Ukraine: Investing

FDI in Figures

On February 24th 2022, Russia initiated a military conflict on the Ukrainian territory, which profoundly upsets the current political and economic context in both countries and will have substantial ramifications on the investment climate. For the ongoing updates on the developments of Russia-Ukraine conflict please consult the dedicated pages on BBC News.

According to UNCTAD's World Investment Report 2023, FDI flows to Ukraine fell to USD 848 million in 2022, down from USD 7.3 billion one year earlier, due to the effects of the Russian invasion of the country. In the same year, the total stock of FDI stood at USD 51.1 billion. Multinational companies hold assets in steel, information and communication technology, pharmaceuticals and agricultural commodities. Arcelor Mittal is the largest investor, with assets of USD 6.5 billion (UNCTAD). In 2022, Russia’s invasion of Ukraine and the subsequent protracted war deeply deteriorated business climate. Insecurity, political and economic uncertainty, supply chain disruptions and infrastructure destruction lead to capital outflows. Most investments are made in manufacturing (23.3%), wholesale and retail trade; repair of vehicles and motorcycles (16.3%), mining and quarrying (11.5%), financial and insurance activities (7.6%), and real estate activities (7.3%). The main investors in Ukraine are Cyprus (33.1%), the Netherlands (19.5%), Switzerland (5.1%), Germany (5%), and the UK (4.8% - National Bank of Ukraine, 2022). The EU as a whole accounts for 74.4% of the total stock. In Q1 2023, Ukraine attracted USD 1.1 billion in FDI, comprising USD 128 million in capital, USD 1.1 billion in reinvested funds, and a debt component of USD -64 million. As of March 31, 2023, the cumulative direct investment in Ukraine reached a total of USD 53 billion, as reported by the Ukraine Invest agency.

Despite the war, the government has launched a drive to attract foreign investment of up to USD 400 billion in various sectors including technology, the agro-industry, clean energy, defence, metallurgy and natural resources. Furthermore, the reconstruction efforts in Ukraine are expected to draw investments totalling hundreds of billions of dollars from governments, international financial institutions, and the private sector. In addition to political instability, investors pointed out before the war that the underlying inefficiency and corruption in the justice system were among the main obstacles to investment. Other serious impediments are the complexity of laws and regulations, poor compliance with contracts and poor governance. However, the country has a large internal market, proven agricultural potential, energy and mineral resources and a strategic geographic location, making it a transit hub and a gateway to Europe and Eurasia. Before the war, progress had been made in terms of obtaining building permits, connection to electricity, protection of minority investors and cross-border trade. Ukraine has also simplified and reduced the costs of the registration procedure for representative offices of foreign business entities. Overall, the war significantly worsened the business climate: challenges such as Russia's deliberate destruction of Ukrainian civilian infrastructure, the occupation of a significant portion of the territory, disruption of the workforce resulting from the invasion, the presence of unexploded ordnance, and other ecological consequences of the war hinder both new and existing investors. It is worth noting that while these challenges exist, the majority of Ukraine's regions are not directly on the frontlines. Ukraine ranks 55th among the 132 economies on the Global Innovation Index 2023 and was not ranked in the 2023 Index of Economic Freedom due to Russia’s ongoing invasion.

What to consider if you invest in Ukraine

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

In general, foreign nationals can enjoy the same rights as Ukrainian citizens in terms of freemod of investing in the country.

Acquisition of Holdings

Foreign companies are restricted from owning agricultural land, producing bio-ethanol, and some publishing activities. In addition, Ukrainian law authorizes the government to set limits on foreign participation in state-owned companies. Furthermore, the gas transmission system, electricity grids, and various plants and factories are precluded by law from private ownership.

Obligation to Declare

Before registering their business, non-Ukrainian investors must register with the Office of Immigration in the Ministry of Foreign Affairs and obtain a taxpayer identification number through the State Fiscal Service.

Competent Organisation For the Declaration

Ukrainian Ministry of Foreign Affairs
State Fiscal Service

Requests For Specific Authorisations

Ukraine is considering a mechanism for foreign investment review for security matters. According to UkraineInvest, foreign direct investments are reviewed on a case-by-case basis by the Cabinet of Ministers if concerns arise, but there is no formal screening process in place at the moment.

