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Global PEO and payroll for Ukraine

The second-largest European country, Ukraine offers a strategic geographic location, European cultural traditions, visa-free entry for citizens of many countries, an Association Agreement with the EU, and a highly educated workforce. If you or your international clients are considering expanding to Ukraine, you may opt to set up a company there. However, setting up a business in Ukraine can be challenging and risky, and it is not necessary, especially if your main goal is to run smooth and risk-free operations. Acumen’s got a viable alternative to help you get your business up and running by employing your talent in the country. Our Global PEO and Payroll solution is designed to offer your international business an efficient way to expand its operations without establishing a legal business entity in Ukraine.

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Partnering with Acumen International as a Global Professional Employer Organization (PEO) offers your business the local knowledge and on-the-ground support to conduct business in Ukraine without the risk of legal or tax repercussions.

Acumen International – Your Professional Employer Organisation in Ukraine

Whether you are an agency representing international clients or are conducting your own business operations abroad, Acumen International’s Global PEO and Payroll service allows you to hire and payroll local and expat employees in Ukraine on behalf of your business or agency clients. We take care of the entire employee journey, from onboarding to payroll, including benefits provision and offboarding.

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International Global Payroll and Taxation in Ukraine

The Tax Code of Ukraine regulates taxation in Ukraine. The calendar year serves as a fiscal year in Ukraine. The key taxes in Ukraine are personal income tax (PIT), corporate profit tax (CPT), and value-added tax (VAT). Most types of personal income in Ukraine are taxed at a flat 18 per cent personal income tax rate (PIT). Ukraine has been developing an excellent reputation as an IT hub for its highly skilled tech talent. With governments worldwide cracking down on global outsourcing, the country is on the radar of organizations looking to expand their operations instead of hiring local contractors. The complexities of the Ukrainian payroll and taxation system can be a considerable deterrent to companies who want to conduct business in the Eastern European tech hub. Partnering with Acumen International and leveraging our Global PEO and Payroll service in Ukraine to handle your employment details can eliminate the burden of managing the complexities of compensating your global employees.

Employment-related taxes in Ukraine

Employers contribute social security contributions (in the form of the Unified Social Tax – the UST) on behalf of their employees. The UST is accrued on top of the employee’s gross salary at the rate of 22%for a minimum of 6,500.00 UAH (US$ 240) and capped at 97,500.00 UAH (US$ 3,583) per month. Employees pay 18% of their gross salary as personal income tax and 1.5% as military levy, which employers are responsible for withholding.

Payroll Cycle in Ukraine

The payroll cycle in Ukraine is twice a month as standard. The interval between payments should not exceed 16 calendar days (advance payment and final salary payment). Salaries in Ukraine are paid in the local currency, the Ukrainian Hryvnia (UAH).

13th salary in Ukraine

The 13th-month salary in Ukraine is considered an optional bonus and is not required by local law.

Non-payroll taxes in Ukraine

Value-added tax (VAT) was introduced in 1993 and applies to most sales of goods and services in Ukraine. The standard VAT rate is 20%; however, a lower rate of 7% applies to pharmaceutical products. Exports and international transportation are subject to VAT at a 0% rate. The corporate profit tax (CPT) rate in Ukraine is 18%. The tax is calculated based on companies’ net income. Companies must report CPT quarterly, and certain companies can report it annually.

Permanent Establishment Risk in Ukraine

Under the Ukrainian Tax Code, a permanent establishment (PE) is a fixed place of business through which a non-resident’s business activity is wholly or partly carried out. The definition of PE includes, inter alia, a place of management, branch, office, and server. Ukrainian tax law obliges non-residents to register a PE in Ukraine before starting their business activity. If a non-resident fails to register, it is deemed to be evading taxes in Ukraine. There is a potential risk that extended business travel in Ukraine or investments in local real estate may result in a permanent establishment. Avoiding establishing a legal entity or registering a PE in Ukraine by hiring independent contractors still puts your business at risk of being considered a “permanent establishment” based on the activities of these independent contractors. Once you establish a legal business entity in Ukraine, you become liable for all corporate taxes under Ukrainian law. Your organization will be taxed for profits generated within the country and subject to charges for interest and late fees on any outstanding taxes.

Tax Residency in Ukraine

Ukrainian tax residents must pay taxes in Ukraine on their worldwide income, whereas Ukrainian tax non-residents only pay taxes on their Ukrainian-source income. Double Tax Treaties may apply, and currently, Ukraine has double tax treaties with about 75 countries. The following criteria determine tax residence status in Ukraine:
  • place of residence in Ukraine
  • place of permanent residence in Ukraine
  • location of the centre of vital interests
  • number of days spent in Ukraine (more or less than 183 days per a calendar year)
  • Ukrainian citizenship
Each of the above criteria should be applied only if it is impossible to determine tax residency based on the previous one (the tie-breaker test).

How Acumen International’s PEO and Payroll Service Can Benefit Your Business in Ukraine

Ukrainian laws are continually evolving, making the local payroll and taxation systems challenging for you to navigate. Don’t let that divert your time and valuable resources from what can help your business grow. We hire and compensate your global personnel on your behalf so that you can focus on development instead of payroll and paperwork. A reliable global employment solution like Acumen’s Global PEO and Payroll service will take a significant burden off the shoulders of your business or agency clients. Outsource the administrative and compliance tasks involved in employee payroll to us. Partnering with Acumen International and leveraging our global PEO and Payroll service in Ukraine puts your agency, business, and organization in a prime position to leverage our services against your competition. Our comprehensive global PEO and payroll services are just some benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Ukraine by officially employing and compensating your best selected global talent—both locals and expats—without concerns for the legal and compliance risks faced by global employers. Are you interested in learning more about our all-in-one global PEO and payroll solution? Contact us now or request a quote.