The Ukraine–EU Memorandum on Macro-Financial Assistance of €8.35 Billion: Legal Nature, Conditionality, and Constitutional Aspects of Ratification

On May 28, 2026, the Committee of the Verkhovna Rada of Ukraine on European Integration considered draft law №0376, submitted by the President of Ukraine, on the ratification of the Memorandum between Ukraine and the European Union on the provision of financial assistance totaling up to €8.35 billion. According to Sudovo-Yurydychna Hazeta, the document provides for disbursement in three tranches (€3.2 billion, €3.7 billion, and €1.45 billion respectively) and contains a detailed catalogue of structural and policy conditions whose fulfilment is a necessary prerequisite for the receipt of each tranche.

The Memorandum is of considerable interest for legal analysis on several grounds. First, it is a vivid example of a modern instrument of conditional financial assistance that combines elements of an international treaty, a budgetary commitment, and a political-economic reform obligation. Second, it contains a developed catalogue of conditions whose fulfilment directly affects Ukraine’s national legislation — from tax law to budget law, from customs to institutional design. Third, the ratification of such a document raises a series of questions concerning the relationship between Ukraine’s international obligations and the constitutional principles of fiscal sovereignty and the exclusive legislative competence of the Verkhovna Rada.

This article offers a comprehensive analysis of the legal nature of the Memorandum, the legal construction of conditionality, and the constitutional aspects of its implementation.

The Legal Nature of the Macro-Financial Assistance Memorandum

Characterization of the document

From the standpoint of public international law, memoranda on macro-financial assistance between the EU and third states are formally not classic international treaties within the meaning of the 1969 Vienna Convention on the Law of Treaties. They do not create reciprocal obligations, do not provide for classic dispute resolution mechanisms, and do not have the character of an agreement aimed at creating new legal norms in the relationship between the parties.

At the same time, such memoranda possess all the necessary features of a document that generates legal consequences: they contain specific obligations for the parties, provide for a mechanism for assessing the fulfilment of conditions, and establish conditions for their termination. According to the settled doctrine of the Court of Justice of the European Union (judgment in Case C-370/12, Pringle v. Ireland, November 27, 2012), such instruments are sui generis — possessing a legal nature that combines elements of an international treaty and a unilateral undertaking by the recipient.

Within the Ukrainian legal framework, the Memorandum is subject to ratification as an international treaty, because under Article 9(2)(a) of the Law of Ukraine on International Treaties, ratification is required for treaties whose implementation necessitates amendments to existing laws or the adoption of new laws. The Memorandum expressly provides for the adoption by the Verkhovna Rada of at least ten new legislative acts — which is precisely why the President submitted it for ratification.

The legal force of the Memorandum’s conditions

A fundamental question for legal analysis is whether the conditions set out in the Memorandum acquire the character of legally binding norms upon ratification. The answer is not straightforward.

On one hand, Article 19(2) of the Law on International Treaties establishes that international treaties ratified by the Verkhovna Rada form part of national legislation and take precedence over laws of Ukraine that conflict with the treaty. This implies that the ratified Memorandum formally acquires the status of a normative act that Ukraine is obliged to observe.

On the other hand, the overwhelming majority of the Memorandum’s conditions are formulated as obligations to “submit a draft law to the Rada” or “to have the Rada adopt a law.” This means the Memorandum does not create direct regulatory norms — it creates obligations relating to the legislative process. Such obligations have the character of a pactum de contrahendo (an agreement to conclude an agreement), and their legal realization depends on subsequent acts of the Verkhovna Rada.

Here a delicate legal construction arises. By ratifying the Memorandum, the Verkhovna Rada in effect commits to adopting specific laws with specific content in the future. This creates a situation in which a portion of the legislature’s powers is constrained in advance by an internationally assumed obligation. Such a construction is not unique to Ukrainian practice — it is used in the EU’s relations with all recipients of macro-financial assistance, including Georgia, Moldova, and Tunisia. Its constitutional-legal analysis nonetheless warrants separate attention.

Conditionality as a Legal Mechanism

The structure of the Memorandum’s conditions

According to the published text, the Memorandum divides conditions across three tranches, each of which has three components: mobilization of domestic revenues, effectiveness of public expenditure, and public financial management systems. In total, more than 30 specific conditions are provided for.

