Starting from 4 May 2024, the NBU is lifting many of the currency control limitations introduced due to the Russian invasion. In particular:
1. Repatriation of “new” dividends is allowed
Since 24 February 2022, it has been prohibited to repatriate dividends from Ukraine. From 13 May 2024, the NBU is allowing to repatriate eligible dividends in the amount of EUR 1 million (or its equivalent) per month. Eligible dividends include those accrued from 1 January 2024, but exclude undistributed dividends for earlier periods, as well as reserve capital.
2. Interest eligible for payment under “old” cross-border loans is extended
Previously, it was possible to pay only a small portion of interest accrued during the first half of 2022 in relation to loans received before 21 June 2023. Now, the interest under such loans due from 24 February 2022 to 30 April 2024 can be paid up to the amount of EUR 1 million (or its equivalent) per calendar quarter. Interest in relation to these loans due after 30 April 2024 can be paid without monetary limitations.
3. Restrictions on repaying “new” cross-border loans are further eased
In 2023, the NBU allowed Ukrainian borrowers to service loans received after 20 June 2023, subject to certain conditions. Starting from 4 May 2024, the NBU is removing certain of the most strict of these conditions. In particular, borrowers may repay principal under loans with a duration of up to one year (previously three years), but using only their foreign currency reserves for such payments. However, other payments in relation to these loans – such as interest and fees – are now no longer restricted to existing foreign currency reserves, so the borrowers may purchase currency to make such payments. For loans exceeding one year, in the first year of such loans borrowers can repay principal and interest as just described above with respect to loans with a duration of up to one year, and there are no requirements to use their foreign currency reserves for payments relating to subsequent years.
The above loans are still subject to limitations regarding a maximum interest rate of 12%, and the prohibition on early repayment remains effective. (It should be noted, though, that the limitations in both paragraph 2 above and this paragraph 3 do not apply to the repayment of sovereign borrowing and loans to international finance institutions – e.g., EBRD, IFC, EIB, NIB, NEFCO, etc. – and foreign development institutions – including foreign state banks and ECAs.)
4. All currency restrictions on imports of works and services are cancelled
Previously, Ukrainian companies were allowed to make cross-border payments for only certain services supplied after 23 February 2021. The current relaxation permits paying abroad for all categories of imported services. Additionally, the changes have clarified that paying penalties, indemnities, commissions, contingencies, and other costs under import operations is also allowed.
5. Cross-border payments under lease agreements are allowed
Local businesses are now able to transfer funds abroad for settlements under any leasing/lease agreements. Previously, this exemption applied only to leasing/lease of vehicles.
6. Collection of foreign currency upon enforcement of court decisions against state companies is allowed
Previously, local bailiffs were not explicitly authorised to purchase foreign currency and transfer it abroad (except for certain, specific insurance-related payments). Now state bailiffs can collect foreign currency from the state or state-owned companies and transfer it abroad to foreign creditors. Also, if the debtor does not have foreign currency, the bailiff may convert collected UAH amounts into foreign currency provided that such funds will be transferred to an account of the foreign creditor opened in Ukraine.
Meanwhile, it remains uncertain whether the NBU intends to extend this exemption to operations with private debtors.
7. Representative offices of international card payment systems and foreign airlines may transfer foreign currency to their parent companies
The NBU allowed representative offices of international card payment systems and foreign airlines to transfer up to EUR 5 million (or its equivalent) per month to their parents. All other representative offices remain prohibited from carrying out such transactions.
For more information, please contact Olexiy Soshenko, Managing Partner and Olesia Mykhailenko, Counsel.