May news digest 2025

Corporate Law Practice

The Law on Ratification of the Agreement on the Establishment of the Reconstruction Investment Fund entered into force

On 23 May 2025, the Law of Ukraine No. 4417-IX “On ratification of the Agreement between the Government of Ukraine and the Government of the United States of America on the establishment of the US-Ukraine Investment Fund for Reconstruction”.

The document ratifies an international agreement that paves the way for the formation of a special financing instrument – the Reconstruction Investment Fund to support Ukraine’s rapid and large-scale recovery from Russia’s armed aggression. The agreement provides for the establishment of a legal framework for attracting funds from donor states, international organisations and private investors through a structured co-financing mechanism.

The Fund is designed to provide long-term investment in key areas of reconstruction, including infrastructure, housing, healthcare, energy, logistics, support for small and medium-sized businesses, and digital transformation.

The Fund is expected to provide Ukraine with access to flexible financial resources on favourable terms, which will increase the efficiency of recovery projects and contribute to economic stabilisation.

The government emphasises that ratification of the Agreement is an important step in strengthening the financial architecture of reconstruction and the international community’s confidence in long-term investment in Ukraine.

Cabinet of Ministers approves draft law on cancellation of 63 outdated state regulatory requirements for business

On 21 May 2025, the Cabinet of Ministers of Ukraine approved a draft law developed by the Ministry of Economy that provides for the abolition of 63 duplicative and outdated state regulatory requirements for business.

The document also proposes to abolish administrative liability for violation of regulations that have already expired.

According to the First Vice Prime Minister and Minister of Economy Yulia Svyrydenko, the implementation of this draft law will allow businesses to save around UAH 400 million a year.

The draft law covers regulatory instruments in the following areas:

• agriculture, forestry and hunting, fishing, wildlife protection – 23 instruments;
  
• water and air protection – 18 instruments;
  
• energy, alternative fuels, construction, explosives – 8 instruments;
  
• foreign economic activity, investments, innovations, culture, education – 12 instruments;
  
• healthcare – 2 instruments.
  

Examples of cancelled requirements include:

• approval of the boundaries of sanitary protection zones for water bodies – UAH 15.5 million in savings for businesses;
  
• permit for the construction of land reclamation systems – saving UAH 62.9 million;
  
• approval of special permits for the use of subsoil for groundwater from the State Labour Service – saving UAH 15.4 million;
  
• certificate of state registration of a technology park – saving UAH 105.2 million;
  
• permit to practice traditional medicine (healing) – saving over UAH 100 thousand.
  

The draft law will be submitted to the Verkhovna Rada for consideration. Its adoption and signature by the President will reduce administrative pressure on business and contribute to the country’s economic development.

NBU eases currency restrictions for businesses but tightens control over capital outflows

On 10 May 2025, the National Bank’s new amendments adopted by Resolution No. 53 came into force. The goal is, on the one hand, to support business and attract investment, and, on the other hand, to prevent unproductive currency outflows abroad.

What has changed:

• Investment money is off limits. Companies will now be able to conduct certain foreign exchange transactions without restrictions if they can prove that they have attracted foreign investment after 12 May 2025. This applies, for example, to settlements for old contracts, refunds of prepayments to non-residents, or repayment of external loans received before June 2023.
  
• Financing of representative offices abroad. It is now possible to transfer up to €1 million per year to support the foreign branches of Ukrainian companies. If such expenses were already incurred earlier in 2021, they can also be repeated.
  
• Court costs are unlimited. Businesses can buy foreign currency and transfer it abroad to cover court and arbitration costs in disputes with foreign counterparties.
  
• Cards for companies. The limits for corporate cards have been increased: UAH 17,500 for cash withdrawals and UAH 150,000 for payments for goods and services abroad.
  

But there are also tightening measures.

The NBU has tightened control over card transactions: it has revised the MCC codes that were previously used to circumvent restrictions. Banks should carefully check such transactions.

Bottom line: The NBU is trying to find a balance between business support and financial stability. Companies now have more opportunities, but also clearer rules of the game.

