The procedure for opening foreign accounts for Ukrainian individual entrepreneurs

Ukrainian individual entrepreneurs in recent years have faced tougher financial and tax legislation. Moreover, the ongoing war causes some concern and instability in the functioning of the banking system of Ukraine. That is why Ukrainian individual entrepreneurs, those who temporarily left the country and those who remained on its territory, should consider opening a current account abroad. This will be especially beneficial for those who do business in other countries or have clients located abroad.

Legality of opening a foreign account for individual entrepreneurs

The current legislation of Ukraine does not put forward any prohibitions on opening foreign accounts for Ukrainian individual entrepreneurs in foreign banks and does not limit the terms of settlements on such accounts. Permission from the National Bank to open an account abroad is not required, as it was before.

Moreover, since the beginning of the war, many European banks have been meeting Ukrainian citizens and opening both personal and business accounts in a simplified way.

Please note that an individual entrepreneur must open a business (corporate) account. In the case of opening a personal account and receiving funds from business details, the Ukrainian tax authorities can evaluate such income as personal and apply 18% personal income tax + 1,5% military tax to them. In addition, it is important to choose the right country in order not to fall under double taxation. All these points should be discussed with a lawyer before opening a business account.

Steps for opening an account for individual entrepreneurs

1. Choosing a bank and country

The first step in opening a foreign bank account is choosing a bank and the country in which it is located. This is important because different countries may have different rules and requirements for opening an account. You should make sure that the selected bank supports the opening of accounts for individual entrepreneurs. Not all banks provide this option, so you need to do your research and choose the bank that best suits your specific business needs.

Some banks may also have certain requirements for Ukrainian non-resident clients that need to be discussed on an individual basis.

2. Analysis of bank requirements

When a bank is chosen, it is necessary to contact its representative and request information on the procedure for opening an account. Some banks may provide this information on their websites, but it is best to get all the details from the bank representatives or authorize a specialist who will do this work for you. Managers provide up-to-date information about the required documents, terms of opening an account, the minimum amount for opening an account and other important details.

3. Preparation and collection of documents

The next step is the preparation of all necessary documents. Usually, to open an account in a foreign bank, you must provide:

• national passport or other identification document;
• international passport;
• proof of residential address;
• tax identification card (TIN);
• banking recommendations;
• income statements or tax returns.

It should be borne in mind that each individual bank may request additional documents and data.

After all the necessary documents are collected, they must be translated into the language of the country where the bank is located (in most cases, into English). Some banks can accept documents in their native language, this information also needs to be clarified with a bank representative in advance. Notarization and/or apostille of documents may also be required.

When all documents are prepared, they must be sent to the bank for verification and approval. This may take several days or even weeks, depending on the bank and the country where it is located.

4. Activation and access to the account

After checking the documents, banks conduct online identification procedures or, in some cases, require the client to personally come to the branch. After passing the entire compliance, the account is activated. Sometimes a financial institution also requires an initial deposit to activate an account.

Upon completion, the individual entrepreneurs can begin to carry out financial transactions, such as transferring money, receiving payments, etc.

Most European banks provide access to online banking and other virtual services to manage your finances and accounts remotely.

Risks when opening a foreign account

Of course, a foreign account is always more about the benefits. But, do not forget about the small nuances. When opening a sole proprietorship account with a foreign bank, clients may face some restrictions and additional costs. For example, you need to take into account the currency of mutual settlements, currency conversions during transactions, restrictions on transactions and cash withdrawals, commissions for using banking services.

Each bank has its own internal rules and restrictions, so it is recommended that you carefully study the terms of use of the account.

In addition, not all banks will be willing to work with foreign individual entrepreneurs, especially if they do not have any connection with the country where the bank is located. Therefore, before deciding to open an account with a foreign bank, an entrepreneur must conduct a thorough analysis and compare different banks and their conditions. The best solution would be to turn to professional consultants or lawyers who can help you choose the right bank and reduce the risks associated with opening an account abroad.

Thus, if a Ukrainian individual entrepreneurs decides to open an account with a foreign bank, the following issues should be taken into account:

• Choosing a bank: choose the right bank, taking into account its reputation, conditions and requirements for customers, as well as commissions and other costs.
• Documents and requirements: prepare the necessary documents and comply with the requirements of the bank in order to successfully open an account.
• Online Banking: Learn about the terms and conditions of online banking to manage your account and finances remotely.
• Commissions and other expenses: take into account all commissions and other features associated with opening and using an account with a foreign bank.
• Risks: evaluate possible risks and take measures to reduce them, including choosing a reliable bank, protecting your data and complying with legal requirements.