Legal Consultations for Diia.City

In 2022, the Ukrainian technology sector received a unique tool for development – Diia.City. It combines liberal business conditions with European legal standards. However, beneath the conciseness of tax benefits lies a multi-layered regulatory architecture and uncompromising requirements for every business process.

To maximize the benefits of the special regime, professional legal consultations on Diia.City are necessary. Thanks to them, founders can focus on code and product development while legal security is ensured by professionals from Lawrange.

What Diia.City Residency Is

It is a special legal and tax ecosystem created to stimulate the digital economy. It offers companies an alternative taxation model and flexible tools for hiring employees.

To gain a deeper understanding of all the nuances, it is worth studying the material on DIIA CITY – a law review by IT lawyers and attorneys from the AA Lawrange. This analysis covers not only the text of the document but also practical aspects of its application. Residency provides the right to choose between profit tax and distributed capital tax, which is extremely important for increasing capitalization.

Diia.City is not just a benefit; it is a transition to completely new rules of business activity. To fully operate within the system, the following aspects must be considered:

• The possibility of attracting assets using English law instruments.
• Simplified compliance when working with foreign banks and funds.
• Use of intellectual property protection mechanisms at the international level.
• Optimization of costs for maintaining a large development team.

Thanks to the above factors, the special regime is attractive both for startups and for IT giants planning long-term presence in the Ukrainian market.

Legal Basis of Diia.City Residency Status

The foundation is the Law of Ukraine “On Stimulating the Development of the Digital Economy in Ukraine” No. 1667‑IX. It creates a legal framework for IT companies to operate under a special regime, including flexible forms of employment and protection of corporate interests.

This law also allows for the implementation of non-compete agreements (NCA) and non-solicitation agreements (NS) within company internal regulations. Such a solid base ensures predictable rules of the game and stability, and legal support for Diia.City will help adapt internal regulations to these norms and provide legal autonomy for the business.

Particular attention should be paid to the following documents:

• Company charter considering the possibility of paying dividends under new rules.
• Internal regulations on trade secrets and non-disclosure of information (NDA).
• Job descriptions and policies for using corporate resources.
• Protocols of participants’ meetings regarding transition to the special taxation regime.

Do you want to attract investors and build a strong business? A comprehensive approach to corporate regulations will be your key to success.

Key Requirements for Diia.City Residents

To join the Diia community, a company must meet clear criteria, verified both at the admission stage and during ongoing operations. An error in any indicator may lead to the loss of benefits, so each parameter must be precisely calculated.

To successfully complete the procedure, the following key conditions must be met:

1. Conducting types of activities provided by law (programming, software publishing, cybersecurity, animation, etc.).
2. Average monthly remuneration of specialists not less than €1,200 equivalent throughout the entire period.
3. Average number of employees and gig contractors – at least 9 persons during the reporting period (individual entrepreneurs are not included in this number).
4. The share of income from the sale of profile products or services must be at least 90% of total turnover.

It is important to remember that requirements for salary and staff numbers do not apply from day one but have a certain transition period, allowing the business to adapt. Professional assistance from a Diia.City lawyer during compliance verification helps avoid registration denial due to formal errors.

What Legal Support for Diia.City Residents Includes

This is a comprehensive service covering all stages of a company’s operation within the special regime. Specialists handle communication with state authorities, monitor legislative updates, and develop tax planning strategies.

Legal support for Diia.City residents includes the following work blocks:

• Continuous monitoring of compliance with residency criteria.
• Legal audit of foreign economic contracts for compliance with IT KVED codes.
• Communication with the Ministry of Digital Transformation regarding any clarifications or changes in the registry.
• Organization of company asset protection within the legal framework of the regime.

The owner can fully focus on scaling their product without worrying about bureaucratic nuances.

Preparation for Obtaining Residency in Diia.City

Before submitting an application, a thorough internal analysis must be conducted. At this stage, it is often revealed that the business registration in Ukraine was carried out without taking into account the specifics of the IT sector, which creates barriers to entry.

Preparation usually includes several critical steps:

• Conducting a “check-up” of the current income and expense structure.
• Cleaning the register of owners from individuals under sanctions or with reputational risks.
• Compiling a package of documents for digital submission through the portal.
• Testing internal accounting systems for their ability to generate reports for audit.

Professional verification allows the registration procedure in Diia to be completed in just a few days, minimizing human error and the risk of a justified refusal.

Tax Consulting in Diia.City

Correct taxation is the main attraction of the system. Companies can pay 9% on distributed capital instead of 18% profit tax, which encourages reinvestment in development. Services include a detailed calculation of the tax burden and assistance in choosing the most advantageous model.

Specialists can help with issues such as:

• Application of the preferential 5% personal income tax rate for employees and gig specialists.
• Calculation of the single social contribution (SSC) at 22% of the minimum wage regardless of actual income.
• Conditions for exemption from taxation of dividends paid to individuals.
• Transfer pricing rules when dealing with related parties.

Each lawyer on the Lawrange team monitors the clarifications of the tax service to avoid double interpretation of norms and penalty sanctions.

Gig Contracts and Employment Relations

These contracts have become a revolutionary form of cooperation. They combine the flexibility of freelance work with the social guarantees of regular employees, such as paid breaks and insurance. Each contract must be legally precise to avoid being interpreted as hidden employment outside the special regime. Legal consulting for Diia.City allows all terms of cooperation to be correctly formulated.

