Forms of Ownership in Ukraine: What is Suitable in Your Case?

Ownership has always been a key issue in business and investment. Choosing the best form of ownership in Ukraine depends on many factors such as objectives, tax liabilities and level of control. In this article we will look at just the basic but most popular forms of ownership that are available in Ukraine and give you an idea of how to choose the most suitable one for your needs.

1. Individual Entrepreneurship or Physical Entrepreneur (FOP).

FOP is the most common form of ownership in Ukraine. It is suitable for small entrepreneurs and startups. The main advantages of FOP include no minimum authorized capital, simple registration and low taxes, on average 5% of turnover. However, FOP has no limitation of liability, which means that your personal property can be used to satisfy business debts. However, the main disadvantage of this form of business activity is the limitation of annual turnover in the amount of 7,818,900 UAH, which is 210,000.00 USD, as of 2023.

2. Limited Liability Company (LLC)

LLC is a popular form of ownership for small and medium-sized enterprises. Authorized capital is required, minimum authorized capital is UAH 1, maximum authorized capital is unlimited. The annual turnover of the company is not limited. The number of founders and employees is not limited. LLC has limited liability, which means that the owners' property is not used to satisfy the company's debts. This form of ownership is subject to income tax, which is 18% in Ukraine. LLC can be a VAT payer and can also operate without paying VAT.  VAT rate for LLC in Ukraine is 20%.  In the vast majority of cases this form of ownership is used for doing business in Ukraine, when the annual turnover exceeds 7,818,900 UAH / 210,000.00 USD.

3. Joint Stock Company (JSC)

Joint Stock Company provides shareholders with shares in the company, which makes it an ideal choice for large enterprises and corporations. The authorized capital must be at least UAH 4,000,000.00 or USD 108,000.00 and shares are sold publicly or distributed among the founders of the Joint Stock Company. A JSC is required to file accounts and pay income tax.

4. Cooperatives

Cooperatives are a form of ownership that brings together entrepreneurs to operate together. They can be focused on different sectors and their authorized capital depends on the number of participants. Cooperatives enjoy tax benefits and are popular among small farmers and fishermen.