Ukrainian Parliament votes for e-residency: Foreign IT professionals to be allowed to open businesses in Ukraine remotely

On July 13, the Verkhovna Rada passed in the first reading bill No. 5270 about e-residency, which will allow foreign specialists to register as individual entrepreneurs (FOP) and pay taxes in Ukraine without the need to stay in the country.

According to the Ministry of Digital Transformation, foreign IT specialists, freelancers, and entrepreneurs in the creative economy will have a special taxation regime to make the Ukrainian e-residency even more attractive.

How will the e-Residency work

As we already stated, the e-residency will allow IT professionals to “move” their business to Ukraine just in a few clicks while physically staying in their homeland. To obtain the e-resident status, a foreigner must apply on the e-residency portal and pass a check following the current legislation in the Security Service and the Ministry of Internal Affairs of Ukraine. 

Identification and verification at the consular office are mandatory to obtain the status. After that, a foreigner receives a TIN, e-resident status, and digital signature. Further steps are not very different from those of Ukrainian entrepreneurs:

• e-resident registers as an FOP online through the Diia Service
• they open accounts in Ukrainian banks to receive income
• they pay income tax in Ukraine

“The Ministry of Digital Transformation is shaping the country’s digital economy by attracting foreigners to do business remotely in Ukraine. The e-residency bill will create enormous investment opportunities for the country. It will improve the national image of Ukraine in the international IT market and will bring more than $1.5 million to the state budget annually,” said Minister of Digital Transformation of Ukraine Mykhailo Fedorov.

Restrictions on the types of business activities for e-residents

The bill prescribes a rule according to which an e-resident entrepreneur can carry out only the following types of economic activities:

• Publishing of computer games (58.21 NACE)
• Other software publishing (58.29 NACE)
• Computer programming activities(62.01 NACE)
• Other information technology and computer service activities (62.09 NACE)
• Data processing, hosting and related activities (63.11 NACE)

Alex Bornyakov, Deputy Minister of Digital Transformation on issues relating to IT Development, also stated that special taxation mechanisms would be offered to foreign IT professionals, freelancers, and entrepreneurs in the field of the creative economy.

The Ministry of Digital Transformation expects that by the end of 2022, Ukraine will have 3,000+ e-residents, who will bring over $1,500,000 to the state budget annually.