Representation of a foreign company in Ukraine VS a Subsidiary

25.11.2016 12:10 Legal
shutterstock_238323169

Foreign investors when deciding to open an office in Ukraine quietly often ask the question – which organisational and legal form is more optimal.

In general, a key difference between the subsidiary and representative office is that the subsidiary is a legal entity – resident of Ukraine, and the representative office is not a legal entity and is not a resident of Ukraine.

Nevertheless, the representative office as well as subsidiary has a number of advantages and disadvantages. For example, the subsidiary in Ukraine can be registered within 1-2 days, and the representative office – 2-3 months.  At the same time, the foreigners can work at the representative office without any permits, and in order to work at the subsidiary a working permit must be obtained.

Among other advantages of the subsidiary – pursuit of all types of commercial activity in Ukraine, free regime of application of funds on the account, absence of a direct control and responsibility of a parent company.

In its turn, one of the key factors of the opening of representative office for investors – possibility of a full control over the activities of the representative office, as well as saving of a corporate brand of the company when entry to the markets in Ukraine.

That’s why in order to answer to this question as to how organize work in Ukraine, it is necessary first of all to determine the main goal which is put before the company.  If the main goal – receipt of income in Ukraine, it is recommended to register a limited liability company, in which a subscriber will be a company-nonresident. For market analysis and search of clients it is reasonable to open the representative office.

For building an effective and safe business model it is recommended to combine these variants with regard to the company’s goals.