News digest | August 2025

Corporate Law Practice

Commercial Code repealed: new business rules come into force

Starting August 28, 2025, the Commercial Code of Ukraine will cease to apply, in accordance with Law No. 4196-IX, adopted on January 9, 2025. A three-year transitional period will commence simultaneously, during which reforms will gradually take effect, allowing businesses sufficient time to adapt.

Under the new rules, all legal relations previously governed by the Commercial Code will now fall under the Civil Code of Ukraine and other special laws. Even if a contract contains a reference to the Commercial Code, its provisions will no longer apply.

From 28 August, it will no longer be permitted to register new legal entities in the forms of state, communal, or private enterprises; subsidiaries; or enterprises established by civic organisations or cooperatives.

Existing state and communal enterprises will have until 28 February 2026 to either transform into limited liability or joint-stock companies, liquidate, or restructure into another form. If no action is taken, their assets will be transferred to the State Property Fund.

The special rights to “economic control” and “operational management” currently available to state entities will be gradually phased out over the next three years. These will be replaced with standard private law models such as ownership, lease, or usufruct.

Additionally, all state and communal enterprises must publicly disclose their financial statements by February 28, 2026.

Changes are also coming to corporate governance: general meeting decisions must be approved by a majority of all shareholders (not just those present). Where a company has a sole participant, they may independently manage the LLC. The law introduces fiduciary duties for company officers.

President signed the Law on the possibility of creating additional capital for LLCs and ALCs

On 26 August 2025, President Volodymyr Zelenskyi signed Law No. 4564-IX, which amends the 2018 Law on Limited and Additional Liability Companies (No. 2275-VIII).

Under the new rules, a company’s charter may provide for the establishment of additional capital, which is formed separately from the charter capital through contributions of participants. Such contributions are made without altering the amount of the charter capital or the nominal value of the participants’ shares.

Similar to contributions to the charter capital, contributions to the additional capital may be made in cash, securities, or other property.

The resolution to raise additional contributions is adopted by the general meeting of participants, which determines the contribution amount of each participant. The legal regime of the assets contributed to the additional capital, as well as the rules for their disposal and the regulation of participants’ relations in respect thereof, may be defined in the company’s charter and/or a corporate agreement.

“Defence City” regime introduced for defence industry

On 21 August 2025, the Verkhovna Rada adopted draft laws No. 13420 and No. 13421 in second reading, establishing a special legal framework called “Defence City” for defence-sector enterprises. This regime will be in place until 1 January 2036 or until Ukraine joins the European Union, whichever comes first.

The Ministry of Defence will manage a dedicated register of eligible businesses. To qualify, companies must show that at least 75% of their revenue (or 50% for aviation businesses) comes from defence contracts.

Qualified businesses will receive tax incentives, including exemption from profit tax (provided profits are reinvested), land tax, environmental tax, and property tax. Customs procedures and export control regulations will also be simplified.

The National Bank of Ukraine will be authorised to introduce special rules for currency transactions by companies operating under the regime. Additionally, “Defence City” supports the relocation and protection of defence-related production facilities.

NBU eases currency controls: what changes from 6 August

As of 6 August 2025, the National Bank of Ukraine has implemented several changes, as outlined in Resolution No. 95, aimed at providing businesses with greater flexibility in currency transactions while maintaining financial stability.

• Companies may now transfer dividends earned in 2023 abroad, up to the existing monthly limit of €1 million.
  
• They are also allowed to use forward contracts more broadly, including those without physical delivery, provided the bank has sufficient foreign currency available from other clients.
  
• The procedure for returning mistakenly received foreign currency has been simplified: businesses and individuals will now have three working days from the moment the bank is notified to return such funds. This rule took effect on August 7.
  
• Jewellery businesses may now purchase banking metals using hryvnias – up to a limit of one-twelfth of their 2021 annual sales – provided they submit supporting documentation.
  
• The rules were also relaxed for companies that have loans from pools of foreign lenders or international financial organisations. Repayments can now be made not only to the original lenders but also to high-rated international banks.
  
• Lastly, businesses that support Ukraine’s Armed Forces by donating to the NBU’s special military account are permitted to make foreign currency transfers exceeding the monthly cap – but only up to the amount donated and using their own foreign currency funds.

