Employment of a foreigner without payroll in Ukraine

Employing a foreigner in Ukraine whose main place of work is out of Ukraine is uncommon but can be beneficial for certain business models. The requirements, legal and tax consequences of such employment are discussed in this material below.

Since 2022, employment service authorities have widely canceled permits for foreigners whose salaries were unpaid by Ukrainian employers and for whom no taxes were paid. The consequences of such cancellation for a foreigner could be the automatic cancellation of his residence permit in Ukraine, and for the employer - the impossibility for 1 year to obtain or extend employment permits for any other foreigners.

The legislation allows the use of foreigners’ work in Ukraine only after receiving a special permit from the State Employment Service.

Standard employment of a foreigner takes place on the basis of the conclusion of an employment contract between such a foreigner and a Ukrainian employer with all the employer's derivative obligations - notification of the start of the employee's work, payment of wages, payment of taxes and social contributions, etc.

At the same time, the legislator foresees a separate category of foreign workers who perform work on the territory of Ukraine, but do not conclude an employment contract with a Ukrainian employer. This category of foreigners is the so-called "seconded foreign workers".

A key feature of seconded foreign workers in Ukraine is that their employment contract is concluded with a foreign, not a Ukrainian, employer. The basis for using the labor of seconded foreigners in Ukraine is a contract under which a foreign employer sends an employee to a Ukrainian company to perform a certain amount of work on the territory of Ukraine.

In this scenario, the Ukrainian employer is not required to enter into an employment contract with the foreign worker. However, the employer must still obtain a work permit for the foreign worker from the State Employment Service. This permit is issued for the duration of the contract between the foreign employer and the Ukrainian company, but for no longer than three years. Meanwhile, other employment permits for foreign nationals are generally issued for a maximum term of two years.

The official fee for issuing a permit for a period of up to three years in 2024 is UAH 30 280 (10 subsistence minimums for the able-bodied population as of January 1 of the year in which the documents are submitted).

According to the general rule of international private law in Ukraine, the labor relations of seconded foreign workers who have an employment contract with a foreign company are not regulated by the law of Ukraine, unless otherwise established by an international agreement.

Based on the general rule, the Ukrainian employer does not have the obligation to inform the supervisory authorities about the start of work of such an employee, to pay the salary, since it is paid by a foreign company, and also to obtain a tax payer card for the foreigner.

Since the Ukrainian employer does not pay the seconded foreign worker a salary, he does not have the obligation to pay tax on the employee's income and social contribution.

At the same time, we emphasize that in cases of using the labor of seconded foreign workers, non-payment of social contributions by Ukrainian employers for such workers cannot be grounds for annulment of the work permit of the State Employment Service in accordance with clause 10, part 2 of Article 42-10 of the Law of Ukraine "On Employment of the Population".