The right to land in Ukraine for foreigners and legal entities with a foreign element
Pursuant to Ukrainian law, foreigners may acquire ownership of non-agricultural land plots within settlements and of non-agricultural land plots on which real estate objects belonging to them on the right of private ownership are located, outside of settlements.
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It is essential for the revitalization of investment processes in Ukraine, especially during the period of the war that potential foreign investors understand the clear rules that apply in the country.
Therefore, let us consider which land plots in Ukraine may be owned by foreigners/foreign legal entities or legal entities established with the participation of foreigners.
It is necessary to look at this issue in the context of each subject in order to examine it comprehensively.
Pursuant to Ukrainian law, foreigners may acquire ownership of non-agricultural land plots within settlements and of non-agricultural land plots on which real estate objects belonging to them on the right of private ownership are located, outside of settlements.
Legal entities established and registered in accordance with the laws of a foreign country may acquire ownership of non-agricultural land plots within settlements in case of acquisition of real estate and for construction of facilities related to business activities in Ukraine, and outside of settlements in case of acquisition of real estate objects. In other words, the right of a legal entity, established and registered in the laws of a foreign country, to acquire ownership of a land plot is closely related to the acquisition or creation of a real estate object.
Thus, foreigners and legal entities, established and registered in accordance with the laws of a foreign country, are not entitled to acquire ownership of agricultural land.
The provisions of the Land Code of Ukraine and the Forest Code of Ukraine also stipulate that forestry land cannot be acquired by foreigners and legal entities established and registered in accordance with the laws of a foreign country.
The legislation also prohibits the alienation of land plots to foreign states, foreign legal entities and foreigners, where real estate military property to be sold is located and land plots released in the process of reforming theArmed Forces of Ukraine and the State Special Transport Service.
Legal entities that have foreigners as shareholders (founders) or a legal entity registered under the laws of a foreign country but established under the law of Ukraine and located in Ukraine are legal entities of Ukraine. These legal entities have the right to acquire ownership and lease of land plots in the same manner and procedure as legal entities of Ukraine whose participants (founders) are citizens of Ukraine, except as expressly provided by law.
At the same time, the legislation also contains a direct prohibition on the acquisition of agricultural land by these legal entities.
Foreigners, stateless persons and legal entities are prohibited from acquiring shares in the authorized (share) capital, shares, units, membership in legal entities (except for the authorized (share) capital of banks) that own agricultural land. Article 130 of the LandCode of Ukraine provides for a number of exceptions to the ownership of land plots by the above-mentioned entities, but in case of approval of the relevant decision in a referendum.
The legislation also contains a clear requirement that agricultural land inherited by foreigners or legal entities that are not allowed to acquire its ownership under this Code must be alienated within a year.
At the same time, legal entities that have foreigners as shareholders (founders) or a legal entity registered under the laws of a foreign country but established under the laws of Ukraine have the right to acquire land plots for business activities, and this right is not related only to the acquisition of ownership rights to real estate or the creation of a real estate object.
It should be noted that Ukrainian legislation restricts certain categories of land from being privately owned, including the following:
● the territories of nature reserves, protected areas of biosphere reserves, lands and other natural resources provided to national nature parks are the property of the Ukrainian people;
● water fund lands may be in state and municipal ownership, except for enclosed natural reservoirs (with a total area of up to 3 hectares);
● defense land can only be in state ownership
To summarize, despite certain limitations, Ukraine is movingtowards liberalization of the land market, and the second stage of the landreform is expected to be implemented in 2024. And on February 6, 2024, theVerkhovna Rada adopted the Law “On Amendments to Certain Legislative Acts ofUkraine to Attract Investments for the Rapid Reconstruction of Ukraine”, whichprovides for a significant simplification of the change of land use foreconomic recovery (including agricultural purposes).
Olena Shtohryn
Head of Real Estate and Construction Practice, Attorney atLaw,
Managing partner Dictio
