- Overview: Ukraine
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Contractor vs. employee: which is better?
- Expand without a company set up
Global PEO and payroll for Ukraine
Got Ukrainian workers who plan to go abroad fleeing the war started by Russia? Or employees who have already left Ukraine because of the war and found themselves in Poland, Hungary, the Czech Republic, Romania, Slovakia, Slovenia or any other European country?
Acumen International can help companies like yours, including IT, to compliantly employ your Ukrainian talent in foreign countries within days. Acumen’s global PEO and Payroll solution helps to legally onboard talent on-site or relocate your Ukrainian personnel so you can continue working with them as usual, no matter where they are based now. We will arrange global payroll for your employees and open bank accounts for them. Also, we can provide laptops, mobile phones, and anything the talent needs for work.
Ukraine is an increasingly attractive destination for businesses like yours with its buoyant economy based on diversified industry, agriculture and services, and a market of more than 40-million consumers.The second-largest country in Europe after Russia, Ukraine offers a strategic geographic location, European cultural traditions, visa-free entry for citizens of many countries, an Association Agreement with the EU, and 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 via employing your best selected talent in the country.
Our Global PEO and Payroll solution is designed to offer your international business an efficient way to expand their operations without the need to establish a legal business entity in Ukraine.
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 Organization in Ukraine
Whether you are an agency representing international clients or are taking 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.
NOTE: Acumen International is not a payroll service provider and we do not provide payroll as a standalone solution apart from our complex global PEO and Payroll solution in Ukraine.
International Global Payroll and Taxation in Ukraine
Taxation in Ukraine is regulated by the Tax Code of 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 percent personal income tax rate (PIT).
Ukraine has been developing an excellent reputation as an IT hub for its highly skilled tech talent. With governments around the world cracking down on global outsourcing, the country is on the radar of organizations looking to expand their operations instead of hiring local contractors.
However, the 2021 TMF Global Business Index rates Ukraine at number 35 for complexity in accounting and taxation, and the labor regulations not only favor employees over employers but are constantly evolving. In Ukraine, accounting practices are very difficult, and local tax authorities do not offer a lot of flexibility, especially concerning foreign organizations.
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 in the country.
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 0% rate.
The corporate profit tax (CPT) rate in Ukraine is 18%. The amount of corporate profit tax is calculated on the net income of companies. Companies must report CPT on a quarterly basis. Annual CPT reporting is available for certain companies.
Permanent establishment risk in Ukraine
Under the Ukrainian Tax Code, a permanent establishment (PE) is a fixed place of business through which a business activity of a non-resident is wholly or partly carried out. The definition of PE includes, inter alia, 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 the 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 need to 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.
Tax residence status in Ukraine is determined by the following criteria:
- place of residence in Ukraine
- place of permanent residence in Ukraine
- location of the center 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 not possible 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 that are continually evolving, make the local payroll and taxation systems challenging for you to navigate yourself.
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 of the 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 legal and compliance risks faced by global employers.
Disclaimer: Any of the above information is subject to changes imposed by Ukrainian laws. To get the latest updates on taxation in Ukraine and 190 countries worldwide, contact Acumen’s team of global employment experts.
Interested in finding out more about our all-in-one global PEO and payroll solution? Get in touch now or request a quote.