Representative office accounting is the bookkeeping, payroll and tax compliance of a foreign company’s unit in Ukraine, reported under Law No. 996-XIV and the Tax Code of Ukraine (ПКУ). Key Solutions does this under contract, including reports for head office.
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In short
- When you need it: a foreign company has accredited a representative office in Ukraine, is hiring staff or opening a bank account.
- What you get: books kept from the registration date, payroll and payroll taxes, filings with the State Tax Service (ДПС) and a reporting pack for head office.
- Timing: the start date depends on the number of open periods and the state of the documents; after that, filings follow the Tax Code calendar.
- Cost depends on the office’s tax status, the number of transactions and employees, and the head office reporting format.
- First step: send the accreditation documents, a description of the office’s functions and the headcount, and we will define the scope of work.
Does a representative office have to keep accounting records in Ukraine?
Yes. A representative office of a foreign company keeps accounting records and prepares financial statements under the same rules as a Ukrainian company. The Law on Accounting and Financial Reporting No. 996-XIV (Закон «Про бухгалтерський облік та фінансову звітність в Україні») expressly covers branches and representative offices of foreign legal entities (Art. 2(1) of Law No. 996-XIV). Records are kept continuously from registration until liquidation (Art. 8(1)).
The office chooses how to organise its accounting: an in-house accountant or a contract with an accounting or audit firm (Art. 8(4)). Before work starts, the office sets (Art. 8(5) and Art. 10(2) of Law No. 996-XIV):
- an accounting policy agreed with head office, including whether to apply IFRS;
- the form of accounting and the set of accounting registers;
- document flow rules and the staff who sign primary documents;
- the items and frequency of stock counts.
A representative office files abbreviated financial statements, a balance sheet and an income statement, unless it is required to report under IFRS (Art. 11(3)).
Permanent establishment or auxiliary office: what changes for tax
For tax purposes, what matters is what the office actually does. The Tax Code treats as a permanent establishment any place through which a non-resident fully or partly carries on business in Ukraine (Tax Code, subpara. 14.1.193).
| Situation | Taxes and reporting | Legal basis |
|---|---|---|
| The office only collects information, buys or displays goods for the non-resident | Not a permanent establishment if the work is preparatory or auxiliary: payroll taxes and financial statements | Tax Code, subpara. 14.1.193 |
| The office negotiates, signs contracts or sells on the non-resident’s behalf | Permanent establishment: corporate income tax of 18% under the general rules | Tax Code, subparas. 14.1.193, 141.4.7, para. 136.1 |
| Transactions between the non-resident and its permanent establishment exceed UAH 10 million a year | Controlled transactions: transfer pricing report and documentation | Tax Code, subpara. 39.2.1.7 |
| The office employs staff | Personal income tax (ПДФО) 18%, military levy (військовий збір) 5%, single social contribution (ЄСВ) 22% | Tax Code, para. 167.1, para. 16-1 subsec. 10 sec. XX; Law No. 2464-VI, Art. 8 |
Important. If a tax inspection finds that the non-resident operates through a permanent establishment without tax registration, the tax authority can register it on the basis of the inspection report (Tax Code, para. 64.5). Check the office’s functions and staff powers of attorney before accounting starts.
What representative office accounting includes
- Accounting policy and a working chart of accounts that reflect head office requirements.
- Monthly processing of primary documents, bank statements and foreign currency transactions, with exchange differences.
- Accounting for head office funding and the office’s running costs.
- Payroll, holiday and sick pay, personal income tax, military levy, single social contribution and HR records.
- Financial statements, the payroll tax return and, for a permanent establishment, the corporate income tax return.
- A reporting pack for head office in the group format.
- Replies to tax authority requests, preparation for tax inspections and support during them.
How we work
- Office status and records. We review the accreditation, the office’s functions and the state of the books.
- Contract and accounting policy. We agree the scope, deadlines, liability and the head office reporting format.
- Document handover. We take over primary documents, the accounting database and HR orders, and agree how reports are signed with an electronic signature.
- Monthly books and payroll. We post transactions, calculate payroll and taxes, and send amounts and payment dates.
- Tax and head office reports. We file tax returns and prepare the consolidation pack.
- Annual financial statements. We prepare the year-end statements and a list of questions for head office.
Timing
The start date depends on the number of open periods, the state of primary documents and whether accounting restoration is needed first. We set it in the contract after reviewing the documents; after that, the work follows the Tax Code calendar.
The Tax Code sets a separate deadline: the non-resident applies for tax registration at the location of the representative office within ten days of accreditation (Tax Code, para. 64.5).
What affects the cost
- Tax status: an auxiliary office, or a permanent establishment with corporate income tax and transfer pricing.
- Number of transactions, foreign currency payments and counterparties per month.
- Number of employees and HR events.
- Format and frequency of head office reports: IFRS, group forms, reporting language.
- State of the books at the start and the number of open periods.
We quote the fee after reviewing the documents and fix it in the contract.
What we need from you
- Documents on the office’s accreditation and the non-resident’s tax registration.
- The office’s regulations, the head of office’s power of attorney and a description of the office’s functions.
- Bank statements, contracts and primary documents for the month, by the agreed date.
- HR orders, employment contracts and timesheets.
- Head office reporting requirements: forms, chart of accounts, deadlines.