President signs law to speed up land access for digital infrastructure

On 5 August 2025, President Zelenskyi signed Law No. 4321-IX, which simplifies and accelerates the allocation of land plots for building digital infrastructure – including mobile base stations. The law was published on August 7 and entered into force on August 8.

Under the new rules:

• the process for securing land for telecom infrastructure is cut from six months to three;
  
• the law also clarifies the legal status of temporary or mobile base stations, particularly in areas affected by war or recently liberated;
  
• land for telecom use can now legally be allocated under easement (servitude) arrangements;
  
• in Zakarpattia’s Uzhhorod district, a temporary mechanism has been introduced allowing the government to forcibly expropriate land for relocated defence or digital-sector businesses during martial law, with compensation at market value;
  
• the law allows for the formation and registration of land plots in combat zones without requiring field geodetic surveying, deferring such work until after the end of martial law;
  
• the deadline for communities to change the designated purpose of land plots without approved spatial plans has been extended until 2028.
  

Overall, these changes aim to accelerate the rollout of digital infrastructure across Ukraine, especially in rural areas, along key transportation routes, and in regions heavily affected by the war.

Tax Law Practice | Tax Alert

Ukraine plans to withdraw from the CIS tax agreement

The Cabinet of Ministers of Ukraine adopted Resolution No. 882-r dated August 20, 2025, pursuant to which a draft law of Ukraine “On Withdrawal from the Agreement on the Principles of Indirect Taxation during the Export and Import of Goods (Works, Services) between the Member States of the Commonwealth of Independent States” is submitted to the Verkhovna Rada of Ukraine.

It should be noted that the Agreement provides that:

• none of the parties shall impose indirect taxes on goods (works, services) exported to the territory of the other party;
  
• goods (works, services) imported into the customs territory of one party and exported from the territory of the other party shall be subject to indirect taxes in the importing country in accordance with its legislation;
  
• the mechanism for levying indirect taxes and controlling the actual movement of goods (works, services).
  

Draft law on a special tax control regime for economic leaders

On August 20, 2025, draft law No. 13660 “On Amendments to the Tax Code of Ukraine Regarding the Introduction of a Special Tax Control Regime for Taxpayers with the Highest Tax and Fee Payment Rates – Leaders of Economic Sectors” was registered in the Verkhovna Rada.

According to the draft law, leaders of economic sectors are taxpayers who meet all of the following criteria:

• have the status of a legal entity with a registered location in Ukraine, as well as the status of a corporate income tax payer and VAT payer;
  
• they do not belong to business entities in the state or municipal sectors of the economy.
  

The draft law also provides for a third criterion, according to which the “economic leader” in specific industries is determined. The mechanism provides for the establishment of the сlassification of types of economic activity (KVED) class to which the taxpayer belongs. If there is a sufficient number of companies (100 or more) in the relevant class, the taxpayers who have the following in the previous financial year are determined among this group:

• either the highest amount of corporate income tax paid;
  
• or the highest amount of VAT paid;
  
• or the highest average salary of employees, provided that the average monthly number of employees in the relevant year is not less than 100 people.
  

If fewer than 100 companies in a KVED class meet the above two criteria, the sample is drawn from a broader KVED segment (group, division, or section).

The decision to designate a taxpayer as an economic leader is made by the controlling authority by March 15 of the year, which is confirmed by a certificate issued to the taxpayer.

The special tax control regime provides for the introduction of the following for a period of one year:

• a moratorium on any documentary checks and reconciliations by the controlling authorities in relation to such a taxpayer, as well as checks on compliance with tax legislation by the relevant taxpayer;
  
• a ban on including such a taxpayer in the list of risky taxpayers, as well as the suspension of registration of tax invoices/adjustment calculations to tax invoices.
  

Legal regime of Defense City: tax advantages

On September 3, 2025, the President of Ukraine signed two draft laws that lay the foundation for the introduction of a legal regime to support the defence-industrial complex (DIC) in Ukraine (Defence City). Specifically, these are draft law No. 13420 (on amendments to the Tax Code of Ukraine) and draft law No. 13421 (on amendments to the Customs Code of Ukraine).

The Defense City legal regime offers significant tax incentives for its residents that will remain in force until January 1, 2036, but no later than the year of Ukraine’s accession to the European Union.

