GOLAW

Recently, the Ministry of Defense of Ukraine announced the possibility of paying fines for violations of military registration rules via the “Reserv+" system. But does this service work for all types of violations and can it be used for remote fine payments? In April 2025 the President of Ukraine signed Law No. 12093, which introduced a new Article 279-9 to the Code of Ukraine on Administrative Offenses. This article allows for consideration of cases regarding military registration violations without the individual’s presence, if they agree to it. The law came into force on April 17. However, despite appearing to be a progressive mechanism, its practical implementation remains problematic. 1. What Does the New Procedure Entail? Article 279-9 of the Code of Administrative Offenses allows individuals who have violated military registration rules or mobilization legislation (Articles 210 or 210-1) to submit a request and agree to a fine without personal attendance. This is possible if the individual: acknowledges the offense; agrees to the imposition of a fine without personal presence; submits a written or electronic application to the TCR (Territorial Center of Recruitment and Social Support), the Security Service of Ukraine or the Foreign Intelligence Service (depending on where they are registered). This application may be submitted: in person in writing, or via the electronic portal, i.e., through the “Reserv+" system. After receiving the application, an authorized official must issue a resolution and impose the minimum fine within three days. If the application was submitted through the electronic portal, the resolution may also be sent electronically. 2. Why the Mechanism Does Not Work Properly? Despite the presence of this mechanism, its full implementation is currently not possible. The Electronic Portal Does Not Allow Submissions for All Violations Although the law explicitly allows submission of the application via “Reserv+”, this feature currently works only for certain violations. Currently, users can pay fines for failure to update their information before July 16, 2024. When it comes to submitting applications or agreeing to fines for other violations, such as failure to appear upon summons, this option is still being tested. TCRs Do Not Accept Mailed Applications Another method of submitting the application is in written form by mail. However, in practice, TCRs refuse to process such mailed applications and demand in-person attendance. Yet the law clearly states that the procedure should work without the individual’s physical presence. As a result, a mechanism that was supposed to simplify case review and ease the administrative burden is currently not fully operational. It depends entirely on when the required technical capabilities become available and whether the authorities are truly prepared to implement it. 3. Case Law: Can Remote Applications Be Rejected? In this context, the legal position of the Seventh Administrative Court of Appeal is noteworthy. In its ruling dated July 4, 2024, in case No. 120/476/24, the court clearly stated: “the obligation to 'personally inform' is not the same as the obligation to 'personally appear’”. This is an important stance, as it means TCRs cannot force conscripts to appear in person when the law permits remote submission in written or electronic form. 4. Additional Requirements for Fine Resolutions Particular attention should be paid to Part 5 of Article 283 of the Code of Administrative Offenses, which adds further requirements to the resolution on fine imposition. In addition to the mandatory data, the resolution must include: the date and method of application submission; its content; payment details; information on how the resolution is to be executed: at least 50% of the amount must be paid within 10 days after the resolution enters into force. 5. Conclusion Despite the progressive idea of simplifying minor case reviews, the mechanism is not yet fully functional. To make it work effectively, the following are necessary: an update of “Reserv+” to enable submission of applications for any violation of military registration or mobilization laws; clarification from the Ministry of Defense and other responsible bodies regarding the acceptability of applications sent by mail or electronically; a change in the enforcement practices of TCRs to align with the court’s position on the right to submit applications and pay fines remotely. Only under these conditions can the new mechanism become an effective and functional tool. Author: Natalia Matviichuk, Senior Associate at Litigation and Dispute Resolution practice, Attorney at law  

The introduction of martial law in Ukraine has significantly changed both the labor landscape of the country and labor legislation: while during wartime, employees' rights are restricted, employers, on the contrary, are granted broader powers. However, any restrictions do not eliminate the importance and necessity of complying with existing legal norms and the principle of the rule of law. One example of law enforcement practice in the field of labor law concerns the payment of financial assistance for health recovery to employees of the joint-stock company “Ukrzaliznytsia”. According to the provisions of the Sectoral Agreement, employees of the railway transport industry are guaranteed the payment of financial assistance for health recovery in amounts defined by collective agreements, but not less than 30% of the tariff rate (official salary). The specific amount of such assistance for employees is determined by the respective collective agreements concluded between the subdivisions of Ukrzaliznytsia and the trade union organizations of these subdivisions. On March 14, 2022, shortly after the start of the full-scale hostilities, the management board of JSC “Ukrzaliznytsia” decided to suspend the payments provided for by the Sectoral Agreement and collective agreements. However, the provision of Article 11 of the Law of Ukraine "On the Organization of Labor Relations under Martial Law", which allows for the temporary suspension of certain provisions of collective agreements, entered into force only on March 24, 2022. Thus, the decision of JSC “Ukrzaliznytsia” dated March 14, 2022, was adopted without proper legal grounds. This position was confirmed by the Supreme Court