CURRENCY CONTROL: ARE THE DEADLINES FOR SETTLEMENTS WITH NON-RESIDENTS REALLY “FINAL” IN PRACTICE?
In the context of the full-scale war in Ukraine, businesses increasingly face arbitrariness from tax authorities, whose function is becoming less fiscal and more punitive. At the same time, the judicial branch does not always protect the lawful interests of businesses from unlawful actions of controlling bodies.
Export and import operations carried out by business entities are especially important during wartime. However, when conducting such operations, currency regulation and currency control mechanisms come into effect.
INTRODUCTION OF DEADLINES
At the beginning of the war, the National Bank of Ukraine (NBU) shortened the settlement periods for export and import operations.
Violation of these deadlines results in a penalty of 0.3% for each day of delay based on the value of the undelivered goods or unpaid funds.
These deadlines are set based on the Law of Ukraine “On Currency and Currency Operations.”
According to paragraph 2, part 1, article 12 of the Currency Law, the National Bank of Ukraine, if there are signs of instability in the financial system, deterioration of the balance of payments, or risks to the stability of the banking and/or financial system, has the right to introduce such protective measures as setting settlement deadlines for export and import operations.
Part 2, article 12 of the Currency Law provides that the NBU Board may introduce protective measures for a period not exceeding six months and extend them for no more than six months at a time.
Article 13 of the Currency Law outlines the specifics of imposing settlement deadlines. Paragraph 2, part 1 of this article states that the NBU may establish exceptions and/or special rules for certain goods or sectors of the economy upon submission by the Cabinet of Ministers.
Taken together, these provisions confirm that settlement deadlines set by the NBU constitute a protective measure under paragraph 2, part 1, article 12 of the Currency Law. Such a measure may be imposed for up to 6 months and extended once for another 6 months, as per part 2, article 12.
NBU PRACTICE DURING THE WAR
According to part 5, article 12 of the Currency Law, the procedures for imposing protective measures including criteria for their introduction, extension, and early termination—are defined by NBU regulations in accordance with the law.
NBU Resolution No. 18 (as amended on July 7, 2022) set a 180-day settlement deadline for export and import operations.
However, after January 9, 2023, these measures were not extended by the NBU.
Result: from that date, the very concept of “violation” of settlement deadlines ceased to apply. Therefore, taxpayers may not be held liable under part 5, article 13 of the Currency Law if goods were delivered or funds received after January 9, 2023. Any tax notices-decisions issued in such cases are unlawful.
In addition, legislators did not amend the Currency Law to allow for longer deadlines or deadlines tied to martial law. Based on legal certainty and the rule of law, had the legislator intended to authorize longer protective measures, it would have amended the law—especially its transitional provisions.
Since no amendments were made, any continuation of settlement deadlines without proper legal basis is unlawful. The absence of legislative changes confirms that the NBU had no authority to extend protective measures beyond six months without an official resolution.
POSITION OF CONTROLLING AUTHORITIES AND COURTS
Nevertheless, tax authorities ignore the legal framework and continue to hold taxpayers liable by imposing penalties. The only remedy is to challenge such tax decisions in court.
However, current judicial practice shows a trend of disregarding the provisions of the Currency Law. Courts often rely on NBU letters and internal tax information, ignoring the direct norms of the Law. Yet, part 5, article 3 of the Currency Law states that in case of ambiguous interpretation, provisions must be interpreted in favor of residents and non-residents.
Reliance by courts and tax authorities on NBU letters as a source of law contradicts the principles of administrative justice, legality, and the rule of law. Since such letters are not normative acts, they cannot create, change, or terminate rights or obligations of participants in currency operations.
KEY QUESTIONS FOR THE SUPREME COURT
A uniform legal approach is needed. The Supreme Court must answer the following:
– Does the protective measure automatically terminate six months after its introduction if not formally extended?
– Can the NBU justify its actions through administrative documents (letters, clarifications) that exceed its statutory authority?
– Is it lawful to hold businesses liable when there is legal uncertainty regarding the duration of protective measures?
WHY THIS MATTERS
Clear answers will uphold legal certainty, protect the rights of businesses participating in currency operations, and prevent unjustified pressure from state authorities. Establishing consistent legal practice will be an important step in ensuring fairness and transparency in the field of currency regulation.
We await the Supreme Court’s position, which will be crucial for shaping consistent legal practice during wartime and for fostering a favorable investment climate in Ukraine.
09.10.2025
