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Author Topic: Starting up in Ukraine  (Read 13940 times)

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Offline SuperPanda

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Starting up in Ukraine
« on: September 21, 2016, 06:42:30 AM »
After some consideration and finding out earlier on today my job is done for (I'm being put on gardening leave), I've decided to take the dive and start up in Ukraine providing that a suitable factory/distillery with good infrastructure to ship to the EU/UK can be found.

I've spoken to a couple of firms both here in the UK and Ukraine, they've suggested that I set up through a Cypriot company that owns the Ukrainian subsidiary for tax reasons but it is only suitable for dividend payments, I'd still be liable for the full 25% (bar usual deductions) unless I cook the books :rolleye0009:

I'll be investing a significant amount, along with a business partner who is doing it with me but has more experience than I in this particular area, but I'm unsure as to whether the hassle of having an extra company in Cyprus is worth it to save on dividend payments that won't come for quite some time.

The main reason we picked Ukraine is because of the cheapness of set up and labour, we'd considered Poland but it's was more expensive despite slightly less hassle.

Does anyone have any opinions on whether I should listen to the various people I've spoken to thus far, I don't remember there being a Cypriot company when I was consulting before in Ukraine (I didn't set up the business, I came in much later) which is why I'm puzzled and no one has helped me out in my discussions thus far.

Online andrewfi

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Re: Starting up in Ukraine
« Reply #1 on: September 21, 2016, 07:30:49 AM »
(Q) How can a foreigner become a millionaire in Ukraine?

(A) Start off as a billionaire.
 :hidechair:
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Online AvHdB

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Re: Starting up in Ukraine
« Reply #2 on: September 21, 2016, 08:00:06 AM »
Curious what product are you exporting?

Besides time what is 'a significant amount' that you are investing?

Using a Cypriot 'holding firm' is I understand still common in Ukraine and has been since more or less the dissolution of the Soviet Union.

I would seek a variety of opinions and avoid those who are trying to sell there own 'product'.

So you know Andrew's quip has allot of truth in it.
“If you aren't in over your head, how do you know how tall you are?” T.S. Eliot


Offline msmoby

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Re: Starting up in Ukraine
« Reply #3 on: September 21, 2016, 08:04:49 AM »
SuperPanda

I can only help you re Cyprus

There are many UA representatives in Cyprus that will fall over themselves to advise you re setting up the Company

Corporation tax is 12.5 percent and zero for shipping companies

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Offline SuperPanda

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Re: Starting up in Ukraine
« Reply #4 on: September 21, 2016, 08:35:40 AM »
(Q) How can a foreigner become a millionaire in Ukraine?

(A) Start off as a billionaire.
 :hidechair:
This is very true and would apply to Israel and Russia as well as the UK too.
Curious what product are you exporting?

Besides time what is 'a significant amount' that you are investing?

Using a Cypriot 'holding firm' is I understand still common in Ukraine and has been since more or less the dissolution of the Soviet Union.

I would seek a variety of opinions and avoid those who are trying to sell there own 'product'.

So you know Andrew's quip has allot of truth in it.
We'll actually be starting get up a vodka distillery however it isn't for the Ukrainian market but an add on to another business I've got a stake in, Ukraine is just cheaper when it comes to doing it, once I wrap my head around the Cyprus/Ukraine Ltd stuff.

There will be a total of 15 million UAH invested in the first year, or at least that is the plan, we'll see what happens once we've found the ideal location.

Is there a particular reason for the Cypriot holding company, aside from dividend taxes there doesn't appear to be a lot to it as the risks are there regardless and protection doesn't appear to be there either.

Thanks :)

Edit: we do have an accountant and various people in London however they're not any help for Ukraine hence why I've turned to the Internet!

Online AvHdB

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Re: Starting up in Ukraine
« Reply #5 on: September 21, 2016, 09:05:29 AM »
. . .  we do have an accountant and various people in London however they're not any help for Ukraine hence why I've turned to the Internet!

I would seek advice from either the Raiffeisen or the Rabo Bank, the Austrian's have a strong presence in Ukraine. A while back Raiffeisen announced they were pulling out, but that planning seems to have changed. Both banks have an ongoing understanding of the farming and food distribution markets in Ukraine. OK I understand it is Vodka.

Your Vodka I assume will be grain based so Ukraine makes some sense. Curious would it not make more sense to re-brand an existing product initially?

You need to be in Kiev to figure this out so it does cost you over the long or short term.
“If you aren't in over your head, how do you know how tall you are?” T.S. Eliot

Offline Boris

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Re: Starting up in Ukraine
« Reply #6 on: September 21, 2016, 10:15:44 AM »
(Q) How can a foreigner become a millionaire in Ukraine?

(A) Start off as a billionaire.
 :hidechair:

Funny but true...Starting a business in Ukraine would not be on my list of things to do on "Gardening Leave." You would have to have major connections and even then it is a huge risk. By the way....what is Gardening Leave?

