News digest | February 2026

Litigation and Dispute Resolution practice

1. Debt calculation rules under Article 625 of the Civil Code of Ukraine may be revisited 

The Supreme Court has referred case No. 751/4086/24 to the Second Judicial Chamber of the Civil Cassation Court of the Supreme Court. The dispute concerns recovery of inflationary losses and three percent interest per annum for a delay in the performance of a monetary obligation. 

The central issue to be determined is whether, when calculating inflationary losses under Article 625(2) of the Civil Code of Ukraine for the entire period of default, the court should also take into account deflationary periods (i.e., months where the inflation index is below 100%). 

The panel considers it necessary to initiate a departure from the Supreme Court’s previous approach, under which no inflationary losses are accrued for deflationary months, and such months are effectively excluded from the calculation. 

At the same time, the Second Judicial Chamber notes that, by its wording and purpose, Article 625 requires inflationary losses to be calculated for the entire period of default as a single continuous period, rather than for separate intervals. Excluding months with deflation (index below 100%) is, in the Chamber’s view, incorrect because it breaks the continuity of the calculation, artificially inflates the debt, and gives the creditor an unwarranted advantage. 

If the Second Judicial Chamber departs from the earlier position, inflationary-loss amounts in many cases are likely to decrease, as deflationary months would partially offset previous increases. Creditors in ongoing proceedings should therefore already prepare alternative calculations under both methodologies, to avoid being caught off guard if the court applies the new approach. For debtors and their representatives, this development provides an additional argument to challenge inflationary-loss calculations already filed and to seek a reduction of the amounts claimed. Counsel involved in disputes with substantial overdue sums should monitor the Chamber’s final ruling closely and promptly update their calculation templates accordingly. 

2. Non-enforcement of a judgment awarding damages against an aggressor state does not give rise to Ukraine’s liability to compensate such damage – Civil Cassation Court of the Supreme Court 

The absence of a special statutory mechanism for enforcing judgments in cases involving an aggressor state does not create any legitimate expectation of compensation from Ukraine and does not prevent persons affected by the armed aggression of the russian federation from applying to the international Register of Damage for Ukraine. In the absence of factual and legal grounds, an individual may not shift responsibility for damage caused by the aggression from the aggressor state to Ukraine. 

These conclusions were reached by the Supreme Court, acting as a panel of judges of the First Judicial Chamber of the Civil Cassation Court, in its ruling of 14 January 2026 in case No. 553/88/25. 

In the case under review, the claimant brought an action against the state of Ukraine, represented by the Ministry of Justice of Ukraine and the State Treasury Service of Ukraine, seeking compensation for pecuniary and non-pecuniary damage. 

The claim was substantiated by an alleged violation of the claimant’s rights resulting from the prolonged inaction of the Ministry of Justice of Ukraine in the course of enforcement of a court judgment ordering the russian federation to pay compensation for non-pecuniary damage in the amount of UAH 1 million, as well as the failure to initiate legislative amendments concerning the enforcement of such judgments in Ukraine. On that basis, the claimant sought to recover from Ukraine pecuniary damage in the amount of UAH 1 million and non-pecuniary damage in the amount of UAH 100 million. 

The courts of first instance and appeal dismissed the claim, noting the absence of evidence in the case file showing that the bodies of the State Enforcement Service had unlawfully failed to enforce the judgment. 

The Civil Cassation Court of the Supreme Court upheld the findings of the lower courts and noted, in particular, that the mere fact of non-enforcement of a court judgment which awards a certain amount against an aggressor state for its aggression against Ukraine does not, of itself, prove that the claimant has suffered pecuniary damage. 

The Civil Cassation Court also emphasised that the lack of domestic mechanisms in Ukraine for enforcing judgments delivered by national courts against an aggressor state does not prevent persons affected by the armed aggression of the russian federation from applying to the international Register of Damage for Ukraine. 

