Category: Ukraine

Sayenko Kharenko has advised Elementum Energy on the acquisition of a majority stake in Windpark West-R.

Elementum Energy is an international investor in Ukraine’s renewable energy sector, with a portfolio of solar and wind power plants totaling 636 megawatts of installed capacity.

Windpark West-R is a project company developing a 200-megawatt wind power plant in western Ukraine at the junction of the Ternopil, Rivne, and Lviv regions. According to Sayenko Kharenko, the project is being developed in cooperation with Maxima Development Group, which remains a minority shareholder.

In 2022, Sayenko Kharenko advised Elementum Energy on its acquisition of a stake in the Lymanska wind project (as reported by CEE Legal Matters on January 31, 2022).

The Sayenko Kharenko team included Partner Oleksandr Nikolaichyk, Counsels Mykhailo Grynyshyn and Tymur Enkhbaiar, Senior Associates Taras Bondarenko and Natalia Hutarevych, Associate Dmytro Zaiachkivskyi, and Junior Associates Victoria Chorna, Maksym Kysil, Ahil Aliev, and Vladyslav Novitskyi.

Sayenko Kharenko could not provide additional information on the matter.

On 23 December 2024, the Register of Damages for Ukraine caused by the aggression of the russian federation against Ukraine (the “Register”) published the forms and rules for submitting claims for compensation in newly opened categories of claims. This will allow individuals and legal entities, as well as the state of Ukraine, to start preparing the necessary documents in 30 out of the 45 planned categories.

The Register

The Register was launched at the Council of Europe Summit on 17 May 2023. The Register is the first step in the compensation mechanism. Its task is to register, record and categorise claims for compensation for damage, loss and harm caused by the aggression of russian federation against Ukraine, as well as related evidence.

The next step will be the establishment of a Compensation Commission, which is scheduled to start working in 2026. This Commission will develop a formula for calculating the amount of compensation and will review the claims submitted to the Register.

Claims that can be submitted to the Register

Claims that simultaneously meet three criteria can be recorded in the Register:

• the destruction, damage or loss of property occurred on or after 24 February 2022;
• the damage was caused on the territory of Ukraine within its internationally recognized borders; and
• the destruction, damage or loss of property was caused by the russian federation’s internationally wrongful acts in or against Ukraine.

All claims are categorised according to the announced 45 categories, divided into groups A (claims from individuals), B (claims from the state of Ukraine) and C (claims from legal entities). Each category is described in detail on the website of the Register, where claim forms and rules are available in English, French and Ukrainian.

New claim forms

The Register has finalized and published forms and rules for 30 out of 45 categories of applications, including the following categories of applications available to businesses: damage or destruction of residential and non-residential real estate (not intended for profit); damage, destruction, or loss of assets; loss of control over property in the temporarily occupied territories and relocation (evacuation) of business.

As of today, the Register accepts applications only from individuals regarding damage or destruction of residential real estate. However, the Register will gradually launch the possibility of submitting other applications.

The publication of forms and rules in most categories will allow affected individuals and businesses to start preparing applications and gathering the necessary documents and evidence.

Preparation of claims

Applicants must submit information that verifies their identity and evidence that confirms the occurrence of the destruction, damage, or loss. For example, a claim for loss of control over property in the temporarily occupied territories (category C.3.2) must include:

• a document identifying the legal entity and confirming the powers of the representative;
• a detailed description of the lost property;
• confirmation of ownership of the property;
• a detailed description of the events that led to the loss of control over the property; and
• information on the approximate amount of the claim with a detailed evaluation of the property.

The rules and claim forms do not set forth specific requirements for the form of evidence. Therefore, since the consideration and decision to record the claim in the Register is made on an individual basis, it is important that the submitted documents contain the most complete evidence. Amendments to the application may be made only before the application is submitted to the Board of the Register, which makes the final decision on whether to record (or not to record) the claim in the Register or return it for revision.

The claim must be submitted via the Diia web portal. Individuals may submit applications independently, and legal entities may submit claims exclusively through their representatives. The Rules on the Use of Representatives regulate the procedure for engaging representatives to submit claims to the Register.

All information and evidence provided with the claim are confidential, and the meetings of the Board of the Register to consider them are closed. Confirmation of the claim submission (along with a unique number) and decisions on it will be received via the Diia web portal.

