On May 3, 2024, the National Bank of Ukraine took a significant step toward the country's economic recovery by adopting Resolution No. 56, which abolishes a series of currency restrictions imposed due to the state of war. This decision represents the most substantial easing of currency regulations since the beginning of the full-scale war. The measures are aimed at improving business conditions, attracting investments, and the overall recovery of Ukraine's economy, which are crucial steps towards stabilizing the financial environment and enhancing the confidence of international investors in the Ukrainian economy.
The specific changes introduced by the NBU Resolution are explained by KPMG Law Ukraine experts – Yuriy Katser, Director and Head of Legal Services, and Bohdan Shyshkovskyi, Senior Manager of Legal Services.
Aside from the potential repatriation of dividends, which will be enacted on 13 May 2024, the key changes that entered into force on 4 May 2024 include the following:
1. Currency restrictions on imports of works and services are cancelled:
- Restrictions on payments for the import of works, services, and intellectual property rights and other non-property rights intended for sale are cancelled, provided that the delivery of goods/services under such transactions is made after 23 February 2021.
- Settlements under leasing/rental agreements are permitted without additional restrictions on the leasing/rental property and the date of the agreement.
2. The NBU now allows the transfer of funds abroad to repay loans received from non-residents before 20 June 2023, which were due for repayment from 24 February 2022 according to the terms of the loan agreement:
- Within the framework of a single agreement, debtors may transfer no more than the equivalent of EUR1 million in one calendar quarter for interest payments overdue as of 1 May 2024. This restriction does not apply to interest payments starting from 1 May 2024.
- Future scheduled interest payments can be made without restrictions.
- Additional conditions for such transactions are provided for:
- No overdue debt as of 24 February 2022 under the relevant loan agreement.
- Purchasing and transferring funds at the expense of loans or credits received from residents is prohibited.
- Repayment of debt must be no earlier than the term stipulated by the terms of the loan agreement.
3. Restrictions on repayment of loans received from non-residents after 20 June 2023 have been reduced:
- For “new” cross-border loans (i.e. after 20 June 2023) where borrowers receive funds from abroad in foreign currency to accounts with Ukrainian banks, the minimum term of use of a “new” cross-border loan (after which purchasing foreign currency to repay such a loan is allowed), has been reduced from 3 years to 1 year.
- The prohibition on purchasing foreign currency to repay “new” cross-border loans now only applies to short-term loans with a term of up to one year.
- Purchasing foreign currency to pay interest on “new” cross-border loans is allowed regardless of the term of the loan.
4. Dividends on corporate rights or shares can now be repatriated abroad:
- Repatriating dividends accrued based on the results of activities for the period starting from 1 January 2024 is now permitted.
- The monthly limit for repatriation of dividends is EUR1 million in the equivalent of one calendar month.
- Mitigation does not apply to the payment of dividends from retained earnings for previous periods or reserve capital.
5. Payments by representative offices of international card payment systems and foreign airlines are allowed:
- Representative offices of international card payment systems and foreign airlines are allowed to purchase and transfer foreign currency abroad to the account of a non-resident legal entity whose interests are represented by said offices in Ukraine.
- The cumulative maximum threshold between each representative office and its parent company is EUR5 million per month.
The NBU also now permits the purchase of foreign currency on behalf of state enforcement officers at the expense of funds recovered from the state, state-owned enterprises, and legal entities, provided that these funds are transferred to the recoverer's accounts opened in Ukraine. Transferring funds recovered from state/state-owned enterprises and legal entities in the course of enforcement proceedings is also permitted.
6.The NBU now allows the purchase of foreign currency and the transfer of funds abroad to pay airport and port fees, fines, and membership fees.
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