Legislative Updates

ADOPTED LAWS
According to the database of the Verkhovna Rada of Ukraine, no new laws were adopted last week.

REGISTERED DRAFT LAWS
No. 14351 dated 30 December 2025
On Amendments to the Civil Code of Ukraine and Other Legislative Acts of Ukraine Concerning Proper Legislative Regulation of the Liability of Law Enforcement Agencies, Pre-Trial Investigation Bodies, the Prosecutor’s Office and Courts for Damage Caused to Citizens of Ukraine
Key points:
The draft law proposes amendments to the Civil Code of Ukraine and the Laws of Ukraine “On the National Police,” “On the National Anti-Corruption Bureau of Ukraine,” “On the Prosecutor’s Office,” “On the Security Service of Ukraine,” and “On the Procedure for Compensation of Damage Caused to a Citizen by Unlawful Actions of Bodies Conducting Operational and Investigative Activities, Pre-Trial Investigation Bodies, the Prosecutor’s Office and Courts.” These amendments aim to regulate, at the legislative level, the issue of liability of law enforcement agencies, pre-trial investigation bodies, the prosecutor’s office and courts for damage caused to citizens of Ukraine.
In particular, the draft law provides that:
* If damage and/or losses are caused to an individual or legal entity as a result of actions or inaction of an official or public officer of a state authority (including officials or employees of bodies conducting operational and investigative activities, pre-trial investigation bodies, the prosecutor’s office or courts), officials of authorities of the Autonomous Republic of Crimea, or officials of local self-government bodies, which resulted in unlawful decisions, actions or inaction of such authorities in the exercise of their powers, the relevant official or public officer shall compensate such damage and/or losses from their own funds and property, in accordance with applicable law;
* If damage and/or losses are caused by the actions or inaction of several officials or public officers of the above-mentioned authorities, such persons shall bear joint and subsidiary liability for the damage and/or losses in open criminal proceedings and shall pay compensation from their own funds and property, in accordance with applicable law;
* Employees of bodies conducting operational and investigative activities, pre-trial investigation bodies, the prosecutor’s office and courts shall bear joint and subsidiary liability for losses caused in open criminal proceedings and shall pay compensation from their own funds and property, in accordance with applicable law.

Who should be concerned:
All owners of foreign companies conducting business in Ukraine through Ukrainian subsidiaries, as well as owners of Ukrainian companies.
My personal opinion:
This draft law is extremely dangerous for business. Currently, Ukraine applies a general principle whereby a company bears civil liability for the actions of its officials if the damage was caused in the course of performing their official duties. Subsequently, the company may pursue recourse claims (sometimes in full, sometimes partially) against the responsible official.
If this draft law is adopted, victims of unlawful actions by public officials — primarily businesses — will no longer be able to file claims against the state. Instead, they will be forced to sue individual officials directly, who in the vast majority of cases will not have sufficient assets to compensate the damage.
As a result, even if a claim is upheld, businesses will not receive full compensation, while the state will effectively remain outside the scope of liability. I consider this approach absolutely unacceptable and unequivocally harmful to the business environment.

No. 14350 dated 30 December 2025
Draft Law on Amendments to the Criminal Code of Ukraine Concerning Proper Legislative Regulation of the Liability of Law Enforcement Agencies, Pre-Trial Investigation Bodies, the Prosecutor’s Office and Courts for Damage Caused to Citizens of Ukraine
Key points:
The draft law proposes amendments to the Criminal Code of Ukraine aimed at regulating, at the legislative level, the issue of liability of law enforcement agencies, pre-trial investigation bodies, the prosecutor’s office and courts for damage caused to citizens of Ukraine. In particular, the draft law introduces criminal liability for unlawful actions of officials of bodies conducting operational and investigative activities, pre-trial investigation bodies, the prosecutor’s office and courts.
Who should be concerned:
All owners of foreign companies conducting business in Ukraine through Ukrainian subsidiaries, as well as owners of Ukrainian companies.
My personal opinion:
This draft law is potentially interesting, but it clearly requires further refinement. At present, the provisions on personal liability are drafted in a very vague manner. There are serious concerns that, if adopted in their current form, these provisions may simply fail to function in practice. I am convinced that during the legislative review process these provisions will be revised multiple times and significantly improved.