The main one is exemption from corporate income tax, provided that a Defense City resident:

• reinvests tax-exempt profit into the development of its activities in specified areas;
  
• does not accrue and pay dividends (or equivalent payments) to the owners of corporate rights, except for dividends payable to the state;
  
• has no confirmed violations of tax obligations regarding the submission of reports and/or documents in the field of transfer pricing and controlled foreign companies.
  

In addition, Defense City residents are exempt from paying:

• land tax;
  
• real estate tax other than land plot;
  
• environmental tax.
  

It should be emphasized that all of the aforementioned tax incentives apply only if a Defense City resident does not simultaneously hold Diia City residency status.

Furthermore, during the period of martial law and for 1 year after its termination/cancellation, certain customs formalities are significantly simplified for Defense City residents, in particular the authorization procedure for placing goods under the customs regimes of import (in terms of the end-use procedure), temporary admission, inward/outward processing.

The procedure for blocking tax invoices and adjustment calculations has been changed

On August 26, 2025, the Cabinet of Ministers of Ukraine adopted Resolution No. 1048 “On Amendments to the Procedure for Suspending the Registration of Tax Invoices/Adjustment Calculations in the Unified Register of Tax Invoices”.

For businesses operating in areas with a potential threat of hostilities, unconditional registration of tax invoices is introduced.

The resolution also raises the thresholds for unconditional registration of tax invoices and adjustment calculations, in particular:

• the maximum supply volume has increased to UAH 1 million, and per counterparty – to UAH 100,000;
  
• the threshold for tax invoices for transactions involving small amounts has been increased from UAH 5,000 to UAH 10,000, and the limit on the total volume of such transactions in the current month has been increased from UAH 500,000 to UAH 3 million.
  

The threshold values for forming a positive tax history of the payer have been increased, in particular:

• certain indicators of positive tax history, in particular, increased limits on the volume of transactions – from UAH 1 million to UAH 3 million, per counterparty from UAH 100,000 to UAH 500,000;
  
• conditions regarding the number of payers for whom the manager may hold a similar position, from 3 to 5;
  
• the risk criterion for transactions regarding the submission of tax liability adjustment calculations when returning goods from a non-payer of VAT from 30 to 90 days.
  

New criteria have been established for exporters for the unconditional registration of tax invoices and adjustment calculations in the Unified Register of Tax Invoices.

A new appendix has been added to the corporate income tax return

The Ministry of Finance of Ukraine has published Order No. 371 dated 25 July 2025, which amends the form of the corporate income tax return.

The declaration has been supplemented with a new appendix BD, which allows for the reflection of the amounts of funds and the value of goods/works/services that were transferred free of charge to non-profit organisations.

In particular, the declarations will determine:

• the calculation of the amount of the established limit for the free transfer (provision) of funds, goods, performance of works, provision of services during the reporting (tax) year to non-profit organisations, exceeding which adjustments to the financial result before taxation are applied;
  
• calculation of the tax base and taxable objects;
  
• calculation of differences and the object of taxation in the case of free transfer (provision) of funds, goods, performance of work, provision of services to non-profit organisations, determined taking into account the restrictions established by tax legislation.

Litigation Practice

AI responses are not evidence – Commercial Cassation Court of the Supreme Court of Ukraine

Artificial intelligence may serve as a useful and supportive informational tool in the field of justice, but it cannot replace either a judge or the principles of relevance, admissibility, and reliability of evidence provided for in Chapter 5, “Evidence and Proof” of the Commercial Procedural Code of Ukraine.

This conclusion was reached by the panel of judges of the Commercial Cassation Court within the Supreme Court in its ruling of July 8, 2025, in case No. 925/496/24.

The City Council filed a lawsuit against a limited liability company seeking amendments to a land lease agreement and the recalculation of rent payments.

The Commercial Cassation Court of the Supreme Court upheld the decisions of the lower courts and rejected the defendant’s arguments that the appellate court had unjustifiably refused the motion to examine electronic evidence — namely, the responses of two artificial intelligence systems (Grok, developed by xAI, and ChatGPT, developed by OpenAI) regarding the literal interpretation of subparagraph 6 of paragraph 23 of the contract.

