One person and three cost columns of equal take-home pay: two equal employment costs, one with a provider fee, and a lower contractor cost

Own company, employer of record or FOP: what one hire in Ukraine really costs

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Figures checked on 8 October 2026. They follow the 2026 minimum wage of UAH 8,647 a month and the 2026 subsistence minimum of UAH 3,328, both set by the State Budget Law for 2026. Every amount that depends on them is reset by each year’s budget law, so check them again from January 2027.

Our briefing on your first employees in Ukraine compares the three routes on control, speed and the cost of getting out. This one puts numbers on them. It takes one specialist, agrees what they should take home each month, and works out what the same person costs as an employee of your own Ukrainian company, as an employee of an employer of record, and as a sole trader (FOP) invoicing you.

The law fixes most of the numbers. Where it does not — the provider’s fee, the accountant, the bank — this page says so and lists what to get quoted, rather than guessing.

1. The same person, three ways

The specialist should take home UAH 61,600 a month after their own taxes. For an employee, that is a gross salary of UAH 80,000.

Monthly, in UAH Employee of your own company Employee of an employer of record Group 3 FOP contractor
What is paid for the person Gross salary 80,000 Gross salary 80,000 Invoice 67,555.68
Personal income tax 14,400.00 (18%, withheld) 14,400.00 (18%, withheld) —
Single tax — — 3,377.78 (5%, paid by the contractor)
Military levy 4,000.00 (5%, withheld) 4,000.00 (5%, withheld) 675.56 (1%, paid by the contractor)
Single social contribution (SSC) 17,600.00 (22%, on top) 17,600.00 (22%, on top) 1,902.34 (the monthly minimum, paid by the contractor)
Take-home 61,600.00 61,600.00 61,600.00
Your cost for the person 97,600.00 97,600.00 67,555.68
On top The company’s running costs and 18% profit tax on whatever profit it shows The provider’s fee Nothing the law requires
Per year, before the “on top” line 1,171,200 1,171,200 810,668

On these numbers the FOP route costs UAH 30,044 a month less — 31% less, or UAH 360,532 a year. At a gross salary of UAH 250,000 the gap is UAH 81,236 a month (28%): the employer’s SSC stops at its 2026 cap of UAH 38,046.80, so the gap narrows a little as pay rises.

That gap is why the FOP route is popular. It is also what pays for the risks in section 5. Three things the table does not show:

  • Leave is already inside the employee figures. An employee has at least 24 calendar days of paid annual leave, but leave pay replaces salary for those days rather than adding to it. A FOP is paid for services. If you pay a contractor the same amount every month whatever they deliver, including for weeks off, that is itself one of the facts that point to employment.
  • The contractor’s insurance record builds on the minimum wage. A FOP owes the SSC only on the minimum wage, so unless they choose to pay on a higher base, their pension record grows on UAH 8,647 a month. An employee’s grows on their actual salary, up to the cap. Candidates who know this may price it in.
  • The comparison assumes a Group 3 contractor at 5%. Groups 1 and 2 of the simplified system may not supply a foreign company at all. A FOP on the general tax system can, but is taxed differently and the figures above do not apply — see our article on paying Ukrainian FOP contractors.

To run your own salary, use the salary calculator. Every rate and cap above is sourced in our employer costs rate card.

2. Employer of record: what the fee buys

The employment costs are the same as in your own company, to the hryvnia. Income tax, military levy and SSC do not depend on who the employer is. What you pay on top is the provider’s fee, and that is the number to compare against the running costs in section 3.

No Ukrainian VAT on the provider’s invoice to a client abroad. The Tax Code places the supply of staff — “including where the staff work at the buyer’s place of business” — where the recipient is registered (Tax Code, 186.3(г)). A Ukrainian provider invoicing your company abroad therefore charges no Ukrainian VAT. Your own country’s VAT rules decide what happens on your side.

Questions that decide the real fee:

  1. Is it a fixed amount per person or a percentage of payroll — and does it rise when you raise someone’s salary?
  2. What is included: payroll and reporting, HR documents, military registration of staff, leave and sick-leave administration, labour inspections?
  3. Who pays notice and severance when you end an assignment? Ending your service contract does not end the employment. The provider still has to dismiss the person lawfully. For redundancy that means two months’ personal notice, with salary paid throughout (Labour Code, Art. 49-2), and severance of at least one month’s average earnings (Art. 44) — at the salary above, roughly UAH 80,000. The martial-law Law No. 2136-IX changes neither; it removes the trade-union consent step where there is a union (Art. 5(2)). Article 49-2 itself waives the notice only where work cannot be provided because the employer’s facilities or means of production were destroyed in hostilities. Ending the employment by agreement of the parties remains possible and requires no severance by law.
  4. Can the provider reserve your people from mobilisation? That depends on the provider’s own critical status, not on yours.
  5. How does it meet Article 39 of the Law on Employment — pay at least equal to what you pay your own staff, and the collective-agreement condition? Our briefing on outstaffing under Article 39 explains why that matters.

3. Your own company: what the law fixes, and what you must get quoted

Setting up costs less than most foreign companies expect. Running it is where the money goes.

