E-residency and New Opportunities in Ukraine

On 6 October 2022, the Ukrainian Parliament adopted the Law of Ukraine “On Amending the Tax Code of Ukraine and Certain Other Legislative Acts of Ukraine on Specifics of Taxation of Entrepreneurial Activities of Electronic Residents” No. 2654-IX (the “Law”) which introduces a new and unique concept of electronic residency in Ukraine designed exclusively for foreign nationals.

Once the Law becomes effective, scheduled for 1 August 2023, it will authorise eligible foreigner nationals to register in Ukraine to become an E-resident and obtain several benefits with this special status.

Eligibility for E-residency

To be eligible for this programme, a foreign national must meet certain criteria. In particular, a foreign national cannot:

― have right of permanent residence in Ukraine or already be a tax resident of Ukraine;

― be a stateless person or national/resident of the Russian Federation, countries included on the FATF “black” and “grey” lists (the Cabinet of Ministers of Ukraine is expected to approve the list of countries whose nationals are eligible for becoming an e-resident in Ukraine);

― be receiving income originating from Ukraine (except for passive types of income).

The benefits of becoming E-resident

The E-residency programme envisions the following main benefits for its applicants:

― a simplified registration procedure that includes the provision of a state-recognised digital signature;

― the possibility to open an account with a Ukrainian bank on-line easily and quickly; and

― the possibility to opt for beneficial taxation terms as an individual entrepreneur in Ukraine: 5% single tax on business income originating from outside Ukraine, subject to certain limitation criteria including a maximum income threshold.

New opportunities

Apart from E-residents who can benefit from this new programme, Ukrainian banks and other financial institutions will take this opportunity to expand their client portfolio by opening bank accounts and offering additional tailormade financial products attractive to E-residents.

The E-residency concept opens a new horizon not only to non-residents that are interested in Ukraine, but also to local business which can grow and expand.

For more information on E-residency, please contact your CMS partner or local CMS experts: Ihor Olekhov, Partner, Head of Banking and Finance, Viktoriia Stavchuk-Mulundkar, Senior Associate, Tax, and Bohdan Ilchenko, Associate, Banking and Finance.

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