A distinctive feature of the Memorandum is that conditions are formulated with varying degrees of legal precision. Some have the character of clear procedural requirements — for example, condition 1.7 (“Appoint a new permanent head of the State Customs Service”). Others have the character of requirements for the substantive content of future legislation — for example, condition 3.1, which requires the adoption of a law on the reform of the preferential tax regime with a specifically defined fiscal effect (“at least UAH 70 billion per year”) and four mandatory regulatory elements (measures to combat business fragmentation, restrictions on repeated transitions to the simplified tax system, differentiated rates for the third group, and alignment with Directive 2006/112/EU).

This multilevel conditionality structure means the Memorandum effectively determines not only the legal outcome to be achieved but also the specific mechanism for achieving it. This creates a precedent in which an international document contains provisions of a quasi-legislative regulatory character.

The compliance verification mechanism

Under the published provisions, the disbursement of each tranche is carried out by the European Commission on the basis of a positive assessment of Ukraine’s fulfilment of the conditions for the relevant stage. The Commission independently determines the amount and timing of the disbursement of each tranche and its portions. This means that even formal fulfilment by Ukraine of all prescribed conditions does not create an automatic right to receive the funds — the final decision remains with the Commission.

From a legal standpoint, this construction places Ukraine in the position of a party fulfilling prior conditions without legal guarantees of receiving the contemplated counter-performance. The absence of a dispute resolution mechanism in the Memorandum means that if the Commission declines to disburse a tranche in respect of a condition that Ukraine considers fulfilled, Ukraine will have no effective legal instruments to challenge that decision.

This distinguishes the Memorandum fundamentally from classic loan agreements, in which the parties have symmetric legal positions and access to arbitration or judicial dispute resolution. A macro-financial assistance memorandum is an instrument of one-sided conditionality, in which the recipient assumes obligations against a promise that does not have the character of a legally enforceable obligation on the donor’s part.

Constitutional-Legal Aspects

The question of fiscal sovereignty

Article 67 of the Constitution of Ukraine establishes that everyone is obliged to pay taxes and duties in the manner and amounts established by law. Article 92 provides that the system of taxation, taxes, and duties are determined exclusively by the laws of Ukraine. Together, these provisions form the constitutional principle of fiscal sovereignty: the determination of tax policy is the exclusive competence of the Verkhovna Rada, which takes decisions on the basis of its own political discretion.

The Memorandum contains a series of conditions that directly constrain that discretion. Condition 1.3 requires the extension of a 5% military levy for three years, with a specifically defined fiscal effect (UAH 140 billion in additional revenue). Condition 3.1 establishes the requirement for a reform of the preferential tax regime with an effect of at least UAH 70 billion per year. Condition 1.1 requires the abolition of exemptions on international parcels. Condition 1.2 requires the introduction of taxation of income through digital platforms.

From a formal-legal standpoint, after ratification of the Memorandum the Verkhovna Rada retains the juridical freedom not to adopt these laws — but such refusal would automatically constitute Ukraine’s failure to fulfil its international obligations and the loss of entitlement to receive the tranche. This creates a de facto (though not de jure) constraint on parliamentary discretion in the most sensitive domain — the determination of tax policy.

Whether this construction accords with Article 92 of the Constitution is a matter of doctrinal debate. The Constitutional Court of Ukraine has not spoken to this directly, but in its decision of June 13, 2019, №4-r/2019 (the case on the status of international treaties in the budget process), the Court noted that Ukraine’s budget process is conducted exclusively on the basis of national legislation, even if certain international obligations influence budgetary decisions.

The Budget Declaration and medium-term planning

Condition 2.9 of the Memorandum provides for the adoption of a Budget Declaration for 2027–2029, which must include four mandatory components, among them “a policy scenario including the impact of all planned revenue and expenditure measures and measures to achieve the Government’s fiscal goals regarding the deficit and debt of the general government sector, consistent with IMF staff projections.”

From a legal standpoint, this condition integrates the provisions of Article 33 of the Budget Code of Ukraine on medium-term budget planning with the Government’s external political commitment to the IMF. This means that the Budget Declaration — a document which under Article 33(6) of the Budget Code is submitted for consideration by the Cabinet of Ministers — must reflect indicators agreed with the staff of an international financial organization.

The constitutional-legal analysis of this construction requires care. Article 116 of the Constitution assigns the elaboration of the draft state budget to the competence of the Cabinet of Ministers. If this competence is exercised within the framework of an international obligation ratified by Ukraine, there is no formal constitutional violation. However, a question arises as to the political accountability of the Government to the Verkhovna Rada when budgetary priorities are determined not by an internal political consensus but by external commitments.

Institutional changes and the independence of state bodies

The Memorandum contains conditions relating to the institutional design of specific state bodies. Condition 1.7 requires the appointment of a permanent head of the State Customs Service. Condition 2.12 requires