After Russia’s full-scale invasion of Ukraine, businesses face a rather difficult task – what to do next. Among the options for action to ensure the activities, retain workers, and support the economy in wartime, the issue of relocation is considered.
The Ministry of Economy has implemented a program that allows businesses to help move their equipment to safe areas and resettle workers. For such assistance, companies need to fill out an application for participation in the program at the link. Detailed information about the program.
We would like to draw your attention to the fact that benefits are also introduced under martial law. In particular:
We often receive requests from Ukrainian companies to move to the Baltic States, Bulgaria, Poland, or Portugal. Less often – to Germany, Great Britain, and Cyprus, due to the cost of opening and maintenance in such business countries.
How to choose a jurisdiction?
There is no “universally ideal” jurisdiction. When choosing a place to relocate, you should pay attention to the characteristics of each country and the needs of your business today and in the nearest future.
When relocating, we recommend paying attention to the following features:
The above list is not exhaustive. Each company and business has its tasks that need to be solved for relocation. For example, before retail or manufacturers – there is a question of export of the goods and the equipment, rent of a warehouse. It is necessary to consider the peculiarities of customs duties, import taxes, and other nuances for such export.
For some companies, it is important to be closer to the country where their primary consumer market is located, for some – a loyal jurisdiction to work with crypto assets.
Once you have identified the key issues, you can assess and determine the most effective jurisdiction for a particular company. Depending on the tasks – to form a budget for registration, the cost of supporting activities in a particular country and analyze the possibilities of optimizing the tax burden.
Each jurisdiction has nuances on the list of documents required for registration.
This can be a minimum set of documents: a copy of a passport, proof of residence address (bank statement/utility bill, etc.), power of attorney, CV of the owner and director, and others, depending on the country.
For example, to open a business in Lithuania, it is necessary to obtain notarized consent from the director for the position if the director and the shareholder are different persons and the director is not able to be physically in Lithuania. The company’s founder in Poland must obtain a PESEL (analog of the Ukrainian TIN) and an electronic signature of EPUAP to sign the memorandum and other necessary documents in Portugal – without a local TIN to start the registration process is impossible. In certain countries, such as Lithuania, Bulgaria, and Slovenia, it is necessary to contribute the authorized capital to the registration and open an account in a bank or payment system.
After determining the jurisdiction and collecting the necessary documents, you must submit them to the local registrar or notary. In conditions of limited departure from the territory of Ukraine, the possibility of remote opening of the company may be key to determining jurisdiction. It should be borne in mind that for most countries, it is necessary to draw up notarized documents and take into account the additional time for sending documents. In addition, choose a bank or payment system where the account can be opened remotely, by a power of attorney, or verified online.
The issue of opening an account sometimes requires more effort and time than the registration of companies, so you must first understand in which bank, payment system, etc., the company will have an account.
While opening an account in the bank, it is necessary to consider the field of activity. For example, a limited number of banks work with high-risk companies in cryptocurrency, gambling, and IT.
Care should be taken in preparing the CV (summary) of the founders and the director. The most common question is to prove the source of funds and plans for the next 1-3 years.
The decision to open an account is left exclusively to the bank’s control department. Still, with the help of lawyers who have experience supporting such openings, you can decide with the bank and take preliminary steps to increase the chances of a favorable decision to open an account.
For example, when opening a company in Bulgaria, it should be borne in mind that local banking institutions, especially, pay attention to the documents confirming the continued stay in the country, cooperation with local companies. In addition, the founders must have a confirmed place of residence, the company – the address for the office and the contact person – a citizen of Bulgaria. In Portugal, translations of documents into Portuguese with a local certificate will not be superfluous (and it will be necessary).
In most EU countries, citizens of Ukraine who have crossed the border since February 24, 2022 – do not need to obtain a work permit, apply for a category D visa, etc. However, the respective procedures may differ significantly from country to country.
For example, Ukrainian citizens can work without additional documents after receiving temporary protection in Poland, Estonia, and Portugal. There are restrictions on the number of non-resident workers (for example, in Bulgaria, only 10% of foreign workers may be employed). For IT professionals, there is an exception of 20% of the total). In some countries, such as Portugal or Slovenia, you can continue to work as an individual entrepreneur, which is most suitable for freelancers.
Accordingly, if the issue of transportation of workers is key to you, the case of the legalization of their stay and work should be understood before determining jurisdiction.
When choosing a specific country to register a company, it is necessary to understand the features and nuances of each of the jurisdictions, both in terms of starting a business and its future activities.
We recommend opening companies with a thorough analysis of future activities. Because the company may simply not be suitable for your business, and the costs will already be incurred for start-ups and related activities. In most cases, tax analysis is a must-have.
The main issues that our customers pay attention to in the first place:
We have prepared a questionnaire to formulate critical questions for the selection of jurisdiction. It may be helpful if you want to analyze and determine the country of the relocation or seek professional help. And if you still have questions about your views on relocation, don’t hesitate to get in touch with +38067 674 47 21, firstname.lastname@example.org
The material is prepared for AIN
Authors of the material:
Sergiy Barbashin, attorney, managing partner at Trustme Law Firm
Oleg Chip, lawyer at Trustme Law Firm