What the law fixes:

Item 2026 Source
Registering a new LLC No administrative fee — Article 36 lists none for registering a company Law No. 755-IV, Art. 36
Time to register The registrar reviews the documents within 24 hours of filing, not counting weekends and public holidays Law No. 755-IV, Art. 26
Registering later changes (director, address, charter) UAH 1,000 — 0.3 of the subsistence minimum, rounded; 25% less when filed online Law No. 755-IV, Art. 36(1) and (5)
Share capital No statutory minimum Law on Limited Liability Companies
Profit tax 18% of profit Tax Code, 136.1
5% simplified tax Not available: a company 25% or more owned by legal entities outside the single-tax system cannot use it — a foreign parent is outside it Tax Code, 291.5.5
Transfer pricing Applies to transactions with a related non-resident only when the company’s annual income exceeds UAH 150 million and the transactions with that counterparty exceed UAH 10 million Tax Code, 39.2.1.7
VAT on services invoiced to the parent Consulting, engineering, legal, accounting, software development and testing, data processing: supplied where the recipient is registered, so no Ukrainian VAT Tax Code, 186.3(в)
VAT on other services Supplied where the supplier is registered — in Ukraine — at 20% once the company is VAT-registered Tax Code, 186.4 and 193.1
Compulsory VAT registration Once taxable supplies exceed UAH 1,000,000 in the last 12 months Tax Code, 181.1

How the profit tax arises. A subsidiary that works for its parent earns its income by invoicing the parent. Whatever profit that leaves is taxed at 18%. Below the transfer-pricing thresholds the Tax Code does not dictate the margin; above them, the price must be at arm’s length and documented. Profit sent back as dividends is subject to 15% Ukrainian withholding tax, which a double tax treaty may reduce (Tax Code, 141.4.2), and the National Bank limits dividend transfers abroad during martial law — the current limit is in our first-employees briefing.

What you must budget for — no law sets these amounts:

  • notary, certified translations and apostilles for the parent’s documents;
  • obtaining Ukrainian tax numbers for foreign founders and directors;
  • a director — Ukrainian, or foreign with a work permit obtained by the new company (see work permits);
  • a bank account, and the bank’s charges for salary and tax payments;
  • an accountant for payroll, the monthly payroll tax return, profit tax returns and annual financial statements;
  • a legal address;
  • qualified electronic signatures for filings;
  • HR administration: the documents in our article on the HR documents an employer must hold, military registration of staff with a named responsible person, labour protection;
  • one day, closing the company again — see closing a company in Ukraine.

Several of these costs — the director, the bank account, the legal address, the annual statements — do not grow with headcount; payroll and HR administration do. That is the arithmetic of the choice: an employer-of-record fee is charged per person, while a company’s fixed costs are spread over everyone it employs.

4. FOP: what the low number assumes

The FOP column is lawful and genuinely cheaper — if four things hold, all set out in our FOP article:

  • the contractor is in Group 3 and registered for the activity you buy;
  • you pay in money and in full — and, for a transaction above UAH 400,000, within the National Bank’s 365-day settlement period;
  • the work is defined by results, not by hours under your direction;
  • the person has their own equipment and, ideally, other clients.

You withhold nothing in Ukraine. The single tax, the military levy and the SSC are the contractor’s own obligations.

5. The risks the price gap is paying for

Risk Own company Employer of record FOP contractor
Reclassification as employment Your company is the employer already Low if the provider is the genuine employer; if it only issues invoices while you hire, pay and dismiss, the risk can fall on you Yes. With a Ukrainian entity: 10 × minimum wage per person (UAH 86,470), 30 × if repeated within two years (Labour Code, Art. 265), plus back taxes. Without one: see the next row
Permanent establishment of your foreign company Lower while the company works for itself; higher if its staff habitually negotiate your contracts Depends on what the person does for you, not on who employs them Highest of the three for a contractor who works only for you, uses your email and negotiates for you. Unregistered: UAH 100,000 fine (Tax Code, 117.4) plus profit tax
Reservation from mobilisation Possible if your company is recognised as critical Only if the provider is critical Not possible — employer reservation does not cover contractors
Ending it Notice and severance; later, closing the company Notice and severance, as the service contract allocates them As the contract says

The permanent-establishment test in Tax Code 14.1.193 looks at what a person does: habitually negotiating the material terms of contracts that you then sign without substantial change, or signing them in your name, while acting exclusively for you. Holding your corporate email address is one of the facts the Code lists as evidence of that authority. A different employer on the payslip does not change those facts. Our FOP article sets out the test in full; on mobilisation, see military reservation for foreign-owned employers.

6. Which route at which size

  • One to a few people, or a market test: an employer of record. No fixed costs, no entity to close, and people can start as soon as the provider has issued the hiring order and notified the tax authority.
  • A team that will grow and stay: your own company. The fixed costs spread over more people, you can seek critical status if the company meets the criteria, and you control everything. A common sequence is to start with an employer of record and move the team across once the company and its bank account are ready.
  • Independent specialists with other clients and defined deliverables: FOP contracts — the cheapest route, and a lawful one, as long as the relationship really is a service contract.
  • Someone who works only for you, full time, under your direction: not a FOP case, whatever it saves. Use one of the first two routes.
  • IT and digital work at scale: a Diia City resident changes the employment figures — 5% income tax for its specialists. A foreign company cannot be a resident itself, but its Ukrainian company can become one if it meets the conditions; see Diia City for companies that are not software houses.

Before you decide

  1. Agree the take-home pay, then work out the gross salary or the invoice from it — not the other way round.
  2. For an employer of record: get the fee in writing, with what it includes and who pays notice and severance.
  3. For your own company: get a quote for every item in the list in section 3, and decide who will be director.
  4. For a FOP: check the group, the registered activities and whether the person really works for others too.
  5. Compare the three totals over the time you expect to keep the team — including the cost of ending each route.

How ClarusApex can help

APEX AV LLC employs people on Ukrainian employment contracts while you direct their work, and you choose whether your service contract is with APEX AV LLC in Ukraine or with FossaTech EOOD in the EU. Send us the role and the take-home pay you have in mind: we come back with the gross salary, the total employer cost and our fee for that person. When your own company is ready, we move the team across.

Sources

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