3. A trade union may demand termination of the employment contract with the head of the enterprise to protect employees’ collective interests – Grand Chamber of the Supreme Court 

Where several primary trade union organisations operate at an enterprise, each of them regardless of whether it is a member of a joint representative body and regardless of its participation in negotiating or concluding a collective bargaining agreement has the right to independently approach the owner (or an authorised body) with a demand to terminate the employment agreement (contract) with the head of the enterprise in accordance with Article 45 of the Labour Code of Ukraine. 

Such a trade union demand must be well-founded, refer to specific facts evidencing the head’s breaches of labour legislation, and relate to the protection of the employees’ collective interests at the enterprise. 

This demand is an exceptional measure, used in cases where the head breaches labour legislation, while at the same time remaining an employee of the enterprise and therefore enjoying the relevant labour-law guarantees. 

These conclusions were reached by the Grand Chamber of the Supreme Court in its decision of 21 January 2026 in case No. 359/8573/20, which concerned the annulment of a trade union committee’s decision to terminate the employment contract with the acting director of a state enterprise. 

At the same time, the Grand Chamber departed from the Supreme Court’s earlier approach (including the position set out in the decision of 11 December 2019 in case No. 266/4331/17). Under that earlier approach, a primary trade union organisation which had not participated in forming the joint representative body and/or in negotiating (agreeing, signing) the collective bargaining agreement was considered not to have acquired the right to initiate a demand for termination of the employment contract with the head; likewise, the demand was considered not to extend to an individual serving in an “acting head” capacity. 

By contrast, the Grand Chamber formulated a new approach whereby the applicable legislation (Articles 45 and 247 of the Labour Code of Ukraine; Articles 33 and 38 of the Law of Ukraine “On Trade Unions, Their Rights and Guarantees of Their Activities”) does not make the exercise of this right dependent on signing a collective bargaining agreement or on membership in a joint representative body. Moreover, the term “head of an enterprise” also covers an acting head. The Grand Chamber justified the departure as necessary to align the approach with the current wording of the relevant provisions and with the principles of equality and autonomy of trade unions, referring inter alia to constitutional provisions and to the position of the Constitutional Court of Ukraine that a trade union’s participation in concluding a collective bargaining agreement does not determine the scope of its powers. 

4. Only a person whose rights or legitimate interests are affected has standing to appeal a separate ruling – Grand Chamber of the Supreme Court 

The mere fact that a person is involved in proceedings and has been granted party status does not, of itself, give that person an automatic right to appeal a separate ruling issued by the court in the course of the proceedings. A separate ruling may be appealed (whether on appeal or in cassation) only by those persons — whether they participated in the case or not — for whom it produces legally relevant consequences and which directly affects, or is capable of affecting, their rights, freedoms and/or legitimate interests. 

The Grand Chamber of the Supreme Court reached this conclusion in its judgment of 21 January 2026 in case No. 490/10876/23. 

In that case, the claimant sought annulment of a decision imposing an administrative penalty and closure of the administrative offence proceedings. The court of first instance dismissed the claim and, at the same time, issued a separate ruling concerning the claimant’s counsel. 

The claimant appealed the separate ruling. Although the appellate court initially opened appellate proceedings, it subsequently discontinued them, holding that the challenged separate ruling concerned the claimant’s lawyer directly and that he — rather than the claimant — had standing to appeal it. The appellate court considered this approach consistent with Article 249(7) of the Code of Administrative Procedure of Ukraine. 

In reviewing the case, the Grand Chamber emphasised that a separate ruling is a distinct type of judicial decision. While it is issued within the framework of a particular case, it does not determine the dispute on the merits and does not affect the outcome of the proceedings. Accordingly, a separate ruling may operate autonomously from the judgment resolving the dispute and does not necessarily concern the rights, obligations or interests of the parties to that dispute. 