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Re: Starting up in Ukraine
« Reply #7 on: September 21, 2016, 10:19:36 AM »
(Q) How can a foreigner become a millionaire in Ukraine?

(A) Start off as a billionaire.
 :hidechair:

Funny but true...Starting a business in Ukraine would not be on my list of things to do on "Gardening Leave." You would have to have major connections and even then it is a huge risk. By the way....what is Gardening Leave?

Gardening Leave is a very English way of saying being lead to a very nice pasture as a bull and all the cows are on the other side of the fence and you can have no contact with said cows for a certain period of time.
“If you aren't in over your head, how do you know how tall you are?” T.S. Eliot

Offline msmoby

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Re: Starting up in Ukraine
« Reply #8 on: September 21, 2016, 11:14:45 AM »


Gardening Leave is a very English way of saying being lead to a very nice pasture as a bull and all the cows are on the other side of the fence and you can have no contact with said cows for a certain period of time.

You forgot to add that the 'bull' is  (normally) on full salary - pending a decision on whether to be allowed back in the field with the 'cows' or 'put out to pasture' - sent off looking for another field .... sacked / made redundant
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Online andrewfi

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Re: Starting up in Ukraine
« Reply #9 on: September 21, 2016, 12:02:11 PM »
Why not just buy the vodka  and slap pretty  labels on it?

Avoid most of the messing around. Simple transactions and the view from the perspective of the buyer is exactly the same.
...everything ends always well; if it’s still bad, then it’s not the end!

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Re: Starting up in Ukraine
« Reply #10 on: September 21, 2016, 12:10:41 PM »

Your Vodka I assume will be grain based so Ukraine makes some sense. Curious would it not make more sense to re-brand an existing product initially?


Why not just buy the vodka  and slap pretty  labels on it?

Avoid most of the messing around. Simple transactions and the view from the perspective of the buyer is exactly the same.

Andrew, Did you run out of crayons or colouring books? I could next week send you some or perhaps Moby could send you a book to learn to read English.
“If you aren't in over your head, how do you know how tall you are?” T.S. Eliot

Offline Gipsy

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Re: Starting up in Ukraine
« Reply #11 on: September 21, 2016, 12:11:51 PM »
Personally, I would not consider opening any business in Ukraine at the moment..
There are too many hands which have to be greased....
Bridge is a lot like sex, either you need a good partner, or a decent hand... Woody Allen

Online andrewfi

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Re: Starting up in Ukraine
« Reply #12 on: September 21, 2016, 12:12:52 PM »
Is there something that you are struggling to say? Put down your glass, brew a cup of strong coffee and have another try.

There's a good lad.  :'(
...everything ends always well; if it’s still bad, then it’s not the end!

Online AvHdB

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Re: Starting up in Ukraine
« Reply #13 on: September 21, 2016, 12:16:46 PM »
Is there something that you are struggling to say? Put down your glass, brew a cup of strong coffee and have another try.

There's a good lad.  :'(

I realized something, do you need to check your eye glasses?

It is obvious you can either not read, are unable to read, or do not wish to comprehend.

Or maybe you are bored by crayons and need perhaps Lego?
“If you aren't in over your head, how do you know how tall you are?” T.S. Eliot

Offline SuperPanda

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Re: Starting up in Ukraine
« Reply #14 on: September 22, 2016, 04:28:22 AM »
(Q) How can a foreigner become a millionaire in Ukraine?

(A) Start off as a billionaire.
 :hidechair:

Funny but true...Starting a business in Ukraine would not be on my list of things to do on "Gardening Leave." You would have to have major connections and even then it is a huge risk. By the way....what is Gardening Leave?
Its been on the cards for a while in all honesty, it was between Poland and Ukraine but Poland was going to be 50% more expensive going forward.

Gardening leave is where one loses his job but gets paid a lot of money to do nothing for 3 to 6 months, I can't take another job in that time frame.
. . .  we do have an accountant and various people in London however they're not any help for Ukraine hence why I've turned to the Internet!

I would seek advice from either the Raiffeisen or the Rabo Bank, the Austrian's have a strong presence in Ukraine. A while back Raiffeisen announced they were pulling out, but that planning seems to have changed. Both banks have an ongoing understanding of the farming and food distribution markets in Ukraine. OK I understand it is Vodka.

Your Vodka I assume will be grain based so Ukraine makes some sense. Curious would it not make more sense to re-brand an existing product initially?

You need to be in Kiev to figure this out so it does cost you over the long or short term.
I'll talk to those banks later on today and see if they can point me in the right direction.

Yes it'll be grain based, I've established some suppliers for the grains and certain other aspects already. Re-branding isn't an option, while its easier, it doesn't fit in with the existing business UK side and what we want to achieve from the future Ukrainian outfit.
Why not just buy the vodka  and slap pretty  labels on it?