Office Real Estate and Land Ownership

Possible Temporary Solutions

Consult InstantOffice, CoWorker, Kiev International Realty.

The Possibility of Buying Land and Industrial and Commercial Buildings

Ukrainian laws impose almost no restrictions on the acquisition of real estate in the country by foreigners, nevertheless there is a moratorium on the sale of agricultural land that prevents them from acquiring it.

Risk of Expropriation

The risk of expropriation is still very present in the Ukraine. Ukrainian law provides for total compensation in case of expropriation, except for extreme emergency cases. On November 17, 2009 the Parliament adopted the law on transfer of land plots and property for public needs. The law gives clear definition of public need, defines procedures for such an expropriation, and provides a list of possible reasons. Furthermore, expropriation of property is permitted in certain criminal proceedings or in cases of failure to fulfil investment obligations during privatization procedures.

Investment Aid

Forms of Aid

Investment incentives take the form of a 5-year tax exemption for investments over USD 10 million in large-scale privatization projects, loans with reduced interest rates for SMEs, the collaboration of a government manager for investments over USD 100 million, higher depreciation rates for fixed assets (property, plant, and equipment), exemptions from customs duties for any in-kind contribution imported into Ukraine for the company’s charter fund, etc.
For further information, refer to the official portal UkraineInvest.

Privileged Domains

Incentives are generally available for larger projects (USD 10 million in case of privatization projects, or for investments above USD 100 million).

Privileged Geographical Zones

Consult UkraineInvest's guide, including analytical data from various industries.

Free-trade zones

Ukraine does not maintain special or free economic zones. Consult the dedicated pages on UkraineInvest for a business overview of the country's regions.

Public aid and funding organisations

Invest in Ukraine

However, the Ukrainian government does not usually financing foreign direct investment projects, and the issuance of government guarantees are rare.

Investment Opportunities

The Key Sectors of the National Economy

Energy sector, agriculture and agro-chemistry, consumer goods, technology.

High Potential Sectors

High technology, agro-chemistry, aerospace industry, alternative energy, tourism and hospitality, transport and logistics, IT service and software R&D.
For an overview of the most attractive sectors, consult the "Industries" section of UkraineInvest's portal.

Privatization Programmes

Although the government has launched a privatization program in 2019, listing 21 major public companies to be privatized (plus many smaller companies), so far the results have been inadequate, with no major privatization being concluded in the last three years.
In 2020, the government started the legislative process to permit partial privatization of some previously excluded public companies, including Naftogaz, MainGasPipelines of Ukraine, UkrTransGaz, UkrNafta, Ukrgasvydobuvannya, Ukrzaliznytsia (UZ) and UkrPoshta. In March 2021, Parliament passed the bill in its final reading.
In principle, nationals and foreign investors should enjoy equal rights when bidding in privatization programs; however, there have been complaints to this extent.

Tenders, Projects and Public Procurement

ProZorro , Official governmental procurement portal
Tenders Info , Tenders in Ukraine
DgMarket , Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

The Government of Ukraine operates 1,600 state-owned companies (with around 1,700 more being inactive), of which more than half are small and inefficient and rely on government subsidies to function as they wouldn’t be able to be in direct competition with private firms. These companies are not restricted to network industries with natural-monopoly segments (e.g., electricity, gas, water supply, and railways), and they operate in a wide range of manufacturing, agricultural, and financial services markets. Ukrainian law defines certain segments of the electricity, gas, and transportation sectors as natural monopolies, while the postal services, railways, alcohol production, and water distribution markets are all legal monopolies.

The Antimonopoly Committee of Ukraine (AMCU) is the Ukrainian state authority for protection of economic competition.

Finding Assistance For Further Information

Other Useful Resources

UkraineInvest's Guide
Ministry for Development of Economy, Trade and Agriculture
Investments in Ukraine - InVenture

Doing Business Guides

World Bank - Doing Business Ukraine
Baker McKenzie - Ukraine Business Guide

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