Your first employees in Ukraine: own company, employer of record, or contractors?

Rules checked on 14 September 2026. Figures that are reset every year are not quoted — each section says where to check them.

Most foreign companies reach the same question early: do we set up our own Ukrainian company, let a local employer hire the people for us, or work with individual contractors? Each route is legal when done properly. They differ in speed, control, the cost of getting out again, and in how exposed you are during martial law.

At a glance

	Own company (LLC)	Employer of record	Individual contractors (FOP)
Who employs the people	Your Ukrainian company	The provider's Ukrainian company	Nobody — civil contracts
Your administration	Full: payroll, reporting, military registration, inspections	Low: the provider runs it	Low, but you carry the reclassification risk
Control over the work	Full	Full day to day; the provider is the legal employer	Limited to the agreed result
Reservation from mobilisation	Possible if your company is recognised as critical	Depends on the provider's own status	Not covered — employer reservation does not apply to contractors
Getting out again	Liquidation takes time and money	End the service contract	End the contracts
Best for	A long-term, growing team	Starting quickly, testing the market, small teams	Genuinely independent specialists

Route 1: your own company

A limited liability company (TOV) is the usual vehicle. It is registered by a state registrar or a notary. Documents about the foreign parent need an apostille and a notarised Ukrainian translation; German documents are apostilled, as Germany is a party to the Hague Convention.

• Share capital: there is no statutory minimum. The founders set the amount, and each founder must pay in their contribution within six months of registration unless the charter sets another deadline (Law on Limited Liability Companies, Article 14). A token amount is legally valid, but banks, counterparties and authorities look at whether the company can actually meet its obligations.
• Director: a foreign director who will be employed by the company needs a Ukrainian work permit before taking up the role. The usual sequence is to register the company with a director who may act immediately — for example a Ukrainian citizen — let the new company obtain the work permit, and then appoint the foreign director. Foreign founders and directors also need a Ukrainian taxpayer number.
• Beneficial ownership: the company must disclose its ultimate beneficial owners in the state register and keep the information up to date. Wrong or missing data is fined.
• Bank account: the company can be registered without one, but it cannot realistically trade, pay salaries, taxes and contributions, or settle international contracts without a Ukrainian corporate account — settlements under international contracts must go through bank accounts. The bank runs its own checks and will ask for the registration extract, charter, ownership and beneficial-owner information, the director's documents and tax number, and evidence of the planned business and the source of funds. Treat account opening as part of setting up, not an afterthought.
• VAT: registration becomes mandatory once taxable supplies over the last twelve months exceed the threshold in Article 181 of the Tax Code.
• Being an employer: payroll and monthly tax reporting, military registration of staff, labour inspections, and — if you want to keep key people from being mobilised — the critical-enterprise procedure.

A representative office is quicker to register — since September 2024 through state registrars, with a review period of five working days — but it is not a legal entity. It may only do preparatory and auxiliary work for its parent, such as liaison, market research and promotion. As soon as it carries on business, the tax authority treats it as a permanent establishment that must be registered for tax. A foreign company that does business in Ukraine through a permanent establishment without tax registration faces a fine of UAH 100,000 (Tax Code, Article 117.4) — and, separately, an assessment of the corporate income tax, VAT or payroll taxes on the activity. A representative office is a listening post, not a way to run operations.

Check: usr.minjust.gov.ua, guide.diia.gov.ua, tax.gov.ua.

Route 2: an employer of record

With an employer of record, a Ukrainian company employs your people on Ukrainian employment contracts and runs payroll, taxes and HR administration, while your managers direct the work.

When your managers direct the people day to day, this is outstaffing, governed by Article 39 of the Law “On Employment of Population”. Since 15 October 2022 the law no longer requires a permit for it, and since October 2023 it contains no fine for the absence of one — guides and providers that still mention an outstaffing licence are working from repealed wording. What the law does require:

• the provider pays the people at least what you pay your own staff for the same work, applies your working-time rules, pays the social contribution, and does not stop the people from joining you directly;
• sending workers is tied to a collective agreement and the consent of a primary trade union organisation — a condition whose application to employers without either is not settled;
• some placements are banned outright, for example with a client that has cut its headcount within the past year, or for hazardous or core production work.

Our briefing Outstaffing in Ukraine: no permit since 2022 — and the rules that still apply explains the details.

Before you sign, ask the provider:

1. how it meets Article 39's collective-agreement and trade-union condition, and what its legal view is where there is neither;
2. how it makes sure people are paid at least what you pay your own staff for the same work, and whether any of your roles fall under the banned placements;
3. how it handles military registration and, if relevant, reservation of your people;
4. who your contract partner is — a Ukrainian or an EU company — and how VAT is invoiced.

Check: Law No. 5067-VI, Article 39.

Route 3: individual entrepreneurs (FOP)

Many Ukrainian specialists, especially in IT, work as registered individual entrepreneurs (FOP) under the simplified tax system. Working with them on a service contract is legitimate — if the relationship really is a service contract.

