Ukraine’s laws “On the legal status of foreign citizens and stateless persons” and “On immigration” state that a foreign citizen who invests the equivalent of at least USD 100,000 into the Ukrainian economy has the right to apply for permanent residence in Ukraine. Yet despite this relatively low threshold for obtaining permanent residence in Ukraine, this approach remains one of the lesser used methods to apply for a permit. Perhaps this is because many expats who might otherwise use this approach also have local spouses and prefer to rely on their marriage when applying for their Ukrainian permanent residence. However, marriage to a Ukrainian is not necessarily applicable for many of the foreign investors who wish to reside in Ukraine permanently. Moreover, recently the procedure for obtaining permanent residence via investment has undergone significant simplification, making it a potentially appealing option. This article discusses how to obtain permanent residence in Ukraine by buying property. It looks at the potential benefits of permanent residence, and things that foreign buyers should keep mind if they are considering this approach.
How to Apply
Previously, the process of using foreign investment to get a Ukrainian permanent residence permit (PRP) was much more difficult because a foreign investor was obliged to register his investment with the local executive authority. This step is no longer necessary and Ukraine’s current legislation stipulates that the main document that a foreign investor must submit to the State Migration Service Office is a certificate from his bank that confirms the inflow of foreign investment into the Ukrainian economy in foreign convertible currency totaling an amount not less than the equivalent of USD 100,000.
The procedure for obtaining a Ukrainian permanent residence permit through investment involves a series of steps. You must obtain a “no criminal record” certificate from the country of your current residence, along with an apostille. The next step you face is passing a local medical examination and getting a document that proves you are not addicted to drugs or alcohol and do not suffer from any infectious diseases. Then you will need to open a private investment bank account at a Ukrainian bank. Before doing so, you should obtain a Ukrainian Tax ID, which is a relatively simple process. Next, transfer your money (not less than the equivalent of USD 100,000) from your private overseas account to your Ukrainian investment account and open a legal entity in Ukraine in your name. For the purposes of real estate investment, this should be a limited liability company (LLC). Transfer the money from your investment account to the LLC account in the form of a share capital contribution into the authorized capital of the LLC. After this stage, the amount of the investment will appear in the LLC bank account. You can then obtain a certificate from your Ukrainian bank confirming the inflow of your foreign investment into the Ukrainian economy. You are now ready to submit your application for an immigration permit and permanent residence, along with all the required personal and company documentation.
According to Ukrainian legislation, the procedure to obtain permanent residence may take up to one year, although in practice, many lawyers are able to complete this process in two to four months. To be able to stay in Ukraine legally for more than 90 days in a 180-day period, it is advisable for a foreign investor to apply for a work permit as the director of their Ukrainian LLC and then obtain a temporary residence permit while their permanent residence application is processed.
Benefits and Barriers
Permanent residence in Ukraine offers certain benefits. You will no longer need a work permit, can reside in Ukraine permanently, and are eligible for Ukraine’s relatively low personal income tax of 18%, which can be particularly advantageous for foreigners from “high tax” countries. For citizens from some countries, having Ukrainian permanent residence can also simplify the process for obtaining visas to EU countries.
If you plan to use foreign investment in real estate to apply for permanent residence in Ukraine, then you must use a Ukrainian limited liability company (LLC) to buy your property. You would need to open your LLC with charter capital that is of equal value to the target property, followed by acquisition of the property. Eventually, after you have obtained permanent residence, it is possible to liquidate your Ukrainian company and transfer the property to your name. The above steps for buying property through an LLC to obtain permanent residence in Ukraine may seem theoretically straightforward. However, in practice, very few foreigners currently use LLCs to buy property in Ukraine due to the country’s existing currency control regime and banking regulations.
Moreover, the vast majority of real estate transactions on Ukraine’s secondary market still tend to involve the exchange of “physical cash” between local buyers and local sellers, so relatively few local real estate agencies are capable of or interested in helping foreign buyers acquire property through foreign investment into an LLC via overseas bank transfer. Foreign investors looking at this option should therefore make sure to find out if their broker has experience with such transactions before engaging their services.
Special thanks to attorneys Vasyl Cherednichenko and Tetiana Yashchenko at the law firm ExpatPro for their contributions to this article. Please note that this article is not intended to replace qualified legal advice, but rather to introduce readers to general strategies for foreigners wishing to invest in real estate in Ukraine. You should also bear in mind that your specific circumstances may differ from the assumptions used here.