in case № 211/7338/23, which recognized such a decision as unlawful. Although this case concerned only one employee of Ukrzaliznytsia, the ruling represents an important step toward establishing the illegality of the employer's actions. In June 2024, JSC “Ukrzaliznytsia” unilaterally adopted a new decision, which, in fact, once again suspended the provisions of collective agreements regarding the payment of wellness assistance. At the same time, a "uniform minimum amount" of such aid was set at 30% of the base salary. This approach raises serious legal concerns, since the Sectoral Agreement sets only the minimum guaranteed level of assistance. The majority of collective agreements at JSC “Ukrzaliznytsia” provide for significantly higher payment amounts, which have now been unjustifiably reduced. Moreover, the legislative possibility of temporarily suspending certain provisions of collective agreements, as provided for by Article 11 of the Law mentioned above, requires the existence of objective grounds, in particular, the employer's inability to fulfill the corresponding obligations. At the same time, at the moment the decision was adopted, JSC “Ukrzaliznytsia” continued to generate income, which calls into question the causal link between martial law and the alleged impossibility of fulfilling the terms of collective agreements. It is worth noting that the current legislation does not provide for the possibility of unilateral changes to the terms of a collective agreement by the employer. Any amendments to such provisions must take place only with the consent of, or at the very least following prior consultations with, trade union bodies. In this regard, in September 2024, the Trade Union of Railway and Transport Construction Workers of Ukraine filed a corresponding lawsuit against JSC “Ukrzaliznytsia." Notably, in December 2024, after a change in the management of JSC “Ukrzaliznytsia", a separate decision was adopted to partially resume the payment of wellness assistance for 2022. However, according to available information, these payments covered only 24% of employees who were working during the relevant period. As of August 2025, the issue of payments for the period starting from 2023 and subsequent years remains unresolved. Moreover, it is noteworthy that after the aforementioned lawsuit was filed, JSC “Ukrzaliznytsia” began taking actions that bear signs of procedural abuse. Thus, the company submitted a number of procedural documents that are similar in both content and reasoning. In particular, a motion and petition to leave the statement of claim without further action, submitted two separate motions to close the proceedings, as well as written explanations that once again included a request to terminate the case. The repeated submission of such essentially identical documents clearly does not contribute to the efficient handling of the case—instead, it complicates the proceedings. At the time some of these procedural documents were submitted, the court had already reviewed and reasonably dismissed several of them as unsubstantiated. Despite this, JSC "Ukrzaliznytsia" continues to actively use procedural tools not so much to defend its position on the merits of the dispute, but rather to delay the case's consideration. As a result of these groundless motions, the preparatory proceedings in the case have already lasted for nearly a year. Such conduct contradicts the principle of good faith in civil proceedings and indicates an attempt to postpone the issuance of a fair court decision. Nevertheless, the court proceedings are ongoing. The lawyers of the GOLAW law firm, representing the trade union’s interests in court, remain confident that justice will be restored and the rule of law will prevail. Authors: Kateryna Manoylenko, Partner at GOLAW, Head of Litigation and Dispute Resolution practice, Attorney at law Kateryna Tsvetkova, Partner at GOLAW, Litigation and Dispute Resolution practice, Attorney at law Anastasiia Klian, Counsel at Litigation and Dispute Resolution practice at GOLAW, Attorney at Law Natalia Matviichuk, Senior Associate at Litigation and Dispute Resolution practice at GOLAW, Attorney at law

On 30 April 2025, the governments of Ukraine and the United States of America signed an agreement establishing the U.S.-Ukraine Reconstruction Investment Fund (the “Agreement” and the “Fund”, respectively), which Ukraine ratified on 8 May 2025. Also, on 23 May 2025, 2 other documents relating to the Fund were entered into, the text of which is not currently publicly available (the “Fund Documents”): agreement on the establishment of LLC “DFC Ukraine Subsoil”; and limited partnership agreement. The information in this article is based on the analysis of the text of the Agreement and information on the terms of the partnership published by the Ministry of Economy of Ukraine. What does the agreement cover? The Agreement sets out the basic terms and conditions for the establishment and operation of the Fund, which was created with the participation of the U.S. partner, the U.S. International Development Finance Corporation (the “DFC”), and the Ukrainian partner, the Public-Private Partnerships Agency (the “PPP Agency”). The Agreement sets out, among other things, the taxation of the parties, requirements for currency convertibility and cross-border transfers, contributions to the partnership, investment opportunity rights, and market-based offtake rights. What do we know about the Fund? Structure and contributions The Fund is a limited partnership organised and existing under the laws of the State of Delaware, USA. This means that the Fund’s jurisdiction remains more predictable for the United States. At the same time, in case of disputes, the parties will settle them in arbitration in London. The Fund’s structure includes limited partners and a general partner. The limited partners are the PPP Agency and DFC. The general partner is LLC “DFC Ukraine Subsoil” (the “General Partner”), which is registered in the State of Delaware. The Limited Partners will initially receive 100 Class B shares each. Ukraine makes a contribution in consideration of the 100 Class B shares in the form of an irrevocable right to receive 50% of all royalties (rents), licence fees and amounts payable under production sharing agreements. In recognition of the US financial