with special qualifications). Employers are obliged to retain their work posts until they return from military service. The key problem for business is that it is almost impossible to predict and plan (be sure) that a position can be retained. It is much easier with women in this regard (at some point), but many of them have left Ukraine for security reasons.

Most men (aged 18-60) are not allowed to leave Ukraine even for business purposes, which may also harm business processes.

The demand in the job search market is incredibly high at the moment (many specialists have lost their jobs or used to work abroad and now they cannot leave Ukraine), so it is the right time to find a good employee if you have a job to offer.

Bank regulation

The National Bank of Ukraine has all the power to regulate the banking sector in the country. Restrictions on the scope of transactions, their purpose, and a fixed currency exchange rate are the most applied tools that may affect the business process in Ukraine, and are certainly important for those companies with foreign investments.

The financial monitoring system in Ukraine becomes stricter. The year 2021 was the first one to renew the process of annual reporting of the legal ownership structure in Ukraine. The obligation to keep information on the structure of legal entities was imposed on managers of companies in Ukraine (with a huge fine in case of failure to comply with the regulations). A clear and up-to-date UBO structure is also important for banks in Ukraine. We have noticed that many businesses are now more careful when choosing the structure of companies and when  considering the costs associated with maintaining proper annual notification in the budget. Due to martial law, this mechanism is not operating in full at the moment (the annual reporting obligation will come into effect in 2023). At the same time, sanctions won`t be imposed in the event of failure to submit a report within 3 months after termination of martial law.

The operations of Ukrainian companies with Belarus and Russia as the ultimate beneficiary owners (UBO) in their legal structure were suspended in February 2022 (bank accounts were blocked except for transactions related to donations to the Ukrainian army, taxes, and salary payments). The National Security and Defense Council of Ukraine is authorized to arrest the assets of the Russian Federation and Russian tax residents as a sanction in connection with both acts of war or support of the war in Ukraine.

Banks are prohibited from conducting transactions with residents of Belarus and/or Russian as a party to the transaction. The Ukrainian market needs investments more than ever. We are going through difficult times, but our economy continues to operate under special conditions offered to the business sector. We expect many international programs to be launched in Ukraine (and we already see the branches of international companies and charitable foundations registering in Ukraine) and hope that global players will move their offices from Russia to our country and are ready to support this process.

To sum up, the business relocation process is a complex legal service aimed at a complete change of business jurisdiction, combined with the resettlement of the team. And it gets more complicated in wartime. That involves the work of lawyers with different specializations: corporate, tax, labor, and migration, specialists in tax and financial planning, and accountants. An extremely careful review of the existing business model and the possibility of integration into the Ukrainian legal system, timing, and personal care of each member of the team to be relocated are the key tools for the task that the EXPATPRO law firm faces and handles successfully.