Land rights for foreign investors in Ukraine
1) Can a foreign company/foreigner acquire land in the host country, and what forms are permitted: ownership, long-term lease, sublease, servitude?
Foreign nationals may acquire ownership of land plots designated for non-agricultural purposes in Ukraine. However, they are prohibited from acquiring title to agricultural land. The only exception is agricultural land received by way of inheritance, which must be alienated by the foreign owner within one year from the date title is obtained.
2) Are there restrictions on land categories (agricultural/non-agricultural, border areas, strategic plots, coastal zones) and on size/duration of ownership/use?
Foreigners are prohibited from acquiring title to agricultural land.
3) What is the best way to structure the transaction: purchase of shares in a local landholding company, direct land acquisition, long-term lease through an SPV, concession, or PPP?
All of the listed structures are possible in Ukraine except for direct acquisition of agricultural land ownership, which is not allowed for foreign investors, even through the purchase of shares in a local landholding company. The other options remain available and may be tailored depending on the specific needs of the investor.
4) What approvals and permits are required (government, municipality, land commission, antimonopoly authority), and how long does the process usually take?
The required approvals and permits depend on the specific land plot. In general, technical documentation on land allocation is always required. In addition, approvals from local councils and their land commissions may be necessary depending on the location and designation of the land. Decisions of the Antimonopoly Committee may also be required, depending on the financial thresholds of the buyer and seller, and are assessed on a case-by-case basis.
5) How is land due diligence conducted: boundaries, cadastre, encumbrances, servitudes, disputes, mortgages, designated use, environmental and urban planning restrictions?
Land due diligence in Ukraine typically covers all of the listed aspects - boundaries, cadastre records, encumbrances, servitudes, pending disputes, mortgages, designated use, as well as environmental and urban planning restrictions. In addition, it is common practice to review the Register of Enforcement Proceedings and, to the extent this can be done in a limited scope, to verify whether any criminal proceedings are pending against the seller.
6) Is it possible to change the designated use of land (re-zoning) for the project, what is the process, timing, risks of refusal, and possible appeals?
In general, the answer is yes, it is possible to change the designated use of land (re-zoning) in Ukraine. However, this is a complex, multi-stage and lengthy procedure that depends on many factors: the current designated use, the intended new designated use, the location of the plot, whether it falls within a protected area, and other circumstances.
The process usually involves initiating a change of use, preparing technical documentation, obtaining approvals from local councils, and subsequently updating the State Land Cadastre. In practice, re-zoning is possible, but it is typically quite complicated, time-consuming, and costly.
7) What mechanisms exist to protect rights: registration of title, title insurance (if available), contractual penalties, international arbitration, investment agreements/stabilization clauses?
In addition, rights are often protected through ongoing monitoring of the State Register of Property Rights as well as the Unified State Register of Court Decisions to track any potential claims or encumbrances. Further protection may also be achieved through notarial instruments (allowing direct enforcement of obligations) and pledge/mortgage mechanisms to secure counterparty obligations.
8) What are the tax and payment aspects: land tax, lease payments/indexation, VAT/profit tax on disposal, incentives for priority investment projects, transfer pricing in land transactions?
Land-related transactions are subject to land tax, payable on the basis of the plot’s normative monetary valuation, and lease payments agreed with local councils, usually indexed annually within statutory thresholds. Disposal of land-use rights or corporate rights holding land may trigger VAT and corporate profit tax, with the treatment differing for agricultural and non-agricultural land. Incentives, such as tax exemptions or reductions, may be available for priority investment projects. In addition, transfer pricing rules can apply to cross-border or related-party transactions, requiring proper reporting.
Author: Mykola Aleksiuk.