and material support since the full-scale invasion of russia, the US received 100 Class B shares. In other words, the Agreement and the Fund Documents do not provide for any debt obligations of Ukraine to the United States in connection with the previously provided assistance. Consequently, as of the Fund’s establishment date, despite the receipt of Class B shares by the parties involved, the Fund is currently devoid of any actual funds. It is anticipated that the United States will provide the initial funding, in exchange for which they are expected to receive Class A shares. The parties will be able to receive Class A shares in the event of new financial contributions. The US will also receive Class A shares in case of new military assistance to Ukraine. The number of Class A shares is to be determined by agreement between the PPP Agency and DFC. If no agreement can be reached, the General Partner will evaluate the military assistance at its own discretion. Class A and B shares determine the priority of profit distribution. First, the Class A shareholders receive profits until all contributions have been repaid, and then the profits are shared with the Class B shareholders without restriction on a 50/50 basis. Such distribution will be made only from the proceeds of completed investment projects and not earlier than 10 years after the Fund’s launch. The Fund will invest in priority areas in Ukraine, including mining, energy, logistics and critical infrastructure. Profits will also be reinvested in Ukraine. The Fund is expected to operate without any time limit. Once every ten years, the US and Ukrainian partners will review the Fund’s achievements and the feasibility of terminating its operation. At the same time, there is currently no information on whether the contributions will be returned to the partners in the event of the Fund’s termination, what the mechanism of their return is, and, most importantly, what the value of each partner’s contribution is. Management The management function of the partnership is performed by the General Partner, which is controlled exclusively by the Management Board (the “Management Board”). The Management Board consists of three managers from Ukraine and the United States, appointed by DFC and the PPP Agency. The Management Board performs a supervisory function and delegates powers to 4 committees – Investment, Administrative, Audit and Project Search Committees. In the administrative and audit committees, the parties have an equal number of votes. In the investment committee, the majority belongs to DFC representatives – three against two from the PPP Agency. In the project search committee, the majority belongs to the representatives of the PPP Agency – three against two from DFC. At the same time, all critical decisions are made only unanimously. Such decisions include, among others, amendments to the founding documents of the partnership and the general partner, amendments to the regulations on the Board Committee, investment decisions on more than 25% of the funds available for investment, material changes to the investment protocols, and acceptance of additional limited partners. Rights of the Fund The Fund has exclusive rights – the investment opportunity rights and the market-based offtake rights. The investment opportunity rights provide the Fund with the right to be the first to receive information on capital raising from a permit holder developing a critical minerals or oil and gas project. If the Fund is interested in the project, the holder must negotiate with the Fund. The market-based offtake rights mean that the company that extracts the raw materials must first start negotiations on the purchase of production with the DFC or its authorised representative. In both cases, the permit holder may simultaneously offer cooperation to third parties, but the financial or economic conditions cannot be significantly more favourable than the offer of the Fund/DFC. What conclusions can we draw? To the best of our knowledge, the following conclusions can be drawn in connection with the Agreement and the establishment of the Fund: Ukraine will make contributions to the value of the Class B shares throughout the life of the Fund through the Fund’s irrevocable right to receive 50% of all royalties (rents), licence fees, and amounts payable under production sharing agreements, with no limitations on the total amount of the contribution; The Agreement and the Fund Documents do not provide for any debt obligations of Ukraine in connection with the US assistance, and the Fund will operate without a time limit until both partners decide to terminate its operation; Ukraine receives a source of funding for projects in the field of critical minerals, oil and gas extraction and related infrastructure, but, according to the information provided, the Fund requires a “seed money” contribution from the United States; in parallel to making offers to the Fund, the permit holder is not restricted from making the same offer to anyone else in the market, i.e. if the market is willing to invest on better terms/buy production on better terms, this will theoretically affect the offer to Fund/DFC and it will be market-based; and exclusive rights, in the presence of additional incentives from the Fund/DFC, may lead to greater interest of the permit holders in attracting investments from the Fund or selling production to DFC (or its authorised representative), even if other market participants have identical conditions for cooperation. The signing of the Agreement and the Fund’s Documents will lead to some changes in the regulatory acts to bring them in line with the terms of the documents. Thus, on 4 June 2025, the Law of Ukraine “On Amendments to the Budget Code of Ukraine on the Implementation of the Agreement between the Government of Ukraine and the Government of the United States of America on the Establishment of the American-Ukrainian Reconstruction Investment Fund” was adopted, introducing changes to the distribution of funds received from the use of subsoil between local and state budgets. Authors: Oleksandr Melnyk, Partner, Head of the Corporate and M&A practice at GOLAW, Attorney at law; Yevhenii Ahashkov, Senior Associate at Corporate and M&A practice at GOLAW; Yaroslav Maltsev, Paralegal at Corporate and M&A practice at GOLAW.