The Supreme Court emphasized that technology should be used only to support and strengthen the rule of law. Technology may serve only as a tool to assist courts and judges in the proper administration and management of proceedings. Decision-making, whether explicit or implicit, must remain exclusively within the competence of judges. This function cannot be delegated or carried out by technological means, as judicial autonomy must be respected.

However, in the case under consideration, the party used artificial intelligence technology not as an instrument to support the administration of justice, but rather as a means of disputing (challenging and questioning) the conclusions already reached by the court.

The Court noted that responses generated by artificial intelligence cannot be regarded as a source of credible, scientifically proven information. Therefore, the court’s refusal to examine them as evidence in the case was lawful.

Administrative Cassation Court of the Supreme Court provided a legal position on the procedure of military registration, removal, and exclusion from it

Persons who are excluded from military registration lose their status as liable for military service, whereas those who are only removed from the register remain liable for military service.

In its ruling of 21 May 2025 in case No. 280/2880/24, the Supreme Court examined the procedure for military registration, removal, and exclusion, since the claims concerned the removal of the plaintiff from military registration in connection with permanent relocation abroad.

The Administrative Cassation Court of the Supreme Court emphasized that the legislator differentiates between the concepts of “removal from military registration” and “exclusion from military registration.” In particular, in cases of removal, the Law of Ukraine “On Military Duty and Military Service” provides for the possibility of subsequent re-registration of the person as liable for military service. Therefore, both the grounds and the legal consequences of removal and exclusion differ.

Accordingly, an analysis of the statutory provisions shows that citizens who are subject to exclusion from military registration lose their status as liable for military service, while those who are merely removed from the register continue to retain this status.

Men in Ukraine aged 18 to 22 are now eligible to cross the border

On 26 August, the Cabinet of Ministers of Ukraine introduced amendments to the rules for crossing the border applicable to men. Under the new provisions, men aged 18 to 22 inclusive are permitted to leave the country without restrictions. The changes also apply to those citizens of this age group who, for various reasons, are already abroad.

According to the updated rules, citizens in this category have the right to leave Ukraine during the period of martial law.

To cross the border, they must present:

• A passport document entitling them to travel abroad;
  
• A military registration document (including in electronic form), which must be presented upon request of a representative of the State Border Guard Service.
  

At the same time, there is an exception: this rule does not apply to citizens holding certain positions in state authorities, government agencies, or local self-government bodies. Such persons may leave Ukraine only on official business trips.

Repeated dismissal: Supreme Court clarifies employer’s use of previous grounds and documents

An employer is obliged to issue a new personal notice of impending redundancy to an employee no later than two months in advance, simultaneously offer all available vacant positions, and obtain new approval from the competent authority, if required. The use of documents (such as prior notices, approvals, etc.) from a previous dismissal that has already been declared unlawful by the court constitutes a violation of labor legislation and serves as grounds for reinstating the employee.

Such conclusions were reached by the Supreme Court in its ruling of 30 July 2025 in case No. 761/40406/23.

In the case under review, the plaintiff filed a claim against a state authority seeking reinstatement and recovery of average earnings for the period of forced absence from work.

The plaintiff had initially been dismissed in January 2022, but the court found that dismissal unlawful and reinstated him to his position. However, in October 2023, after the plaintiff was reinstated on 3 October 2023 pursuant to the court’s decision, the defendant once again dismissed him on the same grounds and based on the same documents.

The courts held that the plaintiff’s dismissal was carried out in violation of labor legislation. In particular, he was not given notice of redundancy at least two months in advance. Furthermore, at the time of notifying the employee of dismissal due to changes in the organization of production and work, the employer failed to offer him another position within the same enterprise, institution, or organization. In addition, upon the repeated dismissal, the employer did not obtain new approval from the competent authority and, in the contested dismissal order, cited as grounds a letter of approval that related to the previous dismissal order which had already been declared unlawful and fully annulled by the court.

The employer is obliged to offer all vacancies that meet the relevant requirements and are available at the enterprise, regardless of the structural unit in which the redundant employee was employed.

Since the obligation to provide alternative employment rests with the employer from the date of the redundancy notice until the termination of the employment contract, under part 3 of Article 49-2 of the Labor Code of Ukraine, the employer is considered to have fulfilled this obligation only if the employee was offered all other vacant positions (or other work) that became available at the enterprise during this period and that existed on the date of dismissal.