Standard time limits for actions in the field of intellectual property are restored from 31 May 2025

On 31 May 2025, Law of Ukraine No. 4362-IX comes into force, repealing Law No. 2174-IX, which suspended the time limits for actions related to the protection of intellectual property rights during martial law.

What changes:

• The deadlines that were suspended during the period of validity of Law No. 2174-IX will be renewed taking into account the time elapsed before their suspension, but not less than 75 days.
  
• Annual fees for the maintenance of intellectual property rights (inventions, utility models, industrial designs, plant varieties) and fees for the renewal of trademark certificates, which became due during the period of Law No. 2174-IX and were not paid by 31 May 2025, are deemed to be paid on time if paid within 75 days from the date of entry into force of Law No. 4362-IX, i.e. by 14 August 2025 inclusive.
  

These amendments are aimed at returning to the normal regime of protection of intellectual property rights and providing legal certainty for the owners of such rights.

Tax Law Practice | Tax Alert

Two draft laws registered in the Verkhovna Rada of Ukraine provide VAT exemption for goods needed for security and defense

Draft Laws No. 13306 and No. 13310 have been submitted to the Verkhovna Rada of Ukraine.

Draft Law No. 13306 proposes amendments to the transitional provisions of the Tax Code of Ukraine to exempt from VAT optical fiber, fiber-optic harnesses, other fiber-optic cables, spools with fiber-optic cable, and to create favorable conditions for the development and production of unmanned systems that use fiber-optic cable for control and video signal transmission. These items are classified under subheadings 9001 10 90 10 and 9001 10 90 90 of the Ukrainian Classification of Goods for Foreign Economic Activity (UCGFEA) and are necessary for the defense of Ukraine.

Draft Law No. 13310 similarly proposes amendments to exempt from VAT the importation of military ships, boats, unmanned maritime systems, and their components classified under heading 8906 of the UCGFEA, provided they are supplied to the Ukrainian defense forces.

The State Tax Service of Ukraine issued clarification on the rules for calculating excise tax taking into account the guaranteed tax liability

In its Information Letter No. 3/2025, published on May 20, 2025, the State Tax Service of Ukraine reviewed the novelties introduced by Law of Ukraine No. 4014-IX dated October 9, 2024, “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine Regarding the Taxation of Ethyl Alcohol and Bioethanol,” which came into force on April 1, 2025.

The law introduces the obligation for producers of ethyl alcohol and bioethanol to determine their excise tax liabilities with consideration of the Guaranteed Tax Liability (hereinafter – “GTL”).

The letter defines GTL, provides the formula for its calculation, and explains a number of issues related to excise tax reporting, taking into account the GTL.

Tax authorities clarify whether banks can compulsorily debit funds from accounts of taxpayers with tax debt

According to information from the Public Information and Reference Resource of the State Tax Service, banks are permitted to debit funds from the accounts of taxpayers with outstanding tax debt based on a payment instruction for compulsory debit (recovery) of funds, initiated by the tax authority or the State Enforcement Service.

Such debiting may occur either by court decision, following a claim by the State Tax Service, or directly based on a decision by the head (or their deputy or an authorized person) of the controlling authority without court involvement.

It should be noted that under the relevant provisions of the Tax Code of Ukraine, such a decision by the head of the controlling authority may only be made under specific conditions, namely: the tax debt must have arisen due to non-payment of monetary obligations and/or penalties declared by the taxpayer in tax returns, and such debt must remain unpaid for 90 calendar days following the due date for payment, and the state must not have any outstanding obligation to refund erroneously or excessively paid tax liabilities or VAT reimbursements to such taxpayer.

It is important to emphasize that in both cases—whether the tax authority files a lawsuit for fund recovery or the head of the controlling authority issues a recovery decision—it is necessary to carefully assess the legality of such actions, as it is entirely possible in certain situations to obtain a court refusal to satisfy the tax authority’s claim or to cancel such a decision through judicial appeal.

The Grand Chamber of the Supreme Court issued a legal conclusion on jurisdiction in disputes filed by tax authorities for invalidating transactions

In its ruling of May 8, 2025, in case No. 420/12471/22, the Grand Chamber of the Supreme Court (hereinafter – “GCSC”) concluded that disputes initiated by controlling authorities seeking to invalidate transactions concluded by entities that did not conduct business activities—confirmed by a criminal court verdict—and to apply statutory consequences of such invalidity fall within the jurisdiction of administrative courts under the Code of Administrative Procedure of Ukraine.