By Kostiantyn Likarchuk, Senior Partner, Vadim Medvedev, Partner, and Oleksii Maslov, Counsel, Avellum

Everlegal has advised VisionFund on establishing its Ukrainian entity and obtaining a financial company license, enabling it to provide non-banking financial services such as granting loans and banking metals.

According to Everlegal, “amid strengthened legislative and prudential rules leading to the exit of many financial companies, VisionFund Ukraine became one of only three newly licensed finance providers in 2024.”

The Everlegal team included Managing Partner Yevheniy Deyneko, Partner Andriy Olenyuk, Associates Iryna Plukar and Sofiia Papura, Junior Associates Volodymyr Lutsyk and Vladyslav Shulkin, and Legal Assistants Kateryna Udovychenko and Anastasiia Rybalchenko.

Former Counsel Denys Medvediev has been promoted to Partner at Redcliffe Partners. The same promotion round also saw Kateryna Zheltova promoted to Senior Associate.

Medvediev’s core focus is antitrust law and international trade. He has been with the firm since 2020 when he joined as an Associate. He was promoted to Senior Associate that same year and to Counsel in 2023. Earlier, he was an Associate with Aequo between 2018 and 2020. Earlier still, he was with Asters as a Junior Associate between 2014 and 2016 and as an Associate between 2016 and 2018.

“Congratulations to Denys and Kateryna on this significant milestone in their careers. We wish them immense success and look forward to their continued professional development in 2025 and beyond,” stated a Redcliffe Partners press release.

With effect from 21 December 2024, the National Bank of Ukraine (“NBU”) introduced new exemptions from the moratorium on foreign currency cross-border transfers. Notably, these changes broaden the scope of existing exemption for Ukrainian corporate issuers permitting to make payments in connection with Eurobond-related obligations, described in our earlier legal alert.

The NBU allowed Ukrainian companies to repatriate dividends to their foreign participants/shareholders, subject to the following conditions:

• the Ukrainian company is the borrower under a loan agreement with a foreign Eurobonds issuer;
• a loan from the foreign issuer to the Ukrainian company was funded from Eurobonds issuance proceeds;
• Eurobonds are admitted to trading on a foreign stock exchange and are in circulation as of 10 July 2024;
• the foreign currency transfer for dividends repatriation is limited to the amount of coupon payments on Eurobonds that have already been made to the bondholders during the period from 24 February 2022 until 30 April 2024, minus any foreign currency transfers made by the Ukrainian company from its Ukrainian bank account to the foreign Eurobonds issuer for purposes of interest payments under the loan agreement since 4 May 2024;
• payments must be made exclusively with the Ukrainian company’s own foreign currency funds;
• no export transactions of the Ukrainian company remain subject to currency control monitoring as a result of such Ukrainian company’s failure to comply with maximum settlement deadlines that have passed within the last 12 calendar months; and
• the Ukrainian company must provide the servicing bank with all necessary supporting documents and information to evidence compliance with the above requirements.

Concurrently, the NBU also enacted other exemptions, such as lifting the ban on the sale and purchase of banking metals without physical delivery using non-cash UAH. Such exemption applies to Ukrainian businesses in the jewelry production field that started their operations before 23 February 2022.

By Glib Bondar, Senior Partner, Avellum

On 13 December 2024, the new “Regulation (EU) 2023/988 of the European Parliament and of the Council of 10 May 2023 on General Product Safety” (“GPSR“) came into force.

The GPSR repeals the General Product Safety Directive (2001) and introduces an updated regime to ensure product safety in light of evolving technologies and means of trade. As a regulation, the GPSR is directly applicable to all EU member states without the need for national transpositions.

The GPSR generally applies to all consumer products on the EU market, whether new, used, repaired or reconditioned. It is explicitly not applicable to certain product categories regulated by higher safety standards (e.g., medicines, animal products, food and feed). The regulation introduces a new framework of obligations covering general product safety requirements, consumer information, complaints, product incident and recall management.

