How to register the NGO in Ukraine: the procedure of registration and obtaining the taxpayer status

The previous article discussed a list of the main NGO registration forms. We stated that the NGOs we are interested in are divided into two big groups – public organizations (associations, unions) and charitable organizations, and the choice of the organization of a certain type to register depends on the purposes of activities that the NGO sets. So, let’s consider the procedure of NGO registration due to the legislation of Ukraine.
This article will touch upon the following topics:

• The general registration procedure, a list of the documents needed, and the stages of its implementation
• The issues due to obtaining the taxpayer status that may arise upon accreditation of a separate division of a foreign NGO
• Whether third-party organizations should be involved in the registration process.

The procedure of NGO registration

So, the registration of both Public Associations (CPOs) and Charitable organizations (BOs) takes place on the basis of the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations” dated May 15, 20023 № 755-IV (henceforth – Law of Ukraine № 755-IV).

This law does not single out separate conditions for each of them and names them as public formations (GFs), which may or may not have the status of a legal entity. Without the status of a legal entity, it is allowed to register (accredit) charitable organizations, separate divisions of a foreign NGO, representative offices, and subsidiaries of foreign charitable organizations in Ukraine (henceforth – a foreign NGO).

To successfully register the organization, you should take into account the following key stages:

1. Preparation of founding documents of the organization
2. Holding of constituent meeting
3. Preparation of the documents needed for the registration (accreditation):

Public formations with the status of legal entity – the founders are residents of Ukraine (see Article 17, Law of Ukraine № 755-IV):

• Application for state registration of the legal entity setting
• Information about Public formation management bodies
• Public Associations (CPOs) organization charter (statute)
• Or founding documents of Charitable organizations (BOs) (see requirements in Article 14 of the Law Of Ukraine “On Charitable Activities and Charitable organizations” dated July 05, 2012, № 5073-VI))
• The minutes of the founding meeting
• Application for inclusion in the register of non-profitable organizations (or it should be noted in the application for state registration of the legal entity setting)

Public formations without the status of a legal entity, the founder is a foreign NGO (see the procedure of accreditation in Article 22, Law of Ukraine № 755-IV):

• Application for state registration of a separate division of a foreign NGO
• A copy of the document of the authorized body of a foreign state that confirms the registration of a foreign NGO (for example, a certificate or an extract)
• A copy of the founding documents of a foreign NGO
• The resolution of the authorized body of a foreign NGO on the formation of a separate division of a foreign NGO and the appointment of its manager
• The founding document (statute, provisions) of a separate division of a foreign NGO, a representative office, or a subsidiary (if there are any)
• Power of attorney (notarized copy) in the name of the manager of a separate division of a foreign NGO according to the legislation of the country where it was issued
• Ownership structure (not mandatory)
• A document on the payment of the administrative fee (except for the organizations that are exempt from payments)
• If the founder is a legal entity – non-resident, the necessary documents are an extract, statement, or other document from the trade, bank, court register, etc. that confirms the registration of a legal entity – non-resident in the country of its location
• A notarized copy of an identity document of a person who is the ultimate beneficial owner of the legal entity, – for a non-resident natural person.

4. The choice of the way to submit documents for state registration:

• Personally or through an authorized representative
• Remotely (by mail)
• Online (on the site Online House of Justice the service of Public Association with the status of legal entity registration is available in the personal account)

5. Receiving the answers about:

• State registration
• Suspension of examining the documents
• State registration refusal.

Concerning the accreditation of the separate division of a foreign NGO, the Ministry of Justice has created a memo on accreditation of the separate division of a foreign NGO, a representative office, a subsidiary of a charitable organization in Ukraine.

It should be taken into account that in some cases the administrative fee for state registration of Public Formation is not charged, mainly when they are involved in providing help for the Armed Forces of Ukraine (other military units), law enforcement (special) bodies, civil defense authorities, voluntary formations of territorial communities, other persons who ensure national security and defense, repelling and deterring the armed aggression of a foreign state, as well as persons who have suffered or may suffer from such armed aggression.

The answer on the successful registration may be received on the portal of electronic services by access code that is specified in the description of the documents, issued on the basis of the results of submission documents for registration (accreditation).
The answer to the question of whether it is possible to register Public Formation remotely (online) or if physical presence is required is “Yes, it is possible. But it is advisable to use such an opportunity while registering the organization with legal entity status the founders of which are natural persons – citizens (residents) of Ukraine”.

The peculiarities of obtaining the status of a taxpayer that arise while accrediting the separate division of a foreign NGO

It has to be taken into account that the “incorrect” form of an NGO registration may cause the necessity to obtain the tax status of an income taxpayer.

So, in any way, non-residents (foreign legal companies or organizations) who carry out activities in Ukraine through separate divisions, and permanent representative offices includingly, are obliged to register with the regulatory authorities with simultaneous registration of separate divisions of such non-residents. As a result of such registration, both non-residents and separate divisions receive a certificate on form 34-OPP, in accordance with the Order of the Ministry of Finance of Ukraine “On approval of the Procedure for accounting of taxpayers and fees” dated 09.12.2011 No. 1588.