Judicial Practice (Key Cases of the Week)

I would like to draw your attention to two decisions of the Supreme Court of Ukraine adopted last week. Both decisions address disputes between taxpayers and tax authorities concerning the substantiation of taxpayers’ expenses. In both cases, the taxpayers possessed all duly executed primary documents confirming that they had entered into commercial contracts with specific counterparties and properly performed those contracts. In both cases, however, the State Tax Service assessed additional tax liabilities not on the grounds that the taxpayers lacked supporting documents, but based on the alleged inability of the counterparties to actually perform the contractual obligations. Personally, I read the second Supreme Court decision with great interest, as it expressly refers to the judgment of the European Court of Human Rights in Intersplav v. Ukraine as a judicial precedent. I had the honor of representing JV “Intersplav” in that case, which resulted in a truly unique precedent for Ukraine in a dispute between a taxpayer and the tax authorities. Subsequently, this judgment has been repeatedly cited both by the Supreme Court and by practicing attorneys.

1. Ruling of the Supreme Court (Administrative Cassation Court)
   Dated: 30 December 2025 Case No. 818/1719/17
   Outcome:
   When resolving disputes concerning the legality of the formation of taxpayers’ tax accounting data, in particular where the subject of the dispute is the reliability of primary documents and confirmation of other circumstances evidencing the reality of business transactions reflected in tax accounting, courts must take into account that, pursuant to Article 77(2) of the Code of Administrative Procedure of Ukraine, in administrative cases challenging decisions, actions or omissions of a public authority, the burden of proving the lawfulness of such decisions, actions or omissions lies with the defendant. If the controlling authority provides evidence which, taken together with other evidence in the case, indicates that the documents on the basis of which the taxpayer declared a tax credit contain information that does not correspond to reality, the taxpayer must rebut such arguments. This follows from Article 77(1) of the Code of Administrative Procedure, under which each party must prove the circumstances on which its claims and objections are based, except as provided by Article 78 of the Code.
   Having assessed the evidence in its entirety, the courts of first and appellate instances concluded that the business transaction involving road transportation of goods and unloading of trucks and railcars between LLC “VALMI GROUP” and Individual Entrepreneur [Person 1] was actually performed, aimed at producing legal consequences, and duly confirmed by the primary documents
   submitted by the claimant. The panel of judges emphasized that the arguments of the cassation appeal do not refute these conclusions. Moreover, the appellant itself acknowledged that it did not dispute the documentary confirmation of the transactions, but merely challenged the fact that the services were actually performed specifically by the counterparty, arguing that the claimant allegedly had sufficient personnel and technical capacity to perform the work independently. The Supreme Court rejected these arguments, noting that a taxpayer is not restricted in its choice of counterparties engaged on a contractual basis to conduct its business activities. The tax authority’s arguments were reduced to subjective assumptions regarding the counterparty’s inability to perform the services, which did not rebut the lower courts’ conclusions as to the reality of the transactions, their economic purpose, and the business rationale for using the services.
2. Ruling of the Supreme Court (Administrative Cassation Court)
   Dated 30 December 2025 Case No. 380/16061/21
   Outcome:
   The Supreme Court further referred to the position of the Grand Chamber of the Supreme Court, as set out in its ruling of 7 July 2022 in Case No. 160/3364/19, according to which a taxpayer may not be restricted in using a primary document for tax accounting purposes if the taxpayer did not personally include false or inaccurate information in such document. All negative consequences associated with inaccurate data contained in a primary document must be borne exclusively by the person who entered such data. If inaccurate information regarding a participant in a business transaction was included by another person, a bona fide taxpayer who relied on such document for tax accounting purposes should not suffer any negative consequences, provided that other circumstances reflected in the document — including the actual movement of assets — did in fact occur. In this context, the taxpayer’s real ability to verify the accuracy of the information provided by
   the counterparty must be taken into account. This conclusion was reached by the Grand Chamber through the application of Article 9(8) of the Law of Ukraine “On Accounting and Financial Reporting in Ukraine”, which establishes that liability for untimely preparation of primary documents and accounting registers, as well as for the inaccuracy of data reflected therein, rests with the persons who prepared and signed such documents. The Grand Chamber interpreted this provision as reflecting the principle of individual liability for entering inaccurate information into primary documents. The Grand Chamber also noted that amendments to Article 112 of the Tax Code of Ukraine, introduced by Law No. 466-IX and effective as of 23 May 2020, further reinforced these principles. Under Article 112.2 of the Tax Code, a person is deemed guilty of a tax offense if it is established that they had the ability to comply with the relevant rules but failed to take sufficient measures to do so. Measures taken by a taxpayer are considered sufficient unless the tax authority proves that the taxpayer acted unreasonably, in bad faith, or without due diligence. According to the Grand Chamber, these amendments codified approaches that had already been actively applied in judicial practice, namely the doctrines of due diligence and individual legal liability, including those derived from the ECtHR judgment in Intersplav v. Ukraine. The mere use of primary documents containing inaccurate data does not automatically indicate the unjustified nature of tax accounting data. Instead, the tax authority must prove that the taxpayer acted unreasonably, in bad faith, or without due diligence when accepting and using such documents. This assessment must consider the taxpayer’s actual ability and the economic feasibility of verifying the accuracy of the information included in the primary documents.

