UKRAINE: EUROPEAN EMERGING TIGER

DOING BUSINESS IN UKRAINE

Edition 1

WHY UKRAINE

BACKGROUND

INTRODUCTION

GOVERNMENT STRUCTURE

MACROECONOMIC SITUATION

FINANCIAL AND BANKING SYSTEM

CURRENCY OPERATIONS AND CURRENCY CONTROL

INVESTMENT CLIMATE

TAX SYSTEM

POSESSION OF LAND IN UKRAINE

BUSINESS CLIMATE

Edition 2

Posession of land in Ukraine

Land divisions by categories

The Constitution of Ukraine provides for two forms of land ownership:

Public property	Private property
Public property consists of state property and municipal property. The main legislative document regulating land issues in Ukraine is the Land Code of Ukraine The Land Code clearly distinguishes agricultural and non-agricultural land, establishing different ownership regimes for each type of land.	The Land Code of Ukraine establishes a moratorium on the sale-purchase of agricultural lands until January 1, 2007. Also until January 1, 2015, the area of privately owned agricultural land may not exceed 100 hectares. Moreover, until January 1, 2007, land property and rights of its use cannot be contributed to the authorized fund (charter capital) of legal entities.

Land is divided into a three major categories by the end use:

residential	industrial	agricultural
building plots for residential constructions within populated areas, state construction and other structures of public use	lands intended for allocation and exploitation of principal and auxiliary buildings and structures of industrial, mining, transportation and other enterprises, including their means of access, communication networks, administrative-infrastructure buildings and other structures	agricultural lands

The Land Code provides for the following types of rights for land possession in Ukraine:
· ownership
· perpetual/indefinite use
· short-term lease
· long-term lease
· servitudes (easements)

Foreign citizen's rights
Foreign individuals, legal entities and foreign states may own and use in Ukraine non-agricultural land only, they are not entitled to own agricultural land. Foreign investors may receive access to the agricultural land only by conducting according lease/rental agreement. Agricultural land inherited by non-resident must be sold within one year after inheritance. Any legal entity or natural person can acquire non-agricultural land apart from the beaches, roads and strategically important lands belonging to the state (for instance, railroads, lands on which airports, pipeline and nuclear plants are located). But this prohibition can be easily evaded, as Land Code allows Ukrainian companies, fully owned by foreign investors to own land in Ukraine. But it is secured that only those companies which founded by Ukrainian legal entities and joint ventures have the right to own land in Ukraine.

No substantial restrictions different from restrictions applied to Ukrainian citizens are imposed on non-resident's ownership of non-agricultural land.

State or municipal land may be sold to a foreign legal entity if it will establish and register permanent representative office in Ukraine.

Legal entities may acquire ownership rights for non-agricultural land plots within inhabited locality, when acquired property will be made better due to new buildings construction or other objects , which will be relevant to company's business activity in Ukraine or outside dwelled area in case of immovable property acquisition.

No restrictions for Ukrainian juridical entities to rent land fully owned by foreign investors are stipulated in Ukrainian Land Code.

Moreover foreigners have a right to participate in land privatization. However, land sale to the foreigners must be performed by the Cabinet of Ministers of Ukraine and asserted by the Parliament. Municipal land and its sale to the foreigners must be done by according local board and approved by the Cabinet of Ministers.

Right to use the land

Permanent use rights

Lease rights

The right for permanent use provides holder with the right to possess and use land belonging to the state or public without expiration term. Unfortunately, this right may only be acquired by enterprises, institutions and organizations which are state or communally owned.

Land leasing remains a viable alternative for foreign investors, international organizations and foreign governments. The Land Code provides that a land lease is a contractual, finite possession and use of a land plot, granted in exchange for compensation and which is necessary for the lessee's commercial and other activities. All Ukrainian, foreign individuals and legal entities, foreign states and international organizations may lease land in Ukraine. According to the Land Code, leases may be either short-term (not more than five years) or long-term (up to 50 years). The Land Code also allows the Lessee to sublet the land plot upon consent of the Lessor. All other issues connected with the lease of land are regulated by Ukrainian legislation.

Econimic Development © 2006

Who we are ¦ Ukraine ¦ Investment policy ¦ Portfolio companies ¦ Press ¦ Contact us