These requirements are prescribed in Clause 64.5 of Article 64 and Clause 133.3 of Article 133 of the Tax Code of Ukraine.

The stated requirements in the Articles of the Tax Code of Ukraine cover 2 cases of registration of a non-resident, which has a separate division, for tax purposes:

1. If a foreign legal company or organization carries out activities in Ukraine through their accredited (registered, legalized) separate division and such activity does not lead to their setting of a permanent representative office in Ukraine (as stated in Paragraph 14.1.193 of Clause 14.1, Article 14 of the Tax Code of Ukraine).
2. If a foreign legal company or organization carries out activities in Ukraine through their accredited (registered, legalized) separate division and such activity causes their setting of a permanent representative office in Ukraine.

In the latter case, current Clause 133.3 of Article 133 of the Tax Code of Ukraine defines the requirement to be registered as an income taxpayer, besides the requirement of registration as the taxpayer as a whole, i.e. in case they carry out economic activity (for the purpose of obtaining profit) in Ukraine through their permanent representative offices.

At the same time, it is stated in Information Letter No. 20 of the State Tax Service of Ukraine that state registration of separate divisions of foreign NGOs, representative offices, and subsidiaries of foreign charitable organizations does not lead to the creation of a permanent representative office of a non-resident (see Clause 3.2 of the Information Letter).

However, as stated in the Letter, it is informative in character and it is not a personal tax consultation, as it is not based on the peculiarities of actual conditions of a particular taxpayer operations.

Therefore, placing non-residents on the tax register (that is, assigning them a tax number of a taxpayer) does not entail their automatic registration as a payer of corporate income tax. The obligation to register as a corporate income taxpayer applies only to those non-residents who carry out economic activity (for the purpose of obtaining profit) in Ukraine through their permanent representative offices.

It is worth mentioning that a foreign NGO is obliged to be registered as a payer of other taxes and fees. Therefore, it is advisable to get an individual tax consultation (as, for example) or refer to experts for help in getting registered as discussed further.

Engaging a third-party contractor organization in NGO registration

In the process of registration, NGOs frequently face problems arising from the selection of an inappropriate contractor for such a process.

Several NGOs contracted our team, as to achieve their targets, they followed the recommendations of non-professional lawyers who registered several types of organizations simultaneously (for example, Public Associations and Charitable Organizations) without analyzing the specifics of their activity. And that was inappropriate in one case or another because as we know they have different purposes. Therefore, people often make mistakes in choosing a professional contractor organization.

As the list of documents for the Public Formation registration shows, there are many conditions and aspects in documents preparation and legitimization, therefore, it is necessary to thoroughly study the relevant legislation. Furthermore, in case of involving a third-party (contractor) organization, you should carefully choose them taking into account their practical experience in going through all the registration procedures, as well as their expertise in providing consulting advice and preparation of all the documents needed for successful completion of the registration procedure.

This especially applies to foreign NGOs as foreign founders do not always have the possibility to be personally present at the registration. Therefore, when deciding to submit documents in paper form (it is advisable for foreign NGOs to choose such a method) it is worth involving a representative by giving them a power of attorney or another document certifying their authority.

Our company also provides services on the registration of Public Associations and foreign NGOs. You may find all the necessary information via the link.

Conclusions

To sum up, the process of NGO registration involves many peculiarities and aspects that may have an impact not only on the tax consequences of the organization’s activity but also on the operational activity, in particular, the effectiveness of staff time allocation, as well as accounting and personnel accounting.

Therefore, it is crucial to choose a professional contractor organization that has specialists both in the field of accounting (taxes) and in the field of legislation and consequently can provide a differential approach when analyzing the purpose of creating an organization, and, accordingly, its registration and placing on the relevant records in the control bodies.

References

• the Law of Ukraine “On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations” dated May 15, 20023 № 755-IV
• the Law Of Ukraine “On Charitable Activities and Charitable organizations” dated July 05, 2012, № 5073-VI
• the Law of Ukraine “On Public Associations” dated March 22, 2012 № 4572-VI
• the Law of Ukraine On Prevention and Counteraction of Legalization (Laundering) of Criminal Proceeds, Financing of Terrorism and Financing of Proliferation of Weapons of Mass Destruction” dated December 06, 2019 № 361-IX
• Information letter No. 20 regarding non-residents’ fulfillment of obligations regarding tax registration
• On the approval of the general tax consultation regarding the registration of non-residents in the control bodies № 277 dated May 19, 2021
• Letter of the Ministry of Finance of Ukraine (MFU) Generalizing tax consultation regarding the registration of non-residents in the control bodies № 277 dated May 19, 2021
• The Tax Code of Ukraine dated December 02, 2010 № 2755-VI
• Individual Tax Consultation dated June 15, 2021 ІПК від 15.06.2021 № 2404/99-00-21-02-02-06.

Abbreviations used in the text

NGO – non-governmental or non-profitable organization, Public Associations (CPOs), or Charitable organizations (BOs), or public formations (GFs).

Article authors

Natalya Lytvynenko  
Project manager        

Volodymyr Jyvun   
Expert