Key changes

The key changes, also applicable to Ukrainian businesses offering goods to EU consumers, are the following: 

• The GPSR applies to products placed or made available on the EU market. The “made available on the market” also includes consumer products sold online (e.g., via online marketplaces) or via other forms of distant sales (e.g., ordered via phone, post, etc.).
• Economic operators who must comply with the GPSR are manufacturers (both EU and non-EU), importers, distributors, online retailers and the manufacturer’s representatives in the EU.
• Any individual or legal entity is subject to the manufacturer’s obligations under the GPSR if they (i) place the product on the EU market under their own name or trademark, or (ii) substantially modify the product.
• Each non-EU manufacturer must establish an economic operator within the EU to ensure GPSR compliance for imported products and serve as a contact point for market surveillance and incident claim management (“EU Authorized Representative”).
• Online marketplace providers must comply with the GPSR by cooperating with EU market surveillance authorities (e.g., processing notices within three working days) and taking immediate mitigation actions in regard to the product deemed as non-compliant (e.g., incident management and product recall, etc.).
• The GPSR foresees specific product labeling obligations, including specific contact details of foreign manufacturers and EU Authorized Representatives. 
• The penalties for the violation of the GPSR are at the discretion of each EU member state. However, deeming the initial draft proposing a maximum fine of at least a 4% annual turnover, such a fine will be high. A violation may also lead to civil damage compensation claims filed by consumers in various EU member states against all economic operators, including the ones located outside the EU.

Recommendations 

Ukrainian businesses exporting consumer products to the EU are recommended to:

• Reassess and update your internal product assessment procedures, product labeling, representation in the EU and compliance with EU technical standards in light of the GPSR
• Liaise with your export supply chain partners (e.g., EU importers, distributors, online retailers) and establish a new internal process compliant with the GPSR
• Implement new procedures for internal communication strategies and consumer/authority response teams to meet all GPSR requirements for a speedy reaction to incident reports, customer complaints and requests and orders from EU market surveillance authorities

By Ario Dehghani​, Counsel, Volodymyr Stetsenko, Associate, Baker McKenzie

On 21 December 2024, a new package of foreign currency (“FX”) easings came into effect. It is aimed at supporting domestic producers and improving the business environment in Ukraine. The amendments, introduced by Resolution No. 155 of the National Bank of Ukraine (the “NBU”) dated 20 December 2024 (“Resolution No. 155”), include the following measures:

1. New opportunities to purchase precious metals

Resolution No. 155 allowed legal entities and individual entrepreneurs to buy and sell precious metals without physical delivery with non-cash UAH. However, such transactions are only possible if the following conditions are met:

• the need for precious metals must be related to business activities
• business entities must have been engaged in jewellery production before the full-scale invasion

2. Permission to purchase FX funds by nuclear facility operators

The NBU has granted nuclear facilities operators the right to purchase FX funds without taking into account the balances of FX funds received no later than 31 October 2024 under a loan agreement with a non-resident lender that is guaranteed by foreign export credit agencies, foreign states, or entities in which foreign states are stakeholders. This amendment aims to ensure the uninterrupted supply of nuclear fuel.

3. Clarification of the rules for compensation of coupon payments on Eurobonds

Resolution No. 155 introduces several changes to standardize approaches and ensure equal opportunities for all Ukrainian companies that raised financing through Eurobond issuance to fulfil their obligations.

In particular, subject to the conditions set by the NBU, companies are now allowed to make transfers to related foreign legal entities to compensate for coupon payments on Eurobonds issued by the lenders of such companies. Importantly, such payments can only be made using the company’s own FX funds, not borrowed ones.

These changes complement the easing measures introduced earlier this year regarding the payment of dividends for the redemption of Eurobonds, which were covered in detail in the legal alerts dated 12 July 2024 and 10 September 2024.

The new package of FX easings introduced by the NBU is aimed at supporting businesses in the face of current challenges, creating a favourable investment climate and boosting capital inflows to Ukraine.

By Roman Stepanenko, Partner, and Kateryna Oliynyk, Counsel, Asters

The Law of Ukraine on Tax Increases №4015-ІХ, adopted by the parliament and awaiting presidential signature, came into effect on November 30, 2024. Below are the key changes to the taxation system.

Taxation of individuals

Effective December 1, 2024:

• Military tax (MT): The rate on personal income (e.g., salaries, dividends, capital gains, interest, royalties, lease payments, etc.) increased from 1.5% to 5%. Salary or other income accrued to a person before the law’s effective date but paid afterward will be taxed at the previous rate of 1.5%.
• The MT rate for military personnel and law enforcement employees remains at 1.5%.
• Income exempt from the MT—such as government securities (including war bonds), social benefits, pensions, scholarships and other income not subject to personal income tax (PIT)—remains unchanged.

Effective January 1, 2025:

• Private Entrepreneurs (FOP): Depending on their tax category, entrepreneurs will either pay UAH 800 (approximately €16) or 1% of reportable turnover. Private entrepreneurs belonging to the third group of Single Tax will be required to pay 1% of their turnover based on the results of the first quarter of 2025.