Within this area, it is possible to develop:

• Individual gig contracts taking into account the specifics of developers’ tasks.
• Addenda on the transfer of property rights to intellectual property.
• Confidentiality agreements adapted to the new legal requirements.
• Comfortable remote work conditions and clear rules for those working outside the office.

When paperwork is no longer a headache, the team’s energy is directed solely toward releasing great ideas and conquering markets. Well-drafted terms ensure the “hygiene” of relationships in which all parties of the business interaction remain satisfied.

Military Registration and Employee Reservation

In modern Ukrainian realities, this issue is important for retaining the team. Residents have the right to reserve employees, but the procedure requires perfect order in personnel and accounting documents. A lawyer will help organize the entire chain from scratch so that the company meets the necessary criteria.

We support the process through the following steps:

• Obtaining the status of a critically important enterprise.
• Preparing reservation lists and justifying them to the relevant ministries.
• Verifying the military registration documents of specialists for compliance with current legislation.
• Submitting regular reports to territorial recruitment centers.

This ensures the preservation of human capital and continuity in fulfilling international contracts during challenging times for the country.

Audit Preparation and Reporting

Residency status requires an annual independent audit and submission of compliance data. Therefore, comprehensive support should be provided to prepare accountants and lawyers for inspections. After all, everyone knows – reporting must be submitted on time under any circumstances.

Specialists perform:

• Preliminary audit of documentation analogous to external auditor checks.
• Correction of deficiencies in primary documents and financial registers.
• Support in preparing the compliance report for submission to the Ministry of Digital Transformation.

In addition, specialists can assist in selecting an accredited auditing company with IT experience so that the special status can be maintained for the following year.

Post-Admission Support for a Resident

Life after receiving the certificate is only beginning, and it requires regular legal vigilance. Continuous legal consulting for Diia.City is necessary to adapt to new clarifications from the State Tax Service and changes in subordinate regulations.

Our experts provide support in such matters as:

• Making changes to the registry in case of changes in address, company name, or owners.
• Analyzing new directions of activity for their permissibility within the regime.
• Legal support for mergers and acquisitions (M&A) procedures for residents.
• Protecting interests in case of disputes with state authorities.

By staying in constant contact with consultants, you will be able to adjust the company’s course with ease without losing financial preferences.

Advantages of Diia.City Residency for IT Entrepreneurs

What does this status provide? First, you gain the opportunity to legally attract investments through mechanisms understandable to foreigners. This gives clarity on how to legally run an online business, scaling it internationally with a transparent structure. Residency automatically increases counterparties’ trust.

Key advantages include:

• Stability of tax conditions guaranteed by the state for 25 years.
• Flexibility in choosing forms of employment (gig contracts or individual entrepreneurs).
• Protection against unjustified inspections and equipment seizures.

This creates ideal conditions for Ukraine to become the main hub for technology companies in Eastern Europe.

Common Mistakes and Risks Without Legal Consulting for Diia.City

The most frequent mistake is a mismatch in the income structure, where operations not covered by permitted KVED codes are included. Another risk is incorrect handling of intellectual property, where rights remain with specialists instead of automatically transferring to the company. Legal consulting for Diia.City prevents exactly these scenarios.

Other risks include:

• Missing deadlines for submitting audit conclusions.
• Errors in calculating the average salary (including irrelevant payments).
• Lack of military registration, preventing employee reservation.
• Incorrect use of VAT benefits for software products.

Legal oversight allows these problems to be identified before they become grounds for sanctions or loss of residency.

Why You Should Choose Lawrange

AA Lawrange possesses exceptional expertise in IT law, allowing us to communicate with tech entrepreneurs in their own language. We do not limit ourselves to formal task execution but become part of the team, integrating legal security directly into the business model code.

Lawrange ensures the complete transformation of your company under the requirements of a modern digital ecosystem:

• Comprehensive reengineering of structure: from legalization of beneficiaries and changes to KVED codes to full reorganization of the company according to Diia standards.
• Hybrid structuring of relationships: development of unique gig contracts, NCA, and NDA protecting intellectual property and trade secrets.
• Financial detox: tax consulting regarding the advisability of transitioning to the special regime and support for regular reporting and audits.
• Investment lift: preparing the resident for capital attraction (Due Diligence) and conducting internal workshops for staff so everyone understands the new rules of the game.
• Full operational cycle: prompt resolution of complex requests, communication with state authorities, and support of the business from launch to IPO or exit.

The lawyers focus on creating an autonomous legal system within your project. With us, you can scale your product with ease, without fear of bureaucratic traps.

Conclusions

Diia.City offers great opportunities that require serious attention to documentation and compliance with regulations. To ensure your business operates efficiently and that tax authorities have no questions, it is important to secure a strong legal foundation.

Qualified legal support for Diia.City is a reliable safeguard against mistakes, paying off through tax savings and legal protection.

Residency provides:

• Clear rules of the game for decades ahead.
• Tax optimization enabling the hiring of top talent.
• Legal tools to protect the business from external threats.
• A positive image in the global technology market.

Our team is ready to be your guide in this process, ensuring flawless completion of all formalities and strategic support.

FAQ

Legal Support for Diia.City