Despite the full-scale war, recent years have seen a growing number of foreign citizens arriving in Ukraine for various purposes: from participating in volunteer, humanitarian, and educational projects to starting businesses and building partnerships with Ukrainian entrepreneurs. Their presence holds significant value from a humanitarian and economic perspective, as it fosters international support, attracts investment, and facilitates the exchange of valuable expertise. At the same time, despite the imposition of martial law, Ukraine’s migration legislation has not undergone significant changes. As a result, the rules governing the duration of stay and other migration-related matters remain standard legal issues that shall be addressed by those concerned. Foreign citizens entering Ukraine without a visa are generally permitted to stay for no more than 90 days within any 180-day period, unless otherwise stipulated by international treaties. For citizens of countries subject to a visa regime, the permitted duration of stay is determined by the conditions of the issued visa, which typically also allows for a stay of up to 90 days. After the permitted stay expires, foreign citizens shall leave the territory of Ukraine. Failure to comply may result in administrative liability in the form of a fine. However, the most severe consequence may be a ban on re-entry into Ukraine. A temporary residence permit is one of the main legal mechanisms for foreign citizens to remain in Ukraine. It allows them to stay legally in the country for at least one year, with the possibility of extension, and to travel freely in and out of Ukraine without obtaining a visa each time, which is a significant convenience. The law provides a relatively broad list of grounds for a foreign citizen to obtain a temporary residence permit in Ukraine. These include official employment, participation in volunteer activities, involvement in cultural, scientific, educational, or sports activities, employment in a representative office of a foreign company, participation in the activities of branches of foreign non-governmental organisations, and more. Employment is among the most common grounds for obtaining a temporary residence permit. To employ a foreign citizen officially, the employer shall obtain a permit to use foreign labour, issued by the relevant regional employment centre. This permit is a mandatory prerequisite for obtaining a long-term D-04 visa, allowing the applicant to submit documents for a temporary residence permit in Ukraine. The D-04 visa is issued by Ukrainian consular offices abroad, typically for 90 days. The visa fee is USD 65, but the amount may vary depending on the applicant’s citizenship and the applicable bilateral agreements. For instance, U.S. citizens are charged a visa fee of USD 182 based on reciprocity. Therefore, foreign citizens are advised to check current consular fees in advance to avoid unexpected expenses. It is important to remember that once a temporary residence permit is issued, foreign citizens shall register their place of residence at their address within 30 calendar days. Failure to fulfil this obligation is common in practice, particularly among individuals staying in Ukraine for short-term professional or humanitarian purposes. However, missing the registration deadline may result in an administrative fine and, in some cases, may even prevent the permit extension. It is worth noting that under martial law in Ukraine, the validity of temporary residence permits that expired after the introduction of martial law is automatically extended for the duration of martial law and 30 days after its termination or repeal. Nonetheless, even though such permits are automatically extended, we recommend renewing them on time, especially if the foreign citizen plans to travel abroad, submit documents to banks, or obtain permits and enter into contracts. At the same time, in response to legislative initiatives introduced by certain EU member states to regulate the legal status of Ukrainian citizens, Ukraine has implemented reciprocal mechanisms for simplified legalization. The most notable example is the Republic of Poland: under the Law of Ukraine No. 2471-IX dated 28 July 2022, Polish citizens are granted the right to reside in Ukraine for up to 18 months, with the possibility of extension. They may be employed without obtaining a work permit, register legal entities or operate as individual entrepreneurs, and access public healthcare, education, and other social services on terms comparable to those available to Ukrainian nationals. In this way, the Ukrainian legislator has established a special legal regime that significantly facilitates the integration of Polish citizens. In conclusion, Ukrainian legislation enables foreign citizens to live and work legally based on a temporary residence permit. The process is relatively quick and non-bureaucratic if the application package is prepared correctly. This is particularly important for attracting foreign managers and specialists who can effectively integrate into the Ukrainian business environment, contribute to economic development, and expand international cooperation. At the same time, it creates favourable conditions for foreign businesses to enter the Ukrainian market through the direct presence of their representatives, which is especially relevant in Ukraine’s post-war reconstruction. Authors: Oleksandr Melnyk, Partner, Head of Corporate Law and M&A practice at GOLAW, Attorney at law; Oles Riabchuk, Senior Associate of Corporate and M&A practice at GOLAW, Attorney at law; Oleksandr Shevchuk, Junior Associate of Corporate and M&A practice at GOLAW.

