Calculating duration of stay in Ukraine for foreigners

On 31 March 2015, the Government of Ukraine amended its Resolution No. 150 dated 15 February 2012 regulating the stay of foreigners in Ukraine.

EU passport holders, along with citizens of other visa-exempt countries, may now enter Ukraine without a visa.  Exceptions may apply to long-term visitors and those seeking employment in Ukraine.

The amendments explain how to calculate the permitted length of stay for foreigners and stateless persons where no visa is required.  These groups may be permitted to remain in Ukraine for up to 90 days within any 180 day period and any calculation should be performed with reference to the previous 180 days from each day of stay (or day of entry or border control).

Employment of internally displaced persons

On 27 March 2015, Law No. 245-VII came into force. Law No. 245-VII is aimed at the social protection of persons displaced due to armed conflict in the East of Ukraine and the occupation of Crimea.

Under Law No. 245-VII, the Government will reimburse up to 6 months (and in exceptional cases up to 12 months) of the salary paid under fixed-term employment contracts by companies hiring such displaced persons. Companies will only be eligible for compensation under this scheme if the fixed-term job duration is twice the length of the reimbursement period itself – i.e. at least 12 months of employment under the fixed-term contract is required.

Military draft of employees

Due to continuing operations in the East of Ukraine, male employees may be drafted for compulsory military service. New legislation aimed at protecting their labour rights has been enacted in 2014 and 2015.

Under Ukrainian law, such employees will be entitled to protection and maintenance of their position and average salary for one year (to be compensated to the employers from the state budget and exempt from personal income tax, social security tax and military tax).

On 17 March 2015, the Resolution of the Government No. 105 dated 4 March 2015 became effective. It regulates the procedure for reimbursement of employers' costs related to the payment of salaries to employees engaged in military service. As the Resolution was issued relatively recently, some of its provisions remain ambiguous due to the lack of practical application and official interpretation by the relevant authorities.

Social security tax cut

On 13 March 2015, the Law of Ukraine No. 219-VII dated 2 March 2015 entered into force. In Ukraine, the following taxes are deductible from the employees' salaries:

  • social security tax;
  • personal income tax (15-20%); and
  • military tax (1.5%, temporary).

The Law allows employers to apply a reduced rate of social security tax (as low as 0.4% in 2015 and 0.6% in 2016) when paying salaries to employees if all of the below conditions are met:

  • the amount of salary, subject to the social security tax per employee in the reporting month is increased by at least 20% as compared to the average monthly amount per employee in 2014;
  • once the reduced rate is applied, the average social security tax payment per employee in the reporting month may not be less than the average monthly payment per employee in 2014; and
  • the number of employees in the reporting month does not exceed 200% of the average monthly number of employees in 2014.