Having examined the content of the impugned separate ruling, the Grand Chamber noted that it amounted to an assessment of the actions of the claimant’s representative and did not in any way relate to the claimant’s rights, freedoms or legitimate interests. The claimant therefore lacked standing to appeal it. 

Corporate Law and M&A practice

1. Parliament updates the competitive framework to support growth in renewable energy 

The Verkhovna Rada has adopted in the second reading and as a whole Draft Law No. 13219 aimed at enhancing the attractiveness and transparency of the regulatory framework for the development of the renewable energy sector. The new provisions aim to ensure fairer market opportunities and encourage investment in clean energy generation. 

Among the key changes introduced by the draft law is the transition from Contracts for Difference (CfD) to a “clean” Feed-in Premium (FiP) mechanism for winners of renewable energy auctions. This model enhances transparency in revenue formation and supports long-term financial planning for businesses. 

The “green” auction mechanism has been extended until 31 December 2034, instead of the previously established deadline of 31 December 2029. This extends the planning horizon for investors and creates opportunities for launching new project cycles in the renewable energy sector. 

The draft law also reduces the financial burden on participants in “green” auctions: the amount of the bank guarantee is decreased from EUR 15 to EUR 10 per kilowatt of installed capacity, and in the event of construction delays – from EUR 30 to EUR 10. This lowers the market entry threshold for smaller and new companies. 

To stimulate competition, the draft law introduces a more flexible approach to quota allocation: the minimum share for producers within specific technologies (solar, wind, bioenergy, etc.) has been reduced from 10% to 5%. This broadens the pool of potential auction participants and encourages competition among different generation technologies. 

The law also integrates modern energy efficiency solutions and further aligns the market with European standards. In particular, the mechanism of guarantees of origin for electricity has been improved in accordance with EU requirements, which will be important for international buyers and the conclusion of export contracts. Additionally, the inclusion of battery energy storage systems (BESS) in the cable-pooling mechanism is now permitted, creating new opportunities for the development of the electricity storage market in Ukraine. 

The adoption of this draft law establishes updated conditions for revitalising investment activity in the renewable energy sector and lays the groundwork for launching new auctions and implementing relevant projects in Ukraine. 

2. The Government has approved amendments to the procedure for exchanging of temporary residence permits for foreigners 

The Cabinet of Ministers has adopted Resolution No. 141, amending the rules for exchanging temporary residence permits for foreigners staying in Ukraine. The resolution addresses the exchange of temporary residence permits for foreign nationals and stateless persons whose renewal deadline fell on or after 24 February 2022 – the date martial law came into effect in Ukraine. The resolution enters into force three months after its publication, namely on 7 May 2026. 

The document establishes a timeframe within which foreign nationals and stateless persons with valid grounds to remain in Ukraine may exchange expired or expiring permits. The exchange must be completed within three months from the date the resolution takes effect. 

Due to the full-scale invasion, many foreigners were unable to renew their documents in time. At the same time, many of them continue to reside in Ukraine despite their permits having formally expired. 

Implementation of this resolution will enable the introduction of clear, transparent document-exchange procedures, strengthen efforts to counter irregular migration, and regularise the legal status of foreign nationals and stateless persons lawfully residing in Ukraine. 

3. On 1 February 2026, new ownership structure requirements for professional participants in capital markets came into effect 

On 1 February 2026, Resolution of the National Securities and Stock Market Commission dated 14 November 2025 No. 09/21/3187/К03 came into effect. The resolution approves new Regulations on the ownership structure and on the procedure and conditions for obtaining the Commission’s approval of significant participation by professional participants in capital markets and organised commodity markets. 

The Regulations introduce unified requirements for ownership structures applicable to two categories of legal entities: those seeking approval for significant participation and those applying for, or already holding, a licence for professional activity. 

The document sets out requirements regarding transparency and disclosure of ownership structures, as well as business reputation criteria for legal entities applying for a licence or already licensed, and for individuals and legal entities that hold, intend to acquire, or plan to increase significant participation. 