In the case, the director of a limited liability company who signed the disputed transactions on behalf of the legal entity was found guilty by a court of committing a criminal offense under the article “Forgery of documents submitted for the state registration of legal entities and individual entrepreneurs.”

While resolving the dispute, the GCSC emphasized that the status of a fictitious or illegal enterprise is incompatible with conducting legitimate business activities. Accordingly, there is no actual business activity between the economic entities involved.

Thus, the legal relations in this case arise solely within the public-law domain.

Litigation Practice

The right to compensation for forced downtime belongs to the employee not only in cases of unlawful dismissal – Supreme Court

In its ruling dated May 5, 2025, in case No. 758/4178/22, the Supreme Court of Ukraine stated that the suspension of an employment contract during martial law is permissible only if two conditions occur simultaneously: the employer’s inability to provide work and the employee’s inability to perform work due to military aggression. If the employment contract is suspended unlawfully, the employer is obligated to pay the employee the average salary for the period of forced downtime.

In the case under consideration, the claimant stated that after the introduction of martial law, she continued to perform her duties, but the employer suspended her employment contract and stopped paying her salary. The lower courts ruled in favor of the claimant, as there was no evidence proving the inability of either party to perform work.

The Supreme Court upheld the findings of the lower courts, emphasizing that both conditions must be met simultaneously for the suspension of an employment contract: the employer’s inability to provide work and the employee’s inability to perform it due to military aggression. The Supreme Court highlighted that the mere fact of military aggression is not a sufficient basis for suspending an employment contract. The right to compensation in the form of average wages arises only in the event of an unlawful suspension of the employment contract. Therefore, if the suspension is unlawful and deprives the employee of the opportunity to work, the employer is obliged to pay the employee the average salary for the period of forced downtime.

Verkhovna Rada of Ukraine abolishes the rule that suspended the statute of limitations during martial law

The Verkhovna Rada has adopted Draft Law No. 11315 “On Amendments to Paragraph 19 of the Section ‘Final and Transitional Provisions’ of the Civil Code of Ukraine Regarding the Resumption of the Statute of Limitations.”

The adopted draft law provides for the repeal of the provision of the Civil Code of Ukraine that suspended the course of the statute of limitations during the period of martial law in the territory of Ukraine.

The authors of the draft law refer to the case law of the European Court of Human Rights, according to which failure to observe reasonable time limits for case consideration is the most common ground for finding that Ukraine has violated the right to a fair and public hearing within a reasonable time by an independent and impartial tribunal, as guaranteed by Article 6 §1 of the Convention for the Protection of Human Rights and Fundamental Freedoms.

At present, suspending the statute of limitations is no longer relevant, as the judiciary is functioning and those who wish to protect their rights in court are able to do so. In exceptional and truly justified cases (such as a person’s involvement in active combat), the statute of limitations may not apply based on Part 5 of Article 267 of the Civil Code of Ukraine.

Therefore, in order to ensure the constitutional right to legal protection, fair trial, and legal certainty, as well as to protect potential defendants from stale claims, Parliament has adopted the respective legislative changes.

The court may terminate proceedings concerning the actions or omissions of a public authority if the challenged violations have been remedied – Grand Chamber of the Supreme Court

The Grand Chamber of the Supreme Court expressed its legal position regarding the possibility of terminating proceedings in cases challenging decisions, actions, or omissions of a public authority if the challenged violations have been remedied by that authority.

In particular, in its ruling of 27 March 2025 in case No. 990/364/24, the Grand Chamber noted that paragraph 8 of part one of Article 238 of the Code of Administrative Procedure of Ukraine provides that a court shall close the proceedings in a case challenging decisions, actions, or omissions of a public authority if the alleged violations have been remedied by that authority and there are no grounds to believe that the full restoration of the claimant’s legal rights and interests is impossible without a judicial declaration that the decisions, actions, or omissions were unlawful, even after such remedy.

