Five frictions for Ukrainian companies building a European presence

Friction one: the banking gate

The bank account is the admission ticket, and the step at which most timelines stall; where the law requires the capital to be deposited with a bank before registration, as in Switzerland, the bank's decision comes before the company exists. In our experience Ukrainian-linked applicants are routinely placed in enhanced due diligence: ownership traced to the last natural person, source of funds and source of wealth documented, the sanctions nexus examined, the purpose of the structure interrogated. Some of this is legitimate risk management; some of it, in our experience, is wholesale de-risking of anything with a Ukrainian connection, a judgement each bank makes for itself and not a rule that a Ukrainian connection triggers. European regulators have criticised the practice in general terms: the EBA's Opinion on de-risking (January 2022) warned that unwarranted de-risking of whole categories of customers excludes legitimate ones, and its 2023 Guidelines direct institutions to manage risk case by case and not to refuse whole categories.

That regulatory backdrop helps, but the file is what the bank works from. The file that works contains: a corporate chart to the ultimate owners supported by registry extracts beyond the founders' own declarations; source-of-funds evidence that maps to real contracts and financial statements, with gaps explained and not papered over, including records lost to the war; a business rationale for the structure that a compliance officer can retell in two sentences; and expected payment flows described in advance, so the first incoming transfer from Kyiv raises no avoidable questions; transaction monitoring continues in any event. Applying to two or three well-chosen banks with the same complete core file, adapted to each bank's forms, beats applying to ten with a thin one.

Friction two: the money cannot simply follow

The natural assumption is that the Ukrainian parent funds its new European subsidiary. Under martial law, that assumption fails: since NBU Board Resolution No. 18 of 24 February 2022, cross-border transfers from Ukraine have been restricted, and although the National Bank has been easing the regime step by step, outbound capital operations remain constrained and the current state of the rules has to be checked at the time of the transaction. The easing is real but granular: from 14 January 2026 the NBU moved to a more calibrated framework (Resolution No. 2 of 13 January 2026), including a new "loan limit" under which funds raised abroad under cross-border loans into a Ukrainian bank account create headroom for defined outbound payments, such as servicing older external debt or financing a company's own foreign branches and representative offices (a separately incorporated subsidiary is outside it); and its latest package, in force from 11 August 2026 (Resolution No. 90 of 10 August 2026), eased further restrictions, with the NBU describing its main focus as support for households.

The planning consequence is structural: the European entity is usually funded from the Western side: by new customer contracts concluded and performed by the European entity in its own name (revenue owed to the Ukrainian company for its own exports still has to come home to a Ukrainian bank account within the settlement deadline under Article 13 of the Law on Currency and Currency Operations, and anything the Ukrainian company supplies to its affiliate has to be priced at arm's length), by investor money raised at the new holding level, or by founder resources already outside Ukraine. Which of these is available shapes everything downstream, including what the bank will be told about source of funds. This is Ukrainian law in motion; it needs current Ukrainian advice, and the question needs to be asked at the outset.

Friction three: the tax shadow follows

Ukraine has had controlled-foreign-company rules since 2022. In broad terms, a Ukrainian tax resident who controls a foreign company must notify the tax authority, file CFC reports and may owe Ukrainian tax on the company's undistributed profits, subject to exemptions that depend, among other things, on treaty coverage and the foreign company's effective tax rate. The details are for Ukrainian counsel and move with practice, but the strategic point does not: the new Warsaw or Zug holding company enters the Ukrainian CFC regime from the day it is created: notification within 60 calendar days, an annual CFC report filed with the controller's own return, and Ukrainian tax on the company's adjusted profit in the controller's hands unless an exemption applies; and the founder who relocates changes their own tax residence analysis, on both sides, at the same time. The right moment for this analysis is before incorporation, when the choice of jurisdiction, holding level and profit distribution policy can still respond to it.

Friction four: substance, tested three times

Three different authorities ask whether the European entity is real, each by its own test. The bank tests it at onboarding, because a letterbox with a Ukrainian payment pattern looks like a conduit. The tax authorities test it: treaty benefits turn on residence and beneficial ownership; the Ukrainian CFC exemptions turn mainly on a treaty being in force together with the company's effective tax rate or income mix, or on the controller's CFCs earning no more than EUR 2 million in aggregate, with local substance decisive only where passive income dominates; and the popular alternative, a team working remotely from wherever its members happen to live, can create taxable permanent establishments in several countries simultaneously. And any regulator involved, from licensing bodies to grant programmes, tests it too: as we noted in our update on the Swiss programme, even funding eligibility can turn on the group chart. Substance evidence, assessed separately under each regime, means decisions demonstrably taken locally, at least one person with real authority on the ground, premises consistent with the story, and consistency between what the bank, the tax office and the counterparties are told.

Friction five: the people problem

Much of the standard sequence assumes the founder can travel: to open the account, to sign at the notary, to meet the landlord. Under martial law that cannot be assumed for a large part of Ukrainian management, and the structure has to be designed for it. In practice that means: choosing jurisdictions and banks where remote or video identification is workable; powers of attorney prepared, translated and, where the destination requires it, apostilled before they are needed (Poland's 1993 treaty with Ukraine dispenses with legalisation of official documents; elsewhere check the destination and the recipient); a local director or authorised signatory who can act when the founder cannot appear; and board and shareholder mechanics, including electronic signing, that function across borders. This work decides whether the structure operates or waits.

The sequence that avoids the worst of it

Read together, the frictions dictate an order of operations that is almost the reverse of the intuitive one. The intuitive sequence is: incorporate, then look for a bank, then think about tax, then improvise governance.

The sequence that works is: first the tax and CFC analysis on both sides, because it may change the jurisdiction; then the funding route, because FX rules determine who can pay for what; then the substance and governance design, including who signs when the founder cannot travel; then the bank, which for a company whose capital must be deposited before registration comes before incorporation: the bank checks the founders and the intended structure when it opens the blocked capital account, issues the confirmation the notary files with the register, and after registration releases the capital into what becomes the company's operating account; where no deposit is required, the account follows incorporation, but the file the bank will read is the same; then incorporation, with a complete, consistent file that has answers ready for every question the earlier steps already forced you to think through. In our experience this order is slower at the start and faster overall, because the bank receives a complete file with answers ready for the questions it will ask.

What this means for you

• Start with the two tax systems, before the notary. CFC exposure and founder residence shape the structure; they cannot be retrofitted.
• Settle the funding route before incorporating. If the money must come from the Western side, the business plan, and the bank narrative, change accordingly.
• Build the bank file once, properly. Registry-backed ownership, mapped source of funds, explained gaps, predicted payment flows; one core dossier, adapted to each bank and kept current.
• Build real substance. One person with authority, real premises, local decisions, evidenced for each regime that will test it; it is cheaper than a failed treaty position or a second onboarding.
• Design governance for no travel. Powers of attorney, local signatories and remote identification decide whether the structure runs or waits.

Isak Legal works with Ukrainian companies and founders building their European presence, from structure and substance design to bank onboarding files and the compliance expectations of Western partners, alongside Ukrainian counsel for the home-country side. See our Ukraine: Investment and Reconstruction and Corporate pages, or get in touch.

This client update is provided for general information only, reflects the position as at 26 September 2026 and does not constitute legal or tax advice or create a lawyer-client relationship. Ukrainian-law matters, including currency restrictions, CFC rules and martial-law measures, change frequently and require advice from Ukrainian counsel on the current position. For advice on a specific matter, please contact us.