It also establishes the procedure and conditions for obtaining the Commission’s approval to acquire or increase significant participation in a professional participant. In addition, it clarifies that existing licensing conditions apply only to the extent that they do not contradict the new Regulations. 

Professional participants of capital markets and organised commodity markets must bring their ownership structures into compliance with the new requirements within one year from 1 February 2026. 

4. Ukraine simplifies document flow: customer signature on service completion certificates is no longer mandatory 

The Verkhovna Rada has adopted in the second reading and as a whole Draft Law No. 14023, which simplifies document circulation between service providers and their clients. 

Under the new rules, customers are no longer required to sign an acceptance act to confirm the receipt of a service or the completion of work. This applies to service contracts as well as other agreements where the signature requirement previously caused delays or complications in interactions between the parties. However, this requires an explicit provision to that effect in the written agreement with the client. 

The document clarifies that confirmation of the provision of a service or completion of work may be carried out by other means provided for by law or agreed between the parties, without the customer’s signature on the act itself. 

This measure is intended to reduce administrative burden, speed up document processing, and make interactions between market participants more convenient and efficient, especially when the customer’s signature is not required to confirm that obligations have been fulfilled.

Tax, Restructuring, Claims and Recoveries practice

1. New rules for the preparation of primary documents introduced 

On 27 February, 2026, Law of Ukraine No. 4775-IX “On Amendments to Article 9 of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine” (formerly draft law No. 14023 of 8 September 2025) was submitted to the President of Ukraine for signature. 

We previously wrote about the draft of this regulatory act. At the time of its registration in parliament, it provided, in particular, for the possibility of indicating in the primary documents confirming the provision of services paid for in non-cash form, information about the position, surname and signature of the person responsible for carrying out the economic transaction and the correctness of the provision of services, only on the part of the contractor.  

Now, after its revision, the Law introduces the possibility of drawing up relevant documents for services, works and hiring (renting) without indicating the surname and signature of the person responsible for the economic transaction on the part of the customer or tenant (lessee). 

This format for recording business transactions is possible provided that: 

• it is provided for in a written agreement between the parties; 

• the primary document contains information about the date (term) of provision of services, performance of work, lease (rental), and the relevant actions are reflected in the accounting records within the specified period.  

The above introduction does not apply to the requirements for documenting transactions: 

• payment for which is made from public funds;  
• carried out in accordance with contracts for the lease (rental) of state or municipal property, construction contracts, design and survey work; contracts for donations, charitable or humanitarian aid. 

2. Changes to transfer pricing rules are planned 

On 24 February, 2026, the Ministry of Finance of Ukraine published a draft law “On Amendments to the Tax Code of Ukraine Regarding Further Improvement of Transfer Pricing Rules”. 

In particular, the draft law provides for:  

• updating the cost criteria for recognising transactions as controlled (in particular, calculating the volume of a taxpayer’s economic transactions at prices that comply with the arm’s length principle); 
• extending the application of the arm’s length principle to a number of transactions (for example, business transactions with loss-making enterprises and entities enjoying preferential (privileged) tax regimes, or business transactions between a non-resident’s permanent establishment and its related parties or other permanent establishments in Ukraine or abroad); 
• changing the rules regarding a chain (series) of business transactions between a taxpayer and a non-resident (e.g., introducing the concept of a “comprehensive agreement”); 
• introduction of simplified transfer pricing documentation, in particular for taxpayers with annual income of up to UAH 150 million, as well as establishing that for controlled transactions of up to UAH 10 million, documentation shall be submitted at the request of the tax authority; 
• clarification of the algorithm for identifying and determining the actual conditions of controlled transactions for the purpose of comparability analysis; 
• clarification of the application of transfer pricing methods, in particular resale price, cost plus, net profit and profit distribution methods; 
• clarification of the concept of DEMPE analysis (analysis of transactions with intangible assets, taking into account the functions of development, improvement, support, protection and use of intangible assets and profit distribution in accordance with the functions performed); 
• introduction of an updated model of penalties in the field of transfer pricing (for example, increased penalties apply to taxpayers who demonstrate unfair behaviour); 
• clarification of provisions regarding rebuttable presumptions when choosing a method and sources of information;  
• expansion of the concept of “dividends” (e.g., inclusion in this concept of payments made by joint investment institutions or foreign entities without legal personality to their founders, shareholders, participants in connection with the distribution of profits); 
• adding a definition of the concept of “intangible assets” for the purposes of the provisions of the Tax Code of Ukraine governing transfer pricing rules. 