Corporate PPAs (Power Purchase Agreements) are gaining popularity not only worldwide, but also in Ukraine. These are direct contracts under which electricity from renewable sources is sold not to the government, as was the case under the “green” tariff, but directly to private companies – end consumers. EU countries and the US have been moving away from government subsidies for renewable energy in favor of market mechanisms for a while now. According to BloombergNEF, 183 corporate PPAs were signed in the US in 2024 alone – nearly twice as many as the previous year. For Ukraine, this model is especially relevant given that the “green” tariff is only valid until 2030 and no longer applies to new industrial facilities (except in a few cases explicitly set out by law). It’s also becoming more attractive due to the ongoing financial instability in the energy sector. Benefits of PPAs in the Ukrainian Context Corporate PPAs primarily provide predictability and stability. These contracts are typically signed for 10 to 20 years and lock in the electricity price, helping businesses avoid market fluctuations. Beyond price stability, long-term PPAs also ensure a reliable power supply – a crucial factor given Ukraine’s recent energy challenges, especially after years of widespread blackouts. PPAs also serve as confirmation of a project’s financial viability, which is key for banks and investors when deciding on funding. For businesses committed to sustainability, PPAs help reduce CO₂ emissions, improve ESG ratings, and enhance corporate reputation. On top of that, they open the door to instruments like guarantees of origin and carbon credits – and that’s just the beginning. Regulatory framework: is it already working? Law No. 3220-IX has enabled renewable energy producers to enter into bilateral agreements without mandatory auctions. Regulatory restrictions on the term of such agreements have also been lifted, allowing long-term contracts to be signed even at the project development stage. Producers can leave the Guaranteed Buyer balancing group and operate on the open market, while retaining the right to return to the state model. Therefore, the legal landscape is already in place – all that remains is to use it effectively. ESG, guarantees of origin, carbon credits – how does this relate to PPAs? Guarantees of origin are electronic documents that officially confirm electricity was generated from renewable sources. This mechanism is already in place in Ukraine and is essential for access to EU markets. ESG principles refer to a business’s responsibility in environmental, social and governance matters. Investors and partners are increasingly demanding compliance with these standards – and purchasing electricity from renewable energy sources through PPAs is a concrete way to confirm your environmental friendliness. Carbon credits or emissions trading system – a system in which companies receive CO₂ emission limits: surpluses can be sold, shortages can be purchased. From 2025, Ukraine will reinstate the obligation to report emissions, and the launch of the emissions trading system itself is expected in 2028. Accordingly, entering into PPAs with renewable energy producers allows businesses to meet ESG requirements, obtain guarantees of origin, and prepare for new climate regulatory requirements. Practical aspects of concluding a PPA After considering the general principles of corporate PPAs, it is worth moving on to the the practicalities of putting them into action. First of all, this concerns the terms and conditions of the sale and purchase of electricity, which must be clearly regulated in the contract. If the electricity seller operates under the PPA model, it is important to stipulate in the contract the buyer's obligation to purchase the entire volume of electricity produced, except for that consumed for the station's own needs. The actual conclusion of the contract for a specific trading day is confirmed by the synchronous submission of identical daily volumes of electricity through the electronic platform of the transmission system operator – NPC Ukrenergo. In this regard, the contract must provide for an agreed procedure for coordinating the daily supply schedule, specifying the deadlines, responsible persons and methods of communication. Equally important is defining the moment when ownership of the electricity is transferred. In Ukrainian practice, this usually happens when the transmission system operator confirms the registration of the contract. From this moment, all risks associated with the ownership, use and disposal of electricity, as well as responsibility for compliance with market rules, are transferred to the buyer. Pricing within the PPA is one of the most sensitive issues. Usually, a model based on the day-ahead market is used, with simultaneous determination of price limits – minimum and maximum. This allows maintaining a balance between protecting the interests of the parties and flexibility in market conditions. The contract should also clearly outline the timing and procedure for payments, in line with tax law requirements. Given the long-term nature of PPAs, it is worth providing for the seller's right to temporarily suspend electricity supply in the event of a breach of payment discipline, failures in volume registration or default by the buyer. The conditions for such suspension must be clearly spelled out and agreed upon by the parties in advance. The contract separately regulates both planned and emergency maintenance – including notification procedures, shutdown schedules, and deadlines for resolving technical issues. This helps avoid disputes and interruptions at the energy facility. The parties must hold all licenses, agreements, and technical documents required under the Electricity Market Rules. It is also