Our guide to Payroll in Ukraine

Doing Business in Ukraine

Investing in Ukraine

Ukraine remains investable in 2026 despite wartime conditions. The economy has shown resilience, supported by agricultural exports, the IT sector, and post-war reconstruction opportunities. Government policy aims to attract foreign investors through reforms, digitization (e.g., Diia City), tax incentives, and EU-aligned regulatory improvements.

Basic Facts about Ukraine

Capital: Kyiv

Currency: Ukrainian Hryvnia (UAH)

Population: ~36–40 million (varies due to displacement)

Languages: Ukrainian (official)

Tax year: 1 Jan – 31 Dec

Public Holidays (2026)

Main national holidays in 2026 include:

• New Year’s Day: 1 Jan
• Orthodox Christmas: 7 Jan
• International Women’s Day: 8 & 9 March
• Orthodox Easter: 12–13 April
• Labor Day: 1 May
• Constitution Day: 28–29 June
• Statehood Day: 28 July
• Independence Day: 24 August
• Defender’s Day: 14 October
• Christmas (Western): 25 December

How to say?

English: Ukrainian (Pronunciation)

Hello: Привіт / Добрий день (Pri-veet / Dob-ryi den)

Good Morning: Доброго ранку (Dob-ro-ho ran-ku)

Good Evening: Добрий вечір (Dob-ryi ve-chir)

Do you speak English? Ви говорите англійською? / Ти говориш англійською? (Vy ho-vo-ry-te an-hliys-ko-yu / Ty ho-vo-rysh)

Goodbye: До побачення (Do po-ba-chen-nya)

Thank You: Дякую (Dya-ku-yu)

See You Later: Побачимося (Po-ba-chi-mo-sya)

Registrations & Establishing an Entity

Foreigners may register:

• LLC (most common)
• JSC
• Representative office
• Sole Proprietor (FOP)

Ukraine continues digitalizing company registration, but procedural complexity and required documentation remain significant for non-residents.

Setting Up a Legal Structure

Most investors choose:

• LLC, due to flexible management and limited liability.
• Diia City regime for tech companies (optional, with special tax treatment).
  Business forms and regulatory obligations around beneficial owners, audits, and governance are detailed in professional investment guides.

Banking

Ukraine’s banking sector remains operational but tightly regulated, especially due to wartime risks and currency controls. Investors must meet strict KYC/AML requirements. Banks evaluate documentation carefully.

Working Week

Standard working hours: 40 hours/week.

Employment Law

Holiday Accrual

Annual paid leave is typically 24 days, with proposed expansions under the draft Labor Code (potentially longer).

Maternity / Paternal Leave

Maternity leave follows the Labour Code. The draft 2026 Labour Code proposes modernizations in parental protections.

Sickness

Sick-leave rules remain regulated under general labour law; compensation varies by employer social insurance mechanisms. (Draft code changes pending.)

National Service

Ukrainian nationals may be subject to military mobilization requirements. These operate separately from employment law but strongly impact workforce availability.

Labour Law Framework

Key points from recent and draft reforms:

• Move toward new Labour Code aligned with EU norms (still under review in 2026).
• Increased use of electronic employment agreements.
• Potential right to disconnect.
• Modernization of contract rules and non-discrimination standards.

Wartime-adjusted labour rules include:

• Mechanisms for suspension of employment (formalized and restricted to specific situations).
• Adjustments to termination processes.

Tax & Social Security

Corporate Income Tax

• Standard CIT: 18%
• Financial institutions: 25%
• Banks: 50% (heavy wartime surcharge in 2026)
• WHT: 15% on many passive payments to non-residents

Personal Income Tax

• Income tax: 18%
• Military tax: 5% (increased from prior years)
  → Effective employee tax: 23% on income.
  
  

Social Security

• Unified Social Contribution (USC):
• Employer pays 22%
• Employees pay 0%

Minimum Wage 2026

• The minimum wage effective 1 January 2026 is:
• UAH 8,647 per month
• UAH 52 per hour
  
  

This is an increase from UAH 8,000 in 2025.

Payroll

Payroll Rules

• Employees must earn at least the monthly minimum (UAH 8,647 for full time).
• Part-time pay is proportional.
• Employers must deduct:
• 18% personal income tax
• 5% military levy
• Employers pay 22% USC on top of gross salary.

Reports

Payroll reporting must align with:

• Monthly USC filings
• Employee tax declarations
• Digital Wage Protection requirements (enhanced wartime oversight)

New Employees & Leavers

Employers must:

• Register employees with tax and social funds.
• Comply with payroll documentation and digital reporting norms.
• Follow updated rules for USC payments (mandatory for FOPs again).

Employee Benefits

Common benefits:

• Paid annual leave
• Sick leave
• Maternity protections
• End-of-service payments depending on contract
• Employers frequently provide extra allowances due to wartime conditions

Visa & Work Permit

Ukraine is preparing a single permit covering temporary residence and employment for foreign workers. This would simplify hiring foreign nationals.

Electronic employment agreements also facilitate remote/on-site multinational recruitment.

• Payroll tax payments are due on the 21st and 7th of each month
• SSC compliance includes mandatory top-ups to minimum wage base
• Bonus payments are customary, though not statutory
• Some employee benefits (health insurance, housing, etc.) may be taxed
• Ukraine’s employment law allows significant leave flexibility tied to social protections
• All reports are filed through the eCabinet tax portal
• Currency: UAH (Ukrainian Hryvnia)
• Banks operate Mon–Fri, 9am–5pm. Most closed weekends
• Salary must be paid in UAH to a Ukrainian bank account

Further Information

For more information, or assistance with Ukraine Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.