It is noted that an analysis of this legal norm allows the conclusion that if, during the consideration of the case, it is established that the defendant — the public authority — has corrected the violations being challenged by the claimant, the court must determine whether there are grounds to terminate the proceedings. The key condition for this is the full restoration of the claimant’s legal rights (interests) as a result of such remedy. In other words, the termination of proceedings on this basis is possible if two facts are established: first, that the violations being challenged have been remedied voluntarily by the public authority; and second, that there are grounds to assert that the claimant’s legal rights and interests have been fully restored as a result of such voluntary correction by the public authority.

The Grand Chamber of the Supreme Court expressed its position on what circumstance cannot be considered a valid reason for missing a procedural deadline

In its ruling of 17 April 2025 in case No. 990/20/25, the Grand Chamber of the Supreme Court stated that the Code of Administrative Procedure of Ukraine clearly defines the starting point for calculating the time limit for filing a claim with an administrative court — the day when the person became aware or should have become aware of the violation of their rights, freedoms, or interests.

However, the Code does not provide an exhaustive list of grounds that may be considered valid reasons for restoring a missed deadline, and such reasons are determined by the court based on the specific circumstances of each case. A key condition is that the person must have known about the violation of their rights and had the opportunity to file a claim in a timely manner.

The dispute in the case concerned public service, and the time limit for bringing such a claim is one month from the day the claimant became aware or should have become aware of the violation of their rights, freedoms, or interests as a result of the contested decision made by the respondent. Nevertheless, the claimant filed the lawsuit after the deadline, asserting that they had not known about the violation of their rights.

The court also emphasized that a subjective belief that no rights were violated, or indifference to such violations, cannot be considered a valid reason for delay in legal proceedings. Therefore, a mistaken belief in the absence of a violation over an extended period does not justify the claimant’s passive conduct and procedural inaction.

Recovery of legal fees for professional legal assistance: practice, challenges, and prospects

Every year, millions of cases are submitted to the courts, and turning to lawyers for legal assistance is a common occurrence. This raises a question: “Why should I pay for legal services if I haven’t violated anyone’s rights?” In practice, the process of recovering legal expenses often involves several challenges, as courts typically reimburse costs only partially.

A court may deny or reduce the amount of compensation for legal assistance based on the following factors:

• lack of justification for expenses, if there is no proven connection between the costs and the litigation;
  
• disproportionate legal fees, if the amount does not correspond to the complexity of the case or the time spent;
  
• partial satisfaction of the claim, where costs are reimbursed proportionally to the successful part of the claim;
  
• unproductive behavior of the parties, such as delaying the process or abusing procedural rights;
  
• the court’s discretion in determining whether the expenses were necessary and reasonable.
  

Given these factors, most lawyers warn their clients about the risk that the court may reject or reduce the claimed legal fees.

When deciding on the recovery of expenses, the court takes into account several criteria: the direct connection of the costs with the court proceedings, whether the costs are proportionate to the complexity and value of the claim, the relation between the expenses and the lawyer’s workload, and the significance of the case to the party. However, not all costs will be recognized as necessary — for example, courts often do not consider meetings with clients, coordination of procedural documents, or travel expenses to court as compensable legal services.

To avoid a reduction in compensation, it is important to provide a detailed expense report, demonstrate the connection of the costs to the litigation, justify the amount in light of the case’s complexity, and prove that the expenses were reasonable and necessary.

Practice shows that courts usually do not award legal fees exceeding 30,000 UAH, though there are exceptions. For example:

• in case No. 910/4881/18, the Supreme Court ordered the defendant to pay 337,665.08 UAH;
  
• in case No. 910/9668/23, compensation amounted to 100,000 UAH out of the claimed 316,000 UAH;
  
• in case No. 916/1618/20, the Southern-Western Commercial Court of Appeal awarded 200,000 UAH;
  
• in case No. 924/866/21, the amount was reduced from 464,290.85 UAH to 176,088.48 UAH following an appeal.
  

GOLAW attorneys also secured favorable rulings for their clients:

• 50,000 UAH in case No. 910/11809/24;
  
• 230,850 UAH in case No. 910/11813/24.