necessary to provide for the seller's right to suspend electricity supply in the event of disruptions in the transmission or distribution system, including during maintenance, without applying sanctions. Particular attention should be paid to regulating liability for imbalances – the financial consequences of deviations between the forecast and actual volume of electricity supply. Moreover, the issue of regulating imbalances is an essential condition of the contract. There are also specific points to consider around the contract duration. It all depends on the stage of project implementation. While the agreement is formally in force from the date of signing, actual electricity delivery usually begins only once the facility has been commissioned for commercial operation – that is, once all technical conditions have been met and supply can physically take place. Altogether, these provisions form the backbone of a well-functioning and predictable corporate PPA. Challenges and solutions Despite its benefits, the PPA market in Ukraine still faces a number of challenges. The biggest issue is the lack of a guaranteed long-term buyer (offtaker) willing to purchase large volumes of electricity. Green auctions have not been implemented at scale, and the private PPA market is developing slowly due to a shortage of creditworthy buyers. In particular, green auctions with state support do not enjoy investor confidence, due to both procedural imperfections and the risk of non-fulfilment of obligations on the part of the state. The current “contract for difference” model used in green auctions is unattractive to investors, as auction prices are often lower than market prices. The “contract for difference” mechanism provides that the state guarantees a fixed price to the producer, compensating for the difference in the event of a market decline. A transition to a “market premium” model is being discussed, where the producer sells the electricity itself and the state only pays extra when prices are low. Let us turn our attention to quotas. Investors working in Ukraine have much larger construction projects than the quotas currently offered in auctions. This significantly reduces the possibility for large projects to win. Conclusion Corporate PPAs are not just a trend, but a real tool for transitioning to a sustainable, competitive and energy-independent economy. They open up new opportunities for both energy producers and consumers, allowing them to combine economic efficiency with social and environmental responsibility. A well-structured agreement, supported by professional guidance, is the key to making the most of this instrument in the Ukrainian context. Authors: Oleksandr Melnyk, Partner at GOLAW, Head of Corporate Law and M&A practice, Attorney at law; Khrystyna Zimenko, Associate at Corporate Law and M&A practice at GOLAW; Vladyslava Zaichko, Paralegal at Corporate Law and M&A practice at GOLAW.

On 5 August 2025, the National Bank of Ukraine adopted resolution No. 95, which significantly amends the rules on foreign exchange operations for corporate clients and foreign investors. Key changes in foreign exchange regulation Resolution of the NBU board No. 95 of 5 August 2025 marks another step is easing the wartime foreign exchange restrictions introduced by resolution No. 18 of 24 February 2022. The new rules are aimed at stimulating investment and increasing the foreign exchange flexibility of Ukrainian businesses, while maintaining the necessary control mechanisms. Dividend repatriation One of the most important innovations concerns the payment of dividends abroad. Residents will now be able to partially repatriate dividends for the period of activity starting from 1 January 2023. The monthly limit of EUR 1 million remains unchanged. According to the NBU, the current overall limit prevents a significant increase in demand for foreign currency, while allowing dividend repatriation will strengthen foreign investors’ confidence and stimulate the inflow of new capital into Ukraine. Funds transferred abroad in the form of dividends may also be used for other purposes, including repayment of debt obligations. New risk management instruments Resolution No. 95 considerably expands the possibilities for forward transactions. First, clients are now entitled to sell foreign currency to banks for hryvnia on forward terms without the need for physical delivery of the underlying asset. Second, residents are permitted to purchase foreign currency from a bank on a forward basis for the purpose of hedging exchange rate risks in import transactions. At the same time, restrictions have been set for banks: they may not increase their net long foreign currency position, so such forward transactions are possible only within the amount of currency the bank has itself purchased on a forward basis from its clients. These innovations provide corporate clients with more tools to manage currency risks but also require the establishment of internal accounting and control for forward contracts. Simplification of international settlements Following the amendments, residents and non-residents may return erroneously credited foreign currency funds within three working days of the bank receiving the relevant notice. This increases the confidence of foreign partners, as their funds will not be blocked without the possibility of return. The establishment of a three-day period for returning erroneously credited foreign currency significantly improves the predictability of foreign exchange operations and reduces reputational risks for banks. This change sends an important signal to foreign partners about the normalisation of foreign exchange regulation and alleviates concerns about the “freezing” of assets in the event of technical errors. Greater flexibility in servicing external