In 2024, certain currency control restrictions introduced on the first day of the full-scale invasion are still in force in Ukraine. The National Bank of Ukraine reviews and eases some of these restrictions, but many of the prohibitions on foreign exchange transactions remain.
- RESTRICTIONS ON CROSS-BORDER TRANSFERS
A general ban on cross-border transfers is in force with the following exceptions:
- Payment for the import of goods specified in a special list, provided the delivery of such goods occurred after 23 February 2021
- Refunding an advance to a non-resident entity under an unfulfilled contract
- Payment of insurance premiums under a loan insurance contract
- Transfers by a resident to the accounts of its separate subdivisions in foreign countries, meeting specified conditions
- Settlements under vehicle leasing agreements, vehicle rental agreements, etc.
The list of exceptions is expansive and includes numerous reservations. Consequently, each transaction necessitates a thorough preliminary analysis to ensure compliance with applicable regulations.
- DRAWDOWN AND REPAYMENT OF FOREIGN LOANS
The Ukrainian legislation stipulates that the conclusion of loan agreements with foreign lenders is possible but on certain conditions. Notably, the maximum interest rate allowed under foreign loans is 12% annually. During the initial three years of the agreement, the debtor is restricted to settle the principal debt solely with its own funds in foreign currency, with the option to acquire foreign currency to pay interest, fees and other associated charges.
As for loan agreements with foreign lenders concluded before 24 February 2022, the current provisions only allow for the payment of interest falling due between 24 February 2022 and 10 August 2022, contingent upon meeting specified requirements. Regrettably, the repayment of principal or interest accrued in other periods remains significantly restricted under the present legal framework. Furthermore, it is essential to emphasize that the law explicitly prohibits the reduction of the maturity of obligations under both existing and future foreign loans.
- SETTLEMENT DEADLINES FOR THE EXPORT AND IMPORT TRANSACTIONS
The settlement deadlines for the export and import transactions have been adjusted to 180 calendar days, as opposed to the previous 365 days. This modification is applicable to transactions executed from 5 April 2022 onwards.
Furthermore, it is imperative to note that the offsetting of counterclaims of the same type is not permissible for the termination of obligations arising from export and import transactions.
- DISTINCTIVE ASPECTS OF PURCHASING FOREIGN CURRENCIES
Prior to acquiring foreign currency, a legal entity is obligated to satisfy its obligations in foreign currency from its existing funds. What is more, residents of Ukraine are obliged to utilize the acquired foreign currency within two days from its crediting to their current account.
The acquisition of foreign currency is permissible only when the entity possesses less than UAH 400,000 in equivalent funds. To facilitate the purchase of foreign currency, comprehensive details regarding the total amount of funds in foreign currency held across current and deposit accounts must be provided.
- RESTRICTIONS ON CASH WITHDRAWAL
It is prohibited to withdraw cash in foreign currency more than UAH 100,000 equivalent per day (subject to specific exemptions). This restriction is applicable to cash withdrawals from a Ukrainian bank account, whether conducted within Ukraine or abroad.
- PROHIBITION OF TRANSACTIONS WITH RUSSIAN AND BELARUSIAN ENTITIES
It is prohibited to carry out any foreign exchange transactions involving a legal entity or individual located in the Russian Federation or the Republic of Belarus, as well as to fulfill obligations to legal entities or individuals located in the Russian Federation or the Republic of Belarus.
The list of restrictions and rules is not exhaustive. The National Bank of Ukraine is constantly reviewing and updating these rules, so each currency transaction should be reviewed separately for compliance with the applicable laws.
By Roman Stepanenko, Partner, and Kateryna Oliynyk, Counsel, Asters