Why these decisions matter

1. They clearly define the allocation of the burden of proof in this category of tax disputes.
2. They confirm that where a taxpayer possesses all duly executed primary documents evidencing
   transactions with a counterparty, the mere existence of evidence suggesting that the counterparty
   lacked resources (equipment, personnel, etc.) cannot serve as grounds for claims against a
   bona fide taxpayer.

Business & Market Legal Developments

Ukraine Appoints a New Business Ombudsman
Ukraine has appointed Anka Feldhusen as the new Business Ombudsman. She previously served as Germany’s Ambassador to Ukraine from July 2019 to July 2023. The appointment was announced by the Ministry of Economy, which noted that a draft resolution of the Cabinet of Ministers approving Ms. Feldhusen’s appointment has already been prepared, following the decision of the Supervisory Board of the Business Ombudsman Council dated 25 November. The Business Ombudsman Council is an institution that assists entrepreneurs in protecting their lawful rights and interests in interactions with public authorities through out-of-court mechanisms. The continuity of its work is critically important for maintaining business confidence in state institutions, reducing administrative barriers, and improving the quality of public services for entrepreneurs. After completing her term as Ambassador to Ukraine, Ms. Feldhusen became the Commissioner for Stabilisation and Civilian Crisis Prevention at the German Federal Foreign Office.

Ukraine Launches the e-Receipt (e-Check) System
The Cabinet of Ministers of Ukraine has adopted a resolution regulating the launch of e-Check, the national electronic receipt system. The document defines the operating procedures of the service and the legal framework for its implementation. An e-Check is a digital receipt that a customer receives in their banking application after paying by card — either in-store or online. It is stored electronically and remains permanently available for returns, exchanges, or warranty claims. The introduction of e-Check is part of the government’s broader policy aimed at deregulation, digitalisation of services, and reduction of excessive administrative burden. The service is voluntary: customers may choose to receive a paper receipt, a digital receipt, or both. “The launch of e-Check is a response to changes in the economy and the growth of e-commerce. Paper receipts are often lost or not issued at all, whereas a digital receipt is always available. For consumers, it is a convenient proof of purchase; for businesses, it means less paper and lower costs; for the state, more transparent data without increasing regulatory pressure,”
said Oleksii Sobolev, Minister of Economy, Environment and Agriculture of Ukraine. The launch of e-Check is scheduled for 2026 and will be implemented in stages as an experimental project. During the first phase, the service will operate as a pilot with selected national retail chains and banks. The system is being developed by the Ministry of Economy in cooperation with the Ministry of Digital Transformation and Diia, the Ministry of Finance, the State Tax Service, the National Bank of Ukraine, banks, and payment systems. e-Check is a voluntary service and does not change existing requirements regarding the use of cash registers (RRO/PRRO). It serves as a tool providing access to information on fiscal receipts stored in the national transaction registration system. Its purpose is to introduce a modern digital standard for fiscal receipts that meets the needs of consumers, businesses, and the state.

Growth in Individual Entrepreneurs (FOPs) in Ukraine
In the fourth quarter of 2025, approximately 58.2 thousand new individual entrepreneurs (FOPs) were registered in Ukraine, representing a 40% increase compared to the same period in 2024. This is one of the highest quarterly figures in recent years. At the same time, 50.5 thousand FOPs ceased operations during this period — 18% fewer than in Q4 2024. As a result, registrations exceeded closures by 7.7 thousand FOPs. According to Danylo Hetmantsev, Head of the Parliamentary Committee on Tax Policy, this growth is not driven by economic expansion, but rather “exclusively by the spread of tax avoidance schemes used by large and medium-sized businesses through the simplified single-tax regime.” He emphasized that “the numbers speak for themselves.”