credits The approach to servicing external borrowings has been substantially revised. Now, under loans from a pool of foreign creditors, enterprises may repay debt not only in favour of IFIs but also to other participants, namely first-tier banks with a rating of at least “A”. This change creates greater flexibility for Ukrainian enterprises in structuring external debt and may contribute to diversifying funding sources, potentially reducing the cost of borrowing through competition, and simplifying debt repayment procedures. At the same time, the imposition of strict rating requirements may limit the range of available banks, especially under martial law, when bank ratings may be downgraded due to war-related risks. Conclusions NBU resolution No. 95 is an important step in the liberalisation of foreign currency regulation, providing businesses with more management. The innovations are particularly beneficial for companies with foreign investors and those actively operating in international markets. However, successful use of the new opportunities requires careful planning, compliance with documentation requirements, and regular monitoring of regulatory changes. Companies should promptly adapt their internal processes to fully benefit from the liberalisation of foreign currency restrictions. Authors: Oleksandr Melnyk, Partner, Head of Corporate Law and M&A practice at GOLAW, Attorney at law; Oles Riabchuk, Senior Associate at Corporate Law and M&A practice at GOLAW, Attorney at law; Yaroslav Maltsev, Paralegal at Corporate Law and M&A practice at GOLAW.

The status of a representative office of a foreign company directly affects the taxation of the activities carried out by such a representative office in Ukraine. According to the provisions of the Tax Code of Ukraine, a permanent establishment is a fixed place of business through which the business activity of a non-resident is wholly or partially carried out in Ukraine. Such a place of business may, in particular, consist of a branch, office, factory, workshop, warehouse or premises used for the delivery of goods, server, etc. At the same time, in practice, disputes often arise regarding the qualification of a representative office: whether it performs only non-commercial functions, or actually carries out business activity in Ukraine and, accordingly, should be recognized as a permanent establishment. In this article, we will consider the current approaches of court practice to certain issues regarding the recognition / non-recognition of a non-resident’s representative office as having the status of a permanent establishment. Preparatory and auxiliary activities of a representative office Both domestic and international legislation provides that one of the cases when the business activity of a non-resident carried out through its representative office in Ukraine does not fall under the definition of a “permanent establishment” is when such representative office carries out activities of a preparatory or auxiliary nature. In particular, in the resolution dated February 15, 2024, in case No. 640/35881/21, the Supreme Court noted that when distinguishing core activities from preparatory and/or auxiliary ones, it is necessary to take into account that: preparatory or auxiliary activities must be carried out for the benefit of the non-resident, and not for third parties; core activities are usually perceived as activities that are substantial and significant based on the commercial goals and objectives of the organization; preparatory activity precedes the commencement of the non-resident’s core activity in the territory of Ukraine; auxiliary activity supports the process of conducting the core business activity by the non-resident and is carried out simultaneously with the core activity, but does not qualify as one. At the same time, auxiliary activity may be conducted either on a temporary or on a permanent basis. Thus, in this case, the Supreme Court concluded that, by their nature, the actions of the representative office related to the registration of medicinal products in Ukraine, as well as their subsequent promotion for sale, are of a preparatory and auxiliary nature, since such activities are intended to ensure the possibility of marketing the respective medicinal product in the territory of Ukraine. However, these operations do not necessarily lead to the generation of income in the territory of Ukraine. In the resolution of the Sixth Administrative Court of Appeal dated December 04, 2024, in case No. 640/13698/22, the issue of preparatory and auxiliary activities of a representative office was also examined, in particular taking into account the criterion of receiving / not receiving income from a certain activity of the representative office. The court noted that the activity of a representative office, which does not generate any income for the parent company, cannot, under any circumstances, constitute a significant part of the overall business activity of the enterprise, and therefore has an exclusively auxiliary nature. Duration of a representative office’s activity and expenses for its maintenance Tax authorities often refer to the long duration of a representative office’s activity on the territory of Ukraine, as well as to the significant amount of expenses incurred by the parent company for its maintenance, as circumstances which, in their opinion, indicate that such a representative office meets the criteria of a permanent establishment. At the same time, in the resolution of the Supreme Court dated February 15, 2024, in case No. 640/35881/21, it was concluded that international legislation does not establish specific timeframes after which a representative office acquires the status of a permanent establishment. As a general rule, in order to qualify as a permanent