Germany
Ukraine
Ukrainian law puts no condition on your nationality or residence, so a German founder can own 100% of a Ukrainian company from Germany, without a permit and without a visit.
Germany is also Ukraine's largest EU trading partner, and it holds the most favourable treaty position of any major origin: 10% on portfolio dividends where everyone else pays 15%, and royalties that can reach zero. What decides whether you keep any of that is a single German number, and it happens to sit just below Ukraine's headline rate.
Key facts for German founders
| Question | Answer |
|---|---|
| Can a German resident own a Ukrainian company? | Yes, 100%, individual or corporate |
| Ukrainian permit needed to own? | No |
| Ukrainian permit needed to be director? | Yes, a work permit |
| Ukrainian corporate tax | 18%, or 9% on distributed profit under Diia City |
| Withholding on dividends to Germany | 15% domestic, 5% or 10% under the treaty |
| Withholding on royalties | 15% domestic, 0% or 5% under the treaty |
| German exposure | Hinzurechnungsbesteuerung, plus the Geschäftsleitung test |
The real reason German founders do this
- Trade volume. Germany is Ukraine's largest EU trading partner, so for many Mittelstand businesses the Ukrainian relationship already exists and only lacks an entity.
- Reconstruction and defence. KNDS, the Franco-German group, established a Ukrainian subsidiary for maintenance, overhaul and spare parts production. Energy, infrastructure and machinery follow the same pattern.
- Engineering capacity at a cost no German market matches, with the Diia City regime designed to keep it onshore.
- Machinery and equipment. Selling and servicing German equipment in Ukraine is materially easier through a local entity than through a distributor.
Entity or EOR? Settle this first
| Employer of record | Your own Ukrainian entity | |
|---|---|---|
| Time to first hire | Days | Weeks, plus banking |
| Can sign Ukrainian contracts | No | Yes |
| Can bid on local and reconstruction contracts | No | Yes |
| Diia City access | No | Yes, if you qualify |
| Hinzurechnungsbesteuerung analysis | Not triggered | Possible |
| Cost shape | Per employee, per month | Setup, then a fixed annual base |
Build the entity when you need to invoice Ukrainian counterparties, bid on contracts, hold IP locally, hire past roughly ten people, or reach Diia City.
Can a German resident legally own a Ukrainian company?
Yes, with no restriction on either side. Germany does not prohibit foreign holdings. It applies two separate tests, and they catch different things.
The money rules: the 15% line, and where the company is really managed
The Außensteuergesetz attributes a foreign company's passive income to its German shareholders where the foreign entity is controlled from Germany and is low-taxed. Following the ATAD implementation legislation, the low-tax threshold is 15%.
- On the general 18% regime, Ukraine is above the line. A genuine operating company with staff and customers in Ukraine is an ordinary foreign subsidiary, and the Hinzurechnungsbesteuerung is not the problem.
- Under Diia City, 9% is below the line, and lower again in years where profit is reinvested and nothing is distributed. That is exactly the profile the regime exists to catch.
Geschäftsleitung, §10 Abgabenordnung. The second test is not about rates at all. If the Ukrainian company is in fact managed from Germany, Germany can treat it as German resident and tax it accordingly, regardless of where it is registered. For a founder who stays in Munich and signs everything from there, this is the more likely failure point of the two.
Two conclusions follow:
- The general regime is defensible, provided the company is genuinely run in Ukraine.
- Diia City is a German decision. The Ukrainian saving is real; whether you keep it is an analysis to commission before electing, not after.
The Ukraine-Germany treaty, in numbers
| Payment from Ukraine to Germany | Ukrainian domestic rate | Treaty rate |
|---|---|---|
| Dividends, non-portfolio holding | 15% | 5% |
| Dividends, portfolio holding | 15% | 10% |
| Interest | 15% | 2% or 5% |
| Royalties | 15% | 0% or 5% |
Germany holds the strongest overall position of the major origins. Portfolio dividends at 10% instead of 15% is unique among them, interest can fall to 2%, and royalties can reach zero. The zero and reduced rates apply in defined cases, so classification and shareholding level decide.
Three conditions decide whether you get any treaty rate: a German residence certificate in the Ukrainian payer's hands before the payment, a shareholding above the relevant threshold, and correct classification of the income. Relief is applied at payment, never reclaimed. Boundaries in Ukraine withholding tax for non-residents.
The remote setup path from Germany
- Check the name in the Unified State Register and fix the holding structure.
- Get a Ukrainian tax number (RNOKPP) for every German individual who will be founder, director or beneficial owner. Free, three business days, obtainable by proxy.
- Apostille in Germany and translate into Ukrainian, with the translator's signature notarised. A GmbH founder adds an apostilled Handelsregister extract and its Satzung.
- Draft the charter and the founders' decision. Not the free model charter if someone else will hold the signature.
- File offline. Diia is closed to foreign founders, so a representative lodges the file.
- Registration inside 24 hours by statute, with no state fee.
- Fund the share capital within six months, unless the charter sets a different period.