Avoid most of the messing around. Simple transactions and the view from the perspective of the buyer is exactly the same.
I've looked at private label options but they don't provide what we're looking for and it'll be easier and cheaper in the long run to go forward with our own product straight off the bat.

Online andrewfi

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Re: Starting up in Ukraine
« Reply #15 on: September 22, 2016, 04:48:13 AM »
There's easier and easier. ;)

I absolutely understand the preference to have control over the whole process and, in many ways, if you have the expertise and resources that'd be easier for you to manage in the long term. On the other hand, given the parlous state of Ukrainian society and the rather, shall we say, backward nature of business dealings and business law over there, a situation that will not improve within the next decade or so, it might be easier (more practical) to enter into deals where you get the stock you want but where you can use more than one supplier to mitigate your risk.

If things go tits up with your manufacturing in a vertically integrated system then everything is lost. If things go wrong in a supplier/buyer relationship you wash your hands and move on.

Yes, I know, it is my opinion only, but I bet that you will find yourself in a JV setup of some kind if you try to integrate vertically and that'll be setting you up for loss at every turn.

...everything ends always well; if it’s still bad, then it’s not the end!

Offline msmoby

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Re: Starting up in Ukraine
« Reply #16 on: September 22, 2016, 07:01:05 AM »
Personally, I would not consider opening any business in Ukraine at the moment..
There are too many hands which have to be greased....

Hmm, the same might be true of some other former Soviet States... why single out Ukraine ?
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Re: Starting up in Ukraine
« Reply #18 on: September 23, 2016, 02:44:54 AM »
 Starting a business in Ukraine     It's Not April 1st is it? I thought those jokes were kept for April fools day.. :laugh:

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Offline Gipsy

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Re: Starting up in Ukraine
« Reply #19 on: September 23, 2016, 08:42:34 AM »
Personally, I would not consider opening any business in Ukraine at the moment..
There are too many hands which have to be greased....

Hmm, the same might be true of some other former Soviet States... why single out Ukraine ?

It might be true about other FSU states, but the OP is talking about Ukraine, nowhere else..
Bridge is a lot like sex, either you need a good partner, or a decent hand... Woody Allen

Offline msmoby

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Re: Starting up in Ukraine
« Reply #20 on: September 23, 2016, 09:45:53 AM »

It might be true about other FSU states, but the OP is talking about Ukraine, nowhere else..

It certainly is true about other former FSU states - even our ' leader' referred to the need to grease palms - in the context of couriers - in Russia

If somebody wants to start a biz in an FSU country - they need to live there - lots - or have someone really close - trustworthy - preferably family - to circumvent 'issues' that western nations wouldn't face



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Re: Starting up in Ukraine
« Reply #21 on: September 24, 2016, 07:21:29 AM »
It should be called "Starting up in HELL" It would make a very interesting business documentary it may even be a good idea to suggest it to Channel 4 or something I think they would jump at the chance :)

I think you will loose every thing and go home broke with your tail behind your legs..Its life!

If you succeed then you would deserve a medal... I think defo get hold of a TV Channel to follow your progress..
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Re: Starting up in Ukraine
« Reply #22 on: September 24, 2016, 12:04:11 PM »
Any start up anywhere is tough.

Both the UK and the Netherlands are it seems challenging.

The United States besides allot of lip service to small business is also raising the hurdles. In Ukraine you face other hurdles or barriers as well.

On the other side in all of the above countries you see successful start ups.

It depends less on the location and more on the commitment of those involved. Basically those here with a negative opinion are a bunch of moaning minnows with little more than arm chair expierence.
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Offline Manny

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Re: Starting up in Ukraine
« Reply #23 on: September 24, 2016, 01:30:20 PM »
It certainly is true about other former FSU states - even our ' leader' referred to the need to grease palms - in the context of couriers - in Russia

I prefaced it with the words my bet. I referred to no "need". It was simply my opinion and not based on intimate knowledge of the inside workings of the organisations involved. Source.

And one can start up in Estonia as an example of an FSU place, and one is unlikely to encounter much in the way of corruption.

But as noted, the OP is discussing Ukraine, not Russia or other FSU places.
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Re: Starting up in Ukraine
« Reply #24 on: September 25, 2016, 03:34:13 AM »


I prefaced it with the words my bet. I referred to no "need". It was simply my opinion and not based on intimate knowledge of the inside workings of the organisations involved. Source.

Wow.. me thinks thou protest, too much .... 

And one can start up in Estonia as an example of an FSU place, and one is unlikely to encounter much in the way of corruption.

Estonia has had nearly twenty years free of the Soviet yolk and over 12 in the EU....

But as noted, the OP is discussing Ukraine, not Russia or other FSU places.

As, ever - lets concentrate on 'knocking' Ukraine and deny parallels elsewhere in the former  - non EU - nations of the FSU ?

I'm truly pleased if you believe Estonia is less corrupt

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