3. Changes planned in the area of tax avoidance prevention 

On 24 February, 2026, the Ministry of Finance of Ukraine published a draft law “On Amendments to the Tax Code of Ukraine Regarding the Implementation of Rules to Counter Tax Avoidance Practices that Have a Direct Impact on the Functioning of the Internal Market of the European Union and Ukraine, in accordance with Council Directive (EU) 2016/1164/EU of 12 July, 2016”. 

In particular, the draft law provides for: 

• the introduction of new concepts  (in particular, “debt obligations on borrowings”, “costs associated with raising financing by alternative means”, “borrowing transactions”, “tax abuse”, “immediate economic effect”, “deferred economic effect”, as well as clarification of the concept of “reasonable economic reason”); 
• the establishment of a rule limiting the recognition of excessive borrowing costs in excess of 30% of a specified profitability indicator; 
• the possibility of carrying forward the unrecognised portion of excessive expenses to future tax periods; 
• introduction of capital gains taxation on the transfer of assets or change of tax residence of legal entities;  
• establishing restrictions on the application of tax benefits in cases where the right to use them arises as a result of transactions that have signs of tax abuse (provided that without such transactions, the taxpayer would not have been entitled to the relevant benefit); 
• determination of the specifics of adjusting the financial result for transactions that have signs of artificiality or do not meet the criteria of reasonable economic cause; 
• introduction of the category of “hybrid mismatches” and related categories, in particular, “hybrid entity”, “double counting of expenses”, “non-recognition of income”.  

4. Controlled transactions: changes to pricing agreement procedures proposed 

On 20 February, 2026, the Ministry of Finance of Ukraine has re-published the draft law “On Amendments to the Tax Code of Ukraine Regarding the Improvement of the Mutual Agreement Procedure and the Advance Pricing Agreement Procedure in Controlled Transactions”, which we wrote about earlier.  

After revising the previously published version of the draft law, in addition to technical clarifications, a number of changes were made, in particular:  

• it is envisaged that the procedure for prior pricing approval, which is approved by the Cabinet of Ministers of Ukraine, should determine the procedure for verifying compliance with the terms of the prior approval agreement, the conformity of the actual circumstances with critical assumptions, and also contain grounds for recognising such an agreement as null and void;  
• the list of outcomes of a case considered under the mutual agreement procedure has been updated: a unilateral decision by the competent authority of Ukraine, an agreement between the competent authorities of Ukraine and a foreign jurisdiction, or failure to reach an agreement between the competent authorities following the mutual agreement procedure. 

5. Changes in the taxation of income from renting out housing 

On 13 February, 2026, draft law No. 15031 “On Amendments to the Tax Code of Ukraine Regarding the Taxation of Income of Individuals from the Rental of Residential Real Estate or Parts Thereof” was registered in the Verkhovna Rada of Ukraine. 

In particular, the draft law proposes to reduce the personal income tax rate from 18% to 5% for income from renting residential real estate or parts thereof. 

It is also envisaged that in the period from 1 April 2026 to 31 December of the year in which martial law is terminated or abolished, such income will not be included in the taxpayer’s total monthly (annual) taxable income. 

