Written by Katerina Bozhkova
There is now an easier way to set up a wire transfer as a private entrepreneur (“PE”): Ukrainian freelancers can receive funds via wire transfer to a private entrepreneur bank account in a compliant way. The new currency controls say that Ukrainian freelancers registered as private entrepreneurs (PE) can use an invoice they complete themselves instead of a confirmation of services and another contract (on Upwork, the User Agreement), which was required in the past.
Setting up your withdrawal method on Upwork even before you have an available balance is important as it takes three days to activate a newly added bank account.
It is essential that you enter your bank information 100% accurately to avoid fund routing problems. Once you add and save it, you cannot edit your bank account and SWIFT code. To update these numbers, or to use a different account, you must add a new account (then remove the old one if it is incorrect or you no longer need it). Contact your bank if you’re not sure you have the correct information or if you received an error when you tried to enter it in the Upwork system.
To add a wire transfer payment method:
To edit your wire transfer information (except bank account numbers and codes):
To remove your wire transfer payment method:
If the name on your bank account and the name on your Upwork account don’t match, check these special cases when the mismatch can be approved manually by contacting customer support. You may be asked to go through an identity verification process.
If you use an unrecognized name variation or nickname, ID verification may be required to prove that you’re the owner of the bank account. You’ll then need to edit your Upwork profile to match your legal name.
In order to get paid, your tax information must be on file. Click here to complete it. Once that is complete, available funds will be disbursed according to your payment schedule and you may initiate manual withdrawals as needed.
Previously, after receiving foreign currency in your name, any Ukrainian bank had to verify the agreement and certificate for services provided, which were two separate written documents. Funds were deposited to your account only upon completion of such “verification.” Obviously, that is not the most convenient procedure. That is why a group of activists comprised of freelancers and lawyers began looking for ways to modify the currency control procedure, at least for freelancers and those exporting services in IT.
The result of their joint efforts was a letter from the National Bank of Ukraine (NBU) № 22-01012/46746 dated July 7, 2015.
Further efforts eventually led to the legislation that simplified the required documents on November 3, 2016, eliminating administrative obstacles for exporting IT services (law #4496, signed by the Ukrainian president) on both bank and tax levels.
1) Instead of an international business contract, you, as a Ukrainian freelancer / Private Entrepreneur, can use an invoice issued to a non-resident (i.e. foreign client), containing the main terms and conditions of your services (including the price), signed unilaterally (no signature of the payer is needed). This is sufficient documentation for the bank to credit funds from a foreign payer to the account of a Ukrainian resident.
Even though the law clarifies that you don’t need to submit the signed contract for being paid going forward, the contract with Upwork is still available and published on Upwork’s website (Upwork User Agreement). Your relations with Upwork are regulated by the Upwork User Agreement, which you entered into when you registered on the website. If you are asked to provide the agreement you have with Upwork, you can just print the User Agreement and note on the copy that you have entered into this agreement by registering on Upwork, and then sign it.
2) Documents issued in English (including the Invoice) do not need to be translated into Ukrainian. Nevertheless, the invoice form that we created for your convenience is available in both English and Ukrainian.
3) There is no currency control on settlements for exporting services anymore. Contrary to exporting services, if freelancers are exporting goods and work, the current law now only regulates and restricts the payment terms on those items; clients need to pay for delivered goods or work performed within 180 days upon their delivery. This timeframe may periodically be amended by the National Bank of Ukraine.
There is no currency control for payments on exporting services anymore. Previously the Confirmation of Services document (also called the Act of Acceptance) was required in addition to an invoice. This document determined the term of payment and proved that the currency regulation was met.
The invoice should reflect the “subject matter” as well as other important clauses to meet the requirements of a foreign economic agreement, explained further below. For your convenience, we have drafted an invoice template. Download the template here. Before the legislation of law #4496, key Ukrainian banks such as PrivatBank, OTP, FUIB, Raiffeisen Bank Aval, Ukrsibbank BNP Paribas Group, Alfabank had confirmed they were satisfied with the Invoice as a confirmation document for exporting IT services.
Every field of the invoice template is required, so you may not want to change anything, unless otherwise requested by the bank or instructed by your advisors. Sometimes, identical provisions may be viewed differently by different branch offices of the same bank. Thus, if in the process of checking the invoice you are requested to add or remove some non-essential things from the Invoice, it may be easier to make the change than to engage in a long and unsuccessful discussion.
To use the template, you will fill in the following details by yourself:
Due to implementation of IBAN in Ukraine, mandatory details are: name of Beneficiary, International Bank Account Number (IBAN), name of bank, SWIFT code of bank, details of correspondent bank.
The new law #4496 has been in action since January 3, 2017. This means as of this date the simplified documents are to be accepted and procedures to be applied by banks in Ukraine.
Upwork’s system allows you to specify the purpose of payment, i.e. the payment is against a specific invoice (don’t forget to include its number and date). Nonetheless, banks sometimes ask for a clarification letter to confirm that the funds they have received are a payment against a specific invoice. This letter is a must in some circumstances, such as if you forgot to include your invoice and bank account details in the purpose of payment.
The law #4496 regulates business activity related to exporting services for both Private Entrepreneurs and legal entities (LLCs). A Limited Liability Company may now issue an invoice to non-residents and it has the same legal force as an international business contract.
In addition, a Confirmation of Services Agreement (Act of Acceptance) is not required anymore. As mentioned above, banks do not control the terms of currency funds settlement with regards to the export of services. And more importantly, the term “primary document” has been changed in the Law of Accountancy, i.e. the wording and its meaning “the document, which confirms business operation performance” has been removed.
When receiving payments for your completed freelance projects on Upwork, you’ll want to ensure that you comply with all accounting and tax requirements. Below is some general information received from initiative group members, but you should determine and confirm all requirements and options for your personal situation with your accountant or legal consultant, as no information in this article constitutes tax or legal advice.
If you are a Group 3 Single Tax Payer (Private Entrepreneur) and are paying a single tax of 5%, you generally must maintain a book of income record. Review the following example:
The Tax Code of Ukraine states that “income in foreign currency should be calculated in UAH at the official rate of the National Bank of Ukraine on the date of the incoming transfer” (Art. 292.5 of Tax Code of Ukraine). The following record should be put in ledger and this amount is recorded in the tax return:
December 05, 2019: Income is UAH 23 930,28.
In this case, the currency sale rate for 70% of the amount does not matter. The exchange rate difference is not taken into account for single taxpayers. If you sold your foreign currency at a higher rate than the one on the value date, the difference is not included in your income.
According to the Tax Code, a single taxpayer must keep all accounting source documents for more than three years and provide them during tax orders (inspections) if required. Invoices fall under the definition of accounting source documents because they contain information about provided services.
Currently this is clearly stated in the Ukrainian Accounting Law which was amended by the law #4496. You may keep these Invoices in electronic form in special e-programs that allow you to keep documents signed by e-signature without creating hard copies. The law #4496 now clearly states this option.
Updated December 18, 2019