Is it possible to transfer funds from a Ukrainian IE to a European IE?

Recently, more and more Ukrainian entrepreneurs are looking for opportunities to develop their business abroad, in particular in the countries of the European Union. Taking this into account, the question arises: is it possible to transfer funds from the Ukrainian FOP to the European FOP.

The transfer of funds between legal entities or entrepreneurs from different countries is regulated by both national legislation and international agreements. Regarding transfers from the Ukrainian FOP to the European FOP, several key aspects should be taken into account. According to the current legislation of Ukraine, entrepreneurs can transfer funds abroad with certain restrictions. In particular, according to the rules of the National Bank of Ukraine (NBU) , there are limits on international transactions for individuals and entrepreneurs, depending on the type of transaction. To carry out the transfer, you must have a valid reason - for example, payment for services or goods, a contract or another form of cooperation that confirms the legality of the transaction . If a Ukrainian entrepreneur wants to transfer funds abroad for investments or other large financial transactions, a special license from the NBU may be required, however, if it is a regular payment for services, a license is usually not required, although it is worth consulting with the bank to avoid misunderstandings.

According to clause 2 clause 14 of the Resolution of the Board of the National Bank of Ukraine dated February 24, 2022 No. 18 "On the operation of the banking system during the introduction of martial law", authorized institutions are prohibited from making cross-border transfers of currency values from Ukraine/transfers of funds to correspondent accounts of non-resident banks in hryvnias/foreign currency, opened in resident banks, including transfers carried out on behalf of clients, except for cases of transfers by residents for operations on the import of goods (including payment of fines, penalties, bonuses, reimbursement of related expenses in connection with the execution of a foreign economic contract , compensation for losses due to non-fulfillment of a foreign economic agreement) on the condition that the delivery of goods under such operations was/is carried out after February 23, 2021.

Tax and currency issues

Ukrainian FOPs pay taxes according to the national taxation system, which provides for a single tax or a general system depending on the selected group. If a Ukrainian entrepreneur has a contract with a European FOP, it is worth paying attention to double taxation. There is an agreement on the avoidance of double taxation between Ukraine and most of the countries of the European Union, which allows you to avoid paying taxes in two countries on the same income. Therefore, the NBU allows e-commerce participants to buy and transfer foreign currency abroad to pay VAT for goods purchased by Ukrainian manufacturers by consumers from EU countries . For this, e-sellers must be registered as taxpayers in the EU. This relaxation is aimed at supporting small and medium-sized businesses, which will be able to promote their goods on the EU market through trade platforms. At the same time, a negative impact on international reserves is not expected, since foreign exchange revenues from the sale of goods will significantly exceed the need for foreign currency for paying VAT in the EU.

Transfers between Ukrainian and European FOP are made in foreign currency. Currency regulation is in force in Ukraine, which determines that all operations abroad are carried out in foreign currency (mainly in euros or US dollars). It is also necessary to take into account possible fluctuations in the exchange rate and fees for international transactions. To do this, it is necessary to provide documents confirming the legality of the transfer, such as a contract for the provision of services or the purchase of goods, acts of acceptance and transfer of goods (services provided) .

So, it is quite possible to transfer funds from a Ukrainian FOP to a European FOP , but certain rules must be followed for this. The main conditions are the correct preparation of documents, compliance with currency legislation and tax regulations of both countries. Consultation with an accountant and a lawyer before carrying out such transactions will help to avoid possible problems and ensure their successful implementation. Useful advice: it is worth carefully studying the tax and legal regulations of both countries in order to avoid unforeseen difficulties. International business has its intricacies, but with proper preparation, transferring funds will be done easily and without problems.

Templates that may be useful:

- Offer account for a non-resident counterparty (legal services) ;
- Offer account for a non-resident counterparty (software development );
- Offer account for a non-resident counterparty ( consulting services) ;
- Offer invoice and deed for a non-resident counterparty ( royalty) ;
- Commercial invoice for a non-resident counterparty ;
- Proforma invoice for goods ;
- Credit note invoice ;
- Contract of purchase and sale of goods (FCA import) for a non-resident counterparty ;
- Agreement on the development of a software package for a non-resident counterparty ;