- A contact person who approves payments and answers questions.
What you receive
- Books kept from the registration date in line with the accounting policy.
- Filed tax returns and financial statements with State Tax Service receipts.
- Payroll and payroll tax calculations, with payment instructions before each due date.
- A head office reporting pack in the agreed format.
- Written replies to tax authority requests and documents for inspections.
Find out the cost of support
Send the accreditation date, the headcount and head office reporting requirements. We will reply with the scope of work, the reporting format and the fee.
Head office reporting and support in English
Head office consolidates the office’s figures into group reporting under IFRS or its own forms. We prepare the consolidation pack and, where needed, carry out transformation of statements to IFRS. An English-speaking specialist works with managers who do not speak Ukrainian.
If the foreign company imports goods through a Ukrainian LLC, that is a separate area of accounting with customs declarations and import VAT: accounting for importers and foreign trade. Companies registered abroad (UK, UAE, US) are served by our group’s project crystal.tax.
Legal basis
Rules this work relies on
- Law No. 996-XIV, Arts. 2, 8, 11 — accounting and abbreviated financial statements of representative offices, ways to organise accounting.
- Tax Code, subpara. 14.1.193, para. 64.5 — permanent establishment and tax registration of a non-resident.
- Tax Code, subparas. 141.4.7, 39.2.1.7 — profit of a permanent establishment and controlled transactions with the non-resident.
- Tax Code, subpara. 14.1.180, Law No. 2464-VI, Art. 4 — the office as tax agent for personal income tax and as payer of the single social contribution (Закон «Про збір та облік єдиного внеску на загальнообов’язкове державне соціальне страхування»).
- Procedure for Submitting Financial Statements No. 419, para. 1 (Порядок подання фінансової звітності) — the procedure applies to representative offices of foreign entities.
Risks and why to hand accounting to a contracted team
The costliest mistake is a wrong tax status: if the office in fact signs contracts, the tax authority can treat it as a permanent establishment and assess corporate income tax. Next come gaps between Ukrainian reporting and the head office pack, and payroll tax errors for which the office answers as tax agent.
We work under a contract that sets out scope, deadlines and liability. Registration (accreditation) and liquidation of the office are handled by our group’s lawyers at legal.ua, so the accounting and the legal documents stay consistent.
Why Key Solutions
- Company
- ТОВ «АУДИТОРСЬКА ФІРМА «КЕЙ СОЛЮШНЗ», a Ukrainian limited liability company, EDRPOU code 39610085. The company's details are public in the Unified State Register (ЄДР).
- Contract
- We work under a written contract: scope, deadlines and liability are agreed before work starts. Client information is protected by professional confidentiality (Art. 11 of the Law on Audit of Financial Statements and Auditing Activities No. 2258-VIII, Закон «Про аудит фінансової звітності та аудиторську діяльність»).
- Group
- We are part of Innova Consulting Group: legal matters are handled by legal.ua, crypto-asset taxation by crystal.tax.
- Office
- Our office is at 77 Velyka Vasylkivska St, Kyiv. We serve clients across Ukraine remotely. The specialists who run projects are listed on the Our employees page.
Frequently asked questions
Does a foreign company's representative office have to keep accounting records in Ukraine?
Yes. Law No. 996-XIV applies to branches and representative offices of foreign legal entities (Art. 2(1)). Records are kept from the date of registration, even if the office runs only on funding from head office.
Does a representative office pay corporate income tax in Ukraine?
Corporate income tax is paid by a non-resident that operates in Ukraine through a permanent establishment; its profit is set on the arm's length principle (Tax Code, subpara. 141.4.7). An office that only collects information, buys or displays goods and has preparatory or auxiliary functions is outside the permanent establishment definition (subpara. 14.1.193) and pays payroll taxes for its staff.
What payroll taxes does a representative office pay?
As tax agent, the office withholds personal income tax and the military levy from salaries, and as employer it accrues the single social contribution; the rates are in the table above. Each month it files a return on income paid to individuals, tax withheld and contributions accrued (Tax Code, para. 51.1).
What reports does a representative office file?
Abbreviated financial statements (Art. 11(3) of Law No. 996-XIV) and the payroll tax return. A permanent establishment also files a corporate income tax return and, where Tax Code subpara. 39.2.1.7 applies, a controlled transactions report.
Can representative office accounting be outsourced?
Yes. The law allows accounting to be kept under contract by a firm that works in accounting or audit (Art. 8(4) of Law No. 996-XIV). The scope of work, document handover deadlines and each party's liability are set out in the contract.
Do you work with managers who do not speak Ukrainian?
Yes. An English-speaking specialist works with office heads and head office finance teams who do not speak Ukrainian: explains the reporting and agrees the accounting policy. We prepare the head office reporting pack in the format agreed in the contract.
Opening a representative office in Ukraine: where does accounting start?
Accounting starts on the date the office is registered. After accreditation, the non-resident registers with the tax authority (deadline under Tax Code para. 64.5), approves the accounting policy, opens a bank account and hires staff. Registration and accreditation are handled by our group's lawyers at legal.ua, and Key Solutions keeps the books from day one.
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Let’s discuss your office’s accounting
Tell us when the office was accredited, how many people it employs and which reports head office needs. We will reply with the scope of work, the reporting format and the fee.
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