6. Proposed increase in penalties for financial offences in the public sector 

On 24 February 2026, draft law No. 15043 “On Amendments to the Code of Ukraine on Administrative Offences to Strengthen Liability for Violations of Financial Legislation” was registered in the Verkhovna Rada of Ukraine.  

In particular, the draft law proposes:  

• to increase the period of administrative liability for violations of financial legislation in the public sector, provided for in Article 164-2 of the Code of Ukraine on Administrative Offences, to 1 year;  
• to establish fines for such violations in the amount of UAH 850 to UAH 1,190, and for repeated violations within a year – from UAH 1,020 to UAH 1,360. 

7. Tax authorities to be informed about online resources for the sale of excisable goods 

On 25 February 2026, Order of the Ministry of Finance of Ukraine No. 34 of 14 January 2026 “On Approval of the Procedure for the Submission by Licensees Engaged in the Sale of Beer (except Non-Alcoholic), Alcoholic and Low-Alcohol Beverages, Tobacco Products, Electronic Cigarettes, liquids used in electronic cigarettes, devices for consuming tobacco products without burning them through electronic commerce (using remote communication means or through online stores), information about the addresses of websites where the relevant goods (products) are offered for sale”. 

In particular, the relevant business entities must notify the tax authorities of:  

• website addresses; 
• URL addresses; 
• domain names; 
• IP addresses; 
• mobile applications; 
• other network addresses through which the specified products are offered for sale on the Internet. 

8. Application of the coefficient for calculating excise duty 

The State Tax Service of Ukraine has announced that from 1 April, 2026, the amount of excise tax on cigarettes cannot be less than the minimum tax liability multiplied by a coefficient of 1.1. 

The application of this coefficient is due to the fact that in 2025, the share of excise tax in the weighted average retail price of cigarettes was 58.8%, which is lower than the 60% threshold established by the Tax Code of Ukraine. In this case, a coefficient of 1.1 is applied to the minimum tax liability. 

9. Review of the Supreme Court’s practice on tax issues for January 2026 

On 26 February, 2026, the Supreme Court published an overview of the current judicial practice of the Administrative Court of Cassation within the Supreme Court for January 2026. 

It highlights the following legal positions in the tax sphere: 

• Sanctions may be recognised as force majeure if confirmed by a certificate from the Chamber of Commerce and Industry. In its ruling of 16 January, 2026 in case No. 420/17341/22, the court considered the legality of charging penalties for exceeding the deadlines for settlements in the field of foreign economic activity by a payer to whom personal sanctions were applied. The payer argued that such restrictions, which effectively make it impossible to fulfil economic and financial obligations, should be regarded as force majeure and, accordingly, lead to the suspension of penalty charges. However, the court concluded that such suspension is possible only if the imposition of personal sanctions is recognised as a force majeure circumstance, confirmed by a certificate from the relevant chamber of commerce and industry. 
• VAT taxation issues during the reorganisation of a legal entity. In its ruling of 22 January, 2026 in case No. 280/10715/23, the court concluded that transactions involving the transfer of property under a distribution balance sheet during the reorganisation of a legal entity by way of spin-off do not constitute the supply of goods within the meaning of the Tax Code of Ukraine and are not subject to VAT if the reorganisation has a reasonable economic reason (business purpose) aimed at achieving an economic effect (improvement of liquidity, solvency, financial indicators). In such a case, the burden of proving the absence of a business purpose and the use of assets outside economic activity lies with the tax authority.  
• The receipt for suspension of registration of a tax invoice must contain a clear list of the requested documents. In its ruling of 29 January, 2026 in case No. 160/29956/24, the court found that the refusal to register tax invoices was unlawful, since the tax authority did not specify in the receipt for suspension a specific list of documents that the taxpayer had to provide in order for a decision on their registration to be made. Therefore, the taxpayer, at his own discretion, provided explanations and documents that, in his opinion, were sufficient to confirm the reality and legality of the transactions.