Do I Need a Local Entity to Hire in Ukraine?

In Ukraine, a "local entity" refers to a recognized business presence that can act as an employer, such as a subsidiary or branch office. This setup allows your company to comply with local payroll and employment obligations, which are essential for hiring employees in the country.

Without a local entity, you generally can't manage payroll, register as an employer, or fulfill mandatory employment protections. An alternative to establishing a local entity is using an Employer of Record (EOR), which can handle these responsibilities on your behalf.

What is Required to Employ Someone in Ukraine?

• Local employing entity required to directly employ? Usually yes (unless using an EOR)
• Payroll registration required? Yes (registration with the State Fiscal Service is mandatory)
• Withholding/tax remittance required? Yes (employers must withhold personal income tax and military tax)
• Social contributions required? Yes (mandatory contributions to the State Social Insurance Fund)
• Local employment agreement required? Yes (employment contracts must comply with Ukrainian labor laws)
• Mandatory benefits to budget? Yes (includes paid leave, sick leave, and social security)
• Works council/collective agreements considerations? Often (certain sectors may have collective agreements)

Best Options If You're Hiring in Ukraine

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should proceed with caution. Hiring contractors in Ukraine can be a viable option, but it comes with risks if the relationship resembles employment.

While contractors don’t require a local entity, misclassification can lead to legal issues. Here are key points to consider:

• Ensure the contractor operates independently and is not integrated into your business.
• Be cautious if the contractor works exclusively for you or if you control their work conditions.
• Understand that Ukrainian law provides strong protections for workers, making misclassification a serious risk.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Ukraine, depending on the type of business and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 10,000–25,000 UAH per month ($270–$675)
• Payroll provider: Estimated 1,500–4,500 UAH per employee per month ($40–$120)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 30,000–100,000 UAH per year ($810–$2,700)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Ukraine

Hiring in Ukraine can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Ukraine quickly without establishing a local entity, eliminating incorporation costs and ongoing administration.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s managed payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.