May 6, 2019

New report: How to outsource to Ukraine?

Are you using or consider using Ukrainian IT-talents? In this new business guide, you get advice on how to outsource and buy IT-services from Ukraine.

With one of Eastern and Central Europe’s largest pools of IT-specialists, Ukraine offers plenty of opportunities for Norwegian companies looking for IT-engineers. In Ukraine you can get the It-competence you need to a reasonable price. The technical competence is also known to be high. In this one pager, based on a recent marked study, you can read about the pros and cons of doing business in Ukraine.

It is however not always easy to know how to move forward. A new business guide conducted by KPMG Ukraine and KPMG Norway for the Norwegian-Ukrainian Chamber of Commerce (NUCC) provides tip and advice on how to outsource to Ukraine. The report includes among others the following three parts: 1) How to buy IT-services from Ukraine?, 2) How to establish an IT-office in Ukraine and 3) a descrption of relevant  taxes and duties in Norway and Ukraine.

Below you find a summary of the report and some of the main advice.

If you want to read the whole report, please send an email to Linda Skjold Oksnes, project manager ICT, or one of us in the NUCC team. We can tell you more about the risks and opportunities of doing business in Ukraine and help you find a partner.

How to buy IT-services?

Find the right partner

  • Check the reputation and references to your potential partners.
  • Conduct a background check of your potential partner. You can find an overview over what to look for in the KPMG-report. NUCC can help check information in publicly available registers.
  • Knowing the Scandinavian business culture is an advantage. Many of NUCCs members have Scandinavian clients.
  • Consider conducting a pilot to test the provider’s actual ability to deliver the requested task.

Conclude a proper contract

  • To be valid contracts between Ukrainian and Norwegian parties must include all essential (substantial) terms of a contract, such as full name of goods/services, contract price, procedure of payments and procedure for delivery. You find a complete list in the KPMG-report.
  • Describe all phases of the process, routines for reporting on the progress and how handle exceptional/unpredicted situations.
  • If you do not want an IT-company to work with a certain client, you should include a non-competition clause. You should also include a clause on transfer of IP-rights and how to manage data, see below.
  • We advice you to include an anti-corruption clause in the contract. NUCC has an anti-corruption clause, which can be used by members as a sample.

If you want to know more about what should be in a contract, you can read this onepager on concluding a contract.

Transfer of data and intellectual property rights

  • Transfer of the IP-rights to the digital product being developed should be regulated in the contract. Make also sure that transfer of IP-rights is properly covered in the contract between the company and its employees/private entrepreneurs working on the project or that the Ukrainian company has registered its IP object in accordance with Ukrainian legislation.
  • Include a clause in the contract which describes in detail the procedure of collection, transfer, processing, access and storage of data. Make sure that Ukrainian IT-company knows the requirements arising from the EU General Data Protection Regulation(GDPR).

If you want to know more about how to buy IT-services, you can read this onepager.

How to establish an IT-office in Ukraine?

  • Location: The largest IT-hubs in Ukraine are: Kyiv, Kharkiv, Lviv, Dnipro and Odessa. Here you will find most of the international companies and IT-specialists. 4 out of 5 IT-specialists works in one of these cities, according to dou.ua.
  • Be prepared: Consult a legal counsellor who knows the peculiarities of the Ukrainian legal system. A specialist can also assist in choosing the right business model.
  • Business model: Registration of a Ukrainian subsidiary is the most relevant option for Norwegian companies. A LLC or a JSC are the most common forms, where LLC is the simplest and involves less regulatory requirements. Entering a Joint Venture might also be an option.
  • Employment: To engage Ukrainian IT-specialists in Ukraine you can either i) Hire employees or ii) conclude civil agreements with Private Entrepreneurs (PE). Ukraine has currently an advantageous tax regime for private entrepreneurs (approximately 5 percent income tax). Please note that the involvement of PEs is limited under Ukrainian law by several conditions.
  • Ukrainian specialists conducting work in Norway have to register at the Norwegian tax office to obtain a tax card. If the stay is less than 14 days the employees can be exempted from personal attendance, and file an electronic application.
  • Transfer of IP-rights: Include a clause on transfer of IP-rights in the contract with your employees and/or subcontractors (private entrepreneurs etc.). This is necessary to secure the property rights for the software being developed.

If you want to know more, you can read this onepager on how to establish an office.

Taxes and duties in Ukraine and Norway

Norway and Ukraine have signed a tax treaty, which is dealing with potential double taxation.


  • Export of services from Ukraine is not subject to customs regulation.
  • Export of services treated as supplied at the customer’s place of registration, such as development and testing of digital products, is not subject to value added tax (VAT).
  • IT-specialists working for a company as private entrepreneurs are subject to 5% income tax under simplified rules. A Norwegian office in Ukraine has to pay 18 % corporate tax  if regarded as a permanent establishment.


  • Provision of services is not subject to the customs regulations in Norway.
  • Payment for outsourcing services is subject to 25% VAT. The recipient in Norway is responsible for paying the VAT when the service is regarded as remote, such as development of digital products.

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