Full sequence in how to register a company in Ukraine.
Substance, and the Geschäftsleitung trap
German cases are lost on management, not on rates. What matters:
- Real premises and real staff in Ukraine, not an address service.
- Decisions taken and minuted in Kyiv, by people who are in Kyiv.
- A director who genuinely directs, which is worth remembering while an interim resident director holds the signature.
- Contracts, invoices and bank activity consistent with a Ukrainian operating company.
- Board and shareholder meetings held where the company is supposed to be run.
An entity run from a German desk is a German company with a Ukrainian registration number, and no treaty rate fixes that.
When Ukraine makes sense from Germany, and when it does not
| Situation | Verdict |
|---|---|
| An engineering or service centre with real staff | Strong |
| Selling and servicing German equipment locally | Strong |
| Reconstruction, energy or defence contracting | Strong |
| Licensing, using the treaty's zero royalty route | Strong, with classification advice |
| Fewer than five hires, no local revenue | Use an EOR instead |
| Reducing German tax without moving activity | No. The AStG and §10 AO are built for that |
Common mistakes from Germany
- Electing Diia City before the German analysis. Nine percent falls the wrong side of the 15% line.
- Running the company from Germany. The Geschäftsleitung test does not care what the register says.
- Assuming 18% against roughly 30% is the point. The gap only survives with real substance in Ukraine.
- Assuming the zero royalty rate is automatic. It applies in defined cases and classification decides.
- Requesting the residence certificate after the dividend. Ukrainian relief is applied at payment.
- Naming yourself director in the incorporation documents. Without a work permit the filing fails.
The bottom line, and how CorpSec helps
Germany has the best treaty position of any major origin and one of the cleanest analyses, provided two conditions hold: the company is genuinely managed in Ukraine, and it stays on the general 18% regime rather than dropping below the 15% line.
Diia City is where that comfortable position ends. Commission the German advice before you elect, and build the substance in Kyiv before anyone asks for it.
CorpSec sets up Ukrainian companies for German founders end to end, remotely, with the tax number, a drafted charter, an interim director, registration and banking introductions, alongside your Steuerberater.
Frequently asked questions
Can a German citizen open a company in Ukraine?
Yes, and own 100% of it, individually or through a GmbH, with no Ukrainian permit and no visit. The requirements are a Ukrainian tax number, apostilled and translated documents, and a power of attorney if you are not filing in person.
Does the Hinzurechnungsbesteuerung apply to a Ukrainian subsidiary?
It applies where the foreign entity is controlled from Germany and low-taxed. The low-tax threshold is 15% following the ATAD implementation legislation, so Ukraine's general 18% sits above it. Diia City at 9% sits below, which changes the analysis.
What is the Geschäftsleitung test?
Under §10 Abgabenordnung, a company managed in fact from Germany can be treated as German resident regardless of where it is registered. For a founder who never leaves Germany, this is a more likely failure point than the rate test.
What is the withholding tax on dividends from Ukraine to Germany?
15% domestically, reduced under the treaty to 5% on a qualifying non-portfolio holding and 10% on portfolio holdings. The 10% portfolio rate is better than any other major origin gets.
Can royalties really be taxed at zero?
The treaty provides for 0% or 5% on royalties depending on the type. Classification decides, so this is worth structuring around with advice rather than assuming.
Is 18% worth it against German rates around 30%?
Only if the activity genuinely moves to Ukraine. The gap is real, and it survives only with real premises, real staff and real decision making there.
Can I be the director of my Ukrainian company?
Not without a Ukrainian work permit, and the permit is applied for by the company once it exists. Most German founders appoint a resident director at incorporation and replace them three to five months later.
Do I need to travel to Ukraine?
No. A representative acting under a power of attorney notarised in Germany and apostilled can complete the process. Whether you should travel is a substance question rather than a procedural one.
Should I elect Diia City?
The payroll saving is genuine and has no German mirror. The 9% corporate rate is the part that needs German advice first, because it falls below the AStG low-tax threshold.
Can I take profit out of Ukraine freely?
Dividends move within EUR 1 million per calendar month, once the company has traded a year and you have held the shares six months. Trade payments in both directions are largely unrestricted.
Sources
- Außensteuergesetz: Hinzurechnungsbesteuerung and the low-tax threshold
- Abgabenordnung §10: Geschäftsleitung, the place of management test
- PwC Worldwide Tax Summaries: Ukraine withholding taxes and the Ukraine-Germany treaty rates
The German controlled foreign company regime rests on the Außensteuergesetz, whose low-tax threshold was reduced to 15% following the ATAD implementation legislation; the comparison is made on the effective burden on the relevant income and applying it to a specific structure requires German advice. The Geschäftsleitung test under §10 Abgabenordnung can make a foreign entity German resident where it is in fact managed from Germany. Ukrainian rates reflect the Tax Code of Ukraine as of September 2026. Treaty rates are drawn from the Ukraine-Germany treaty as amended by the multilateral instrument; the zero rates apply in defined cases only. This is not German or Ukrainian tax advice.