5 steps how to obtain a 5 percent taxpayer status for a foreign IT specialist in Ukraine
Tags: Trp, Ukraine, Immigration, Featured, Taxation

5 steps how to obtain a 5 percent taxpayer status for a foreign IT specialist in Ukraine Oleksandr Oct 13, 2020·4 min read

Ukraine is famous for its attractiveness for IT business, as many analytical researches states. We assume, that Ukraine probably becomes an IT business hub in the CIS region in the close future. From one side, it is implied by established regulatory requirements for the doing IT business in Ukraine. Every year the Cabinet of Ministers of Ukraine approves or revises quotas for the immigration of IT specialists to Ukraine. In 2020, the government approved a permanent residence permit quota for 5,000 IT specialists. The advantage of immigration for an IT specialist within the framework of such a quota is obtaining a residence permit for a 10-year period with the right to travel outside Ukraine and return to Ukraine an unlimited number of times without the need to apply for a visa and other bonuses. Nevertheless, the introduced qualification criteria for specialists in the field of technology who can immigrate to Ukraine within such a quota (spoiler: the minimum work experience in the IT field should be at least 5 years) is a tough filter that allows the State Migration Service to deny technological specialists in obtaining a permanent residence permit to Ukraine within the quota. It remains for such specialists to constantly renew the temporary residence permit along with the rest “on a common basis.” And this is why the Ukrainian technology business rapidly grows: every IT beginner and experienced specialist may register as private entrepreneur, choose 5 % taxation, simplified accounting and provide services for foreign customers from any part of the world. From the other side, there are several factors supporting the IT sector, in general. These are developed infrastructure in the majority of cities of Ukraine, the availability of 4G Internet coverage in large cities, the development of the IT community in Ukraine, the availability of rental housing, the relatively high level of income of IT specialists, the flexibility of the commercial real estate rental market, the ease of acquiring the necessary infrastructure and other non-significant factors.

Everything is almost obviously for IT specialists who are the residents of Ukraine. They can obtain a 5 percent taxpayer status in 3 days by submission of the corresponding form to the state registrar. To obtain the status for non-resident, it is required to complete the following steps:

Step 1. Receiving a VISA.

To get the taxpayer status, IT specialist should arrive in Ukraine in person to submit all applications. Before planning a visit, it is better to check whether it is needed specific documents and permits to pass the Ukrainian border. The requirements may be found at the website of Ukrainian Counsel in any foreign country. The main ways to obtain the VISA are investment in Ukrainian business, marriage with Ukrainian and participation in NGO and the most popular, indeed, is a working VISA. To obtain the latter, IT specialist should receive an offer from its potential employer and permission to work in Ukraine from State Labour Service.

When the VISA has been obtained, it is time to pack the luggage and take off to Ukraine. Due to the situation related to COVID-19, it is advised to consult with lawyers or on the hotline of the customs authority of Ukraine on whether entry is open for foreigners. Besides, when crossing the border, techie will need to present a valid special insurance policy covering the cost of treatment for COVID-19. It can be ordered online or by contacting an insurance broker.

Step 2. Receiving a Temporary Residence Permit.

After arriving in Ukraine, the techie should proceed with the next steps to obtain the 5 percent taxpayer status. So, IT specialist should collect a package of documents and application forms and submit them to the State Migration Service in person.

In case everything has been done correctly, the IT businessman receives a cherished temporary residence permit. Then he can apply for a permanent residence permit (especially if you have frequent business trips).

Step 3. Household registration.

When the temporary residence permit has been received, the IT specialist needs to register its place of staying (to perform a household registration) at the local “passport office”. A household registration is required to fix a place where a person can be contacted so that the state and business can communicate with his. The techie has only 30 days to register his place of residence from the moment he has received his residence permit.

It is important to take into account that the owner of the leased premises will have to confirm in accordance with the established procedure that he is not against the registration of the place of residence in his property. As a rule, landlords ask for a surcharge or refuse altogether. In Ukraine, there is a special service for renting a residence permit, but it is better to contact a trusted landlord, as the risk of getting caught by scammers is very high.

Step 4. Obtaining a taxpayer identification number.

A taxpayer number is needed to open a bank account, register as an individual entrepreneur and for other transactions where a person will need to send or receive payments. The tax number is obtained from the tax authority at the region of household registration.

Step 5. Registration as a private entrepreneur.

Private entrepreneur is the most convenient and simple form of doing business in Ukraine based on the minimum requirements for accounting, reporting, possibility to work at foreign markets, ease of registration and the ability to obtain the 5 percent taxpayer status. Technology specialist can apply online or via the Administrative Services Center. The 5 present status may be chosen within private entrepreneur registration. When he has been registered it is needed to open a business bank account.

This status can actually be obtained in 45 days, but it is better to have a couple of days in a stock just for the case of a new lockdown caused by COVID-19 restrictions.