establishment, the activity must be regular, stable, and stationary – that is, carried out at a specific location and with a certain degree of permanence. However, in the opinion of the Supreme Court, the amount of expenses incurred by a non-resident to maintain a representative office may, under certain conditions, be considered a factor supporting the conclusion that such a representative office should be granted the status of a permanent establishment. At the same time, in order to determine whether such expenses are indeed significant, it is necessary to compare the amount of funding allocated to the representative office with the overall amount of funds received by the non-resident from its business activity, also taking into account the specifics of the business sector, market conditions, and other relevant factors in their entirety. A similar approach was also outlined in the resolution of the Sixth Administrative Court of Appeal dated May 05, 2025, in case No. 320/44103/23, which stated that the duration of the representative office’s presence at a specific location, the number of personnel, and the amount of fixed assets available cannot serve as grounds for granting such representative office the status of a permanent establishment, if its activities are limited to purely preparatory and/or auxiliary functions. Identity of activities and the conclusion of contracts on behalf of the parent company Disputes regarding the recognition of a permanent establishment of a foreign company in Ukraine often arise based on the existence of powers of attorney issued to certain individuals by such company, authorizing them to perform a wide range of functions. Tax authorities, as a rule, take into account not the actual actions performed under the power of attorney, but the content of such power of attorney itself. Thus, in the resolution dated July 04, 2024, in case No. 160/11095/23, the Supreme Court identified the following features of a permanent establishment, which may be applied either simultaneously or separately: the representative office carries out activities that are wholly or partially identical to the core activity of the non-resident; a person (other than an agent with an independent status) acts on behalf of the company and uses authority in the contracting state to conclude contracts on its behalf. In order to avoid recognition of identity between the activities of the parent company and those of the representative office, the latter’s activities must differ from the statutory functions of the parent company. Regarding the second feature, it is worth noting that the prevailing position remains that issuing a power of attorney with broad powers (including authority to conclude any contracts related to the non-resident’s activity) is not sufficient grounds for concluding that the representative is performing the functions of a permanent establishment. Conclusions regarding the performance of permanent establishment functions must be based directly on the analysis of the actual actions performed by such representative, rather than on the content of the power of attorney (resolution of the Supreme Court dated December 21, 2022, in case No. 200/7051/20-а, resolution of the Second Administrative Court of Appeal dated October 10, 2024, in case No. 440/18088/23, resolution of the Third Administrative Court of Appeal dated January 09, 2024, in case No. 160/9196/23). Engaging in investment activity Court practice sometimes reflects the view that the purchase and sale of corporate rights and other investment activities carried out by a non-resident’s representative office are not considered grounds for recognizing the representative office as a permanent establishment, even if such activities correspond to the activities of the parent company. However, in a recent resolution of the Supreme Court dated March 20, 2025, in case No. 280/4264/21, it was concluded that, according to the provisions of international and domestic legislation, investment activity is one of the types of business activity. In particular, for professional investors, such activity may constitute core business activity and a source of independent income. Therefore, in the opinion of the Supreme Court, it is important to distinguish whether the representative office is conducting investment activity as an independent (core) type of business activity, or whether it has an auxiliary nature related to supporting or developing the core activity. Thus, considering that in this case the representatives of the foreign company were carrying out investment activity (primarily concluding contracts for the purchase and sale of shares in Ukrainian companies) on behalf of the foreign company, and such activity was also identical to the core activity of that company, the representative office was recognized as a permanent establishment. Conclusion In conclusion, it should be noted that the determination of the status of a non-resident’s representative office in Ukraine is of significant importance for tax consequences and, in practice, often presents challenges. In general, as the analysis of court practice shows, courts go beyond a formal analysis and focus on the actual substance of the representative office’s activity. Therefore, foreign businesses should take the above-mentioned approaches into account when planning their activities in Ukraine in order to minimize the risks of tax disputes, additional tax assessments, and other negative consequences. Authors: Viktoriia Bublichenko, Partner, Head of Tax, Restructuring, Claims and Recoveries practice at GOLAW, Attorney at law Tetiana Fedorenko, Senior Associate at Tax, Restructuring, Claims and Recoveries practice at GOLAW, Attorney at law Anna Kostsova, Paralegal at Tax, Restructuring, Claims and Recoveries practice at GOLAW