Building in Ukraine — From Legal Setup to Operations

In response to the unprecedented destruction of housing, social amenities, and critical infrastructure, Ukraine has launched comprehensive recovery, reconstruction, and new-build programs at both national and regional levels.

To support these efforts, Ukraine has introduced contractor-friendly reforms:

1. Simplified licensing process: a simple declaration now replaces the full construction licence, cutting lead-times and allowing faster commencement of work.
2. Modernised public-private partnership framework: recent amendments enhance predictability and investor safeguards and establish a fast-track PPP regime—effective during martial law and for 7 years afterwards — under which designated priority projects benefit from an expedited preparation process. It also allows private partners to acquire ownership of newly built residential property under housing PPP schemes.

These combined measures create a clear pathway for foreign contractors and developers to engage in Ukrainian construction projects.

Legal Presence

Foreign companies may operate through either:

1. A local legal entity (most commonly a limited liability company), or
2. A representative office.

The selected legal form determines the tax-registration obligations in Ukraine, the procedure for opening local bank accounts, the rules for employing foreign personnel, etc.

Limited Liability Company (LLC)

LLC is the most flexible vehicle for full-fledged operations in Ukraine, which provides for:

• full legal capacity;
• limited liability of participants to their capital contributions;
• predictable and relatively fast incorporation process;
• possibility of a lower withholding tax on dividends and other repatriated income when a double-tax treaty between Ukraine and the parent company’s country allows it.

Representative Office (RO)

Recent legislative changes have simplified and clarified the registration of representative offices, shortening approval timelines and increasing procedural transparency.

A foreign company may opt for a representative office (RO) in one of two forms:

1. Permanent RO — has no legal entity status but may conduct commercial activity on behalf of the parent company.
2. Non-commercial RO — intended for preparatory or auxiliary functions for the parent company (e.g., marketing, research) without engaging in commercial activities or generating revenue in Ukraine.

ROs share the following characteristics:

• no legal entity status – all obligations are borne by the parent company;
• dual tax registration – both the RO and the parent company are subject to registration with the Ukrainian tax authorities;
• banking requirements are more complex – local accounts and foreign-currency operations often demand additional documentation;
• foreign personnel may be hired without work permits.

Funding the Vehicle

LLC

A foreign investor may acquire a share in an existing Ukrainian LLC or contribute to the charter capital of a newly established LLC by:

• Cash contribution (foreign currency or hryvnia) via non-cash transfer to the Ukrainian company’s bank account;
• In-kind contribution of equipment, vehicles, machinery, or other assets. Such contributions are documented by transfer-and-acceptance acts, pro forma invoices, customs declarations, invoices, etc.

Representative Office

The parent company finances its representative office by:

1. transferring funds for operating expenses, or
2. providing assets and other property.

⚠️ For a non-commercial office, activities must remain strictly auxiliary; otherwise, tax authorities may reclassify it as a taxable permanent establishment and impose penalties.

Key Requirements for Construction Activities in Ukraine

In recent years, Ukraine has significantly simplified access to its construction market.

A key amendment replaces the construction-licence requirement with a simple declaration. This fast-track option, once limited to Ukrainian residents, has been open to foreign contractors operating through permanent representative offices since 16 August 2024.

To undertake construction projects in Ukraine, the foreign contractor must comply with the following legal requirements:

1. Submit a declaration of business activity: During martial law, the declaration substitutes for a construction licence. A full licence must be obtained within 3 months after martial law ends.
2. Certified professionals: Employ Ukrainian-certified architects, technical-supervision engineers, and designers.
3. Registration: Register as a contractor in the Unified State Electronic System for Construction.

All construction works must comply with mandatory State Building Norms (DBN). Breaches may result in project suspension, permit revocation, and fines.

Foreign contractors may also purchase non-agricultural land, develop it, and dispose of the completed real estate—whether commercial or logistics facilities.

Conclusion

Ukraine’s recent legislative reforms — declaration-based licensing, flexible business-presence options, and a clearer package of investment incentives — have simplified the regulatory pathway for foreign contractors.

Acting early allows foreign contractors to place themselves at the centre of Europe’s largest reconstruction programme — helping shape Ukrainian infrastructure for years to come.