The State Labour Service and the courts look at substance, not the title of the contract. Signs of hidden employment include:

• paying for time and presence rather than for a defined result;
• regular monthly payments for ongoing work;
• a fixed schedule and the client's internal rules;
• a role that matches a job title in the national classifier;
• instructions, supervision and integration into your team.

If a contract is reclassified as employment, the company faces a fine of ten times the minimum wage for every person, and thirty times for a repeat within two years (Labour Code, Article 265) — plus back taxes and contributions.

The current Labour Code applies. A draft new Labour Code, bill No. 14386, was withdrawn on 16 July 2026 without being adopted; a separate new draft, bill No. 16010, was registered in September 2026 and is a proposal only until parliament adopts it and it enters into force.

Mobilisation: a FOP contractor is not your employee, so your company cannot reserve them from mobilisation. Record this plainly in the contract, and make no statement about the contractor's own military status — any personal deferment is their own matter.

In our experience, military registration through the employer is the main reason many male specialists of mobilisation age prefer a FOP engagement to employment. That is understandable, but it does not change the test above: if the relationship is employment in substance, the contract can be reclassified.

Changes for FOPs themselves: since 2025 they pay a military levy on their income, and since January 2026 they report quarterly. Making VAT registration compulsory for simplified-system entrepreneurs above a turnover threshold is part of Ukraine's IMF-linked tax reform, but as of September 2026 no such law has been adopted: the IMF timetable foresees legislation by the end of April 2027 and entry into force on 1 January 2028, with the threshold still to be set. This is separate from the option that already exists for group-3 entrepreneurs to work as VAT payers at a lower single-tax rate.

For IT companies: Diia City. This special legal and tax regime is open to Ukrainian companies carrying out qualifying IT activities that meet three continuing conditions:

Condition	Requirement
Qualifying income	At least 90% of total income from qualifying IT activities
Specialists	On average at least nine employees and/or gig specialists
Pay	On average at least the hryvnia equivalent of EUR 1,200 per specialist per month

For employees and gig specialists of a resident, personal income tax is generally 5% — from the month after the company obtains resident status — the military levy is 5%, and the employer's social contribution is calculated on the minimum wage rather than on the full salary. Residents can also use gig contracts, a civil contract for specialists that requires no work permit for foreigners. Start-up residents follow transitional rules, and eligibility always depends on the company's actual activities and income.

Check: dsp.gov.ua, tax.gov.ua, city.diia.gov.ua, itd.rada.gov.ua (status of bills).

What martial law adds to the decision

• Moving money out. The National Bank restricts cross-border payments. As of September 2026, dividends may be sent abroad up to the equivalent of EUR 1 million per issuer per calendar month, in total across all its dividend transfers. The dividends must come from results for periods from 1 January 2023, the Ukrainian company must have operated for at least twelve months, and the foreign shareholder must have held its stake for at least six months; the bank checks the limit through the National Bank's system. Since 11 August 2026, a company created by transformation (a change of legal form) may count its predecessor's operating period. Separate mechanisms tied to new investment or donations allow payments above the limit.
• Sanctions. Foreign-currency transactions with persons registered or permanently resident in Russia or Belarus are prohibited. Outgoing payments from the accounts of Russian or Belarusian residents, and of companies whose ultimate beneficial owners are Russian or Belarusian residents, are suspended; narrow exceptions cover payments such as salaries and taxes.
• Mobilisation. Only companies recognised as critical can reserve employees from call-up; with an employer of record, this depends on the provider.
• War-risk insurance. Investments can be insured against war and political risk through Ukraine's Export Credit Agency and international programmes such as MIGA and the US DFC.

Check: bank.gov.ua (NBU Resolution No. 18, currency regulation during martial law), eca.gov.ua.

If you plan to employ foreign staff

A foreign employee needs a work permit, obtained by the Ukrainian employer from the regional employment centre before the person starts; the standard decision time is seven working days. The permit requires a minimum salary set as a multiple of the Ukrainian minimum wage, and the fee depends on the permit's length. Employing a foreigner without a permit costs 20 times the minimum wage per person.

After the permit is issued, the employer must sign the employment contract within 90 calendar days and file a certified copy with the employment centre within ten days of signing — otherwise the permit is cancelled. The signed contract must match the draft submitted with the application. Foreign employees who live in Ukraine also need a residence basis, usually a temporary residence permit linked to the employment. Diia City gig specialists need no work permit.

Check: guide.diia.gov.ua — permit to employ foreigners.

Which route fits?

• You are testing the market or need people within weeks: an employer of record.
• You plan a team that will grow for years and want your own entity anyway: start with an employer of record and move the team into your own company once it is set up — including the bank account and, for a foreign director, the work permit.
• You work with a few independent experts who deliver defined results: FOP contracts, drafted and managed so they stay service contracts.

How ClarusApex can help

Your people can be employed by APEX AV LLC on Ukrainian employment contracts while you direct their work, and you choose whether your own service contract is with APEX AV LLC in Ukraine or with FossaTech EOOD in the EU. When you are ready for your own company, we move the team across. Stefan Lilienkamp answers questions on market entry within one business day.

This briefing is general information, not legal or tax advice for your case.