These higher rates will remain in effect until the end of the year in which martial law is lifted.

Corporate income tax (CIT)

Effective January 1, 2025:

• The CIT rate for financial companies (excluding insurance companies) will increase to 25%.
• The CIT rate on banks for the 2024 fiscal year is set at 50%.

Advance CIT payments

Taxpayers engaged in retail fuel sales must make advance CIT payments of UAH 30,000, UAH 45,000, or UAH 60,000 per month, depending on the type of fuel station, for each point of sale.

• Advance payments reduce the corporate income tax liability calculated at the standard rate for the reporting period.
• Excess advance payments for the year cannot be carried forward to future periods, refunded or applied to other tax obligations.

Currency exchange operators must now make advance payments for each exchange location as follows:

• €700 for exchange locations in Kyiv
• €600 for locations in cities with populations over 50,000
• €200 for other locations

Land tax

Effective January 1, 2024, until the end of the year in which martial law is lifted:

• The minimum tax liability per hectare is set at UAH 700, or UAH 1,400 for land plots where arable land constitutes at least 50 percent of the total area.
• This provision does not apply to land located in areas included in the official list of territories where hostilities are ongoing (or have occurred) or areas temporarily occupied by Russian forces.

Tax administration

The law includes some amendments to reporting, tax return filing and administration procedures to align with the newly introduced tax changes.

By Valeria Tarasenko, Tax Consultant, Dentons

A leniency procedure has been in place in Ukraine for over two decades. However, until recently, there was no public record of its successful application by the Antimonopoly Committee of Ukraine (AMC).

One key reason for such unpopularity was that, until the end of 2023, only the first-comer could receive full immunity, while subsequent applicants received no benefits. Some other provisions under the old regime further complicated the process, discouraging its use.

In 2024, a new leniency procedure came into effect, introducing significant improvements. It not only continued to offer full immunity to the first-comer but also allowed reductions in fines for subsequent applicants who provided valuable evidence. Specifically, the second applicant could receive a reduction of up to 50%, the third up to 30%, and any subsequent applicants up to 20%. Other enhancements were also introduced to make the procedure more accessible and predictable for applicants.

On 12 December 2024, the AMC reported the first grant of leniency under the new procedure. The case involved bid-rigging, and full immunity was granted to the tender participant who first reported the violation and satisfied certain other conditions (such as, provision of critical evidence and cooperation with the AMC throughout the process).

This example shows that the procedure is workable and can encourage companies to report violations to the AMC.

By Igor Svechkar and Oleksandr Voznyuk, Partners, and Pavlo Verbolyuk and Sergiy Glushchenko, Counsels, Asters

During EU-Ukraine Investment Conference on 13-14 November in Warsaw the European Commission has announced a call for private investment projects in Ukraine that have cost at least EUR 50 m, of which the project initiator provides at least 10% in the own contributions. 

The financial support of the project implementation will come from the Ukraine Investment Facility (UIF), a part of EUR 50 bn Ukraine Facility designated over the period of 2024-2027. 

Eligibility criteria are quite simple and include:

• Applicant or a leader of applicant consortium must be a company incorporated and operating in the EU or EEA, with a valid registration number as a VAT payer and in  the EU Transparency Register 
• The investment must be made within the territory of Ukraine
• Participants can be private enterprises, joint ventures or a consortium of companies.

The project must cover one of the identified priority sectors of the economy and be aligned with public sector investments in:

• agriculture land’s demining 
• education
• energy infrastructure
• financial compensations for damaged housing 
• healthcare
• housing for vulnerable groups 
• social infrastructure 
• support of micro, small and medium enterprises (MSME), small and medium processing enterprises 
• transport infrastructure 

The deadline to apply is 1 March 2025, 00:00 Brussels time.

Applications must be submitted through the official platform.

The call of proposals concerns EUR 2.75 bn of UIF funds, that will be made available to private sector before the end of 2025. 

Background information

UIF totals EUR 9.3 bn, consisting of EUR 7.8 bn in guarantees and EUR 1.5 bn in grant funding; in 2024, EUR 1.4 bn is being made available through a number of loan programs with the following distribution (MinEconomy of Ukraine data): Manufacturing, energy, transport and  IT (combined) – EUR 857.5 m; MSME support, including agriculture – EUR 507 m; big infrastructure projects – EUR 29.75 m. 

By Oleh Zahnitko, Partner, Integrites