Economic Overview, Europe's IT Engine (Grammarly) & Diia.City Regime
Ukraine is Europe's software development powerhouse, producing AI unicorn Grammarly, GitLab, and the pioneering Diia.City 5% tax regime.
Key Economic Clusters
- Software Engineering & AI Unicorns: Grammarly, GitLab, custom enterprise cloud software, and mobile application engineering.
- Diia.City Special Tech Framework: World-leading virtual tech zone offering 5% flat tax and English common law gig contracts.
- Defense Tech & Autonomous Robotics: World-leading autonomous drone software, battlefield AI, and electronic defense systems.
Employment Contracts, Labour Code (KZpP) & Diia.City Gig Contracts
Regulated by the Labour Code of Ukraine (KZpP) and Law of Ukraine On Stimulating the Digital Economy (Diia.City).
- Diia.City Gig-Contract Framework: Allows flexible commercial engagement combining labor protections (paid leave, sick days) with low 5% tax rates.
- Probation Period (*Vyprobovanyy termin*): Maximum statutory probation is 3 months (up to 6 months for executive roles).
Working Hours, Leave & Single Social Contribution (ERU 22%)
- Standard Hours: 40 hours per week (8 hours/day over 5 days).
- Annual Leave: Minimum 24 calendar days paid vacation per year under the Law of Ukraine On Leaves.
- Public Holidays: 11 official national and religious public holidays.
- Maternity Leave: 126 calendar days (18 weeks) (70 prenatal + 56 postnatal) paid at 100% via the Social Insurance Fund.
Single Social Contribution (ERU 22% Employer) & Diia.City 5% Tax
| Statutory Scheme | Employer Share | Employee Share | Description |
|---|---|---|---|
| Single Social Contribution (ERU / SSC) | 22.00% (capped base) | 0.00% | Pensions, health, disability & unemployment (capped at 15x minimum wage) |
| Diia.City Special Tech SSC | 22% on minimum wage | 0.00% | Flat monthly SSC payment based on statutory minimum wage for gig specialists |
| Total Statutory Employer Share | 22.00% (or min wage base) | 0.00% | Employer-funded social insurance |
Personal Income Tax: Standard PIT is 18.0% + 1.5% Military Tax; under the **Diia.City framework**, personal tax is reduced to a flat **5.0% PIT + 1.5% Military Tax**, remitted monthly to the State Tax Service.
Why Use an Employer of Record (EOR) in Ukraine
- Scale Elite European Software Developers Fast: Onboard software engineers, AI researchers, and QA leads in Kyiv or Lviv in days.
- Diia.City, ERU & State Tax Service Compliance: Full administration of 22% SSC contributions and optimized Diia.City tax declarations.
Hiring in Ukraine? Key Resources
Whether you are evaluating entity setup vs. using an Employer of Record, or looking for the best international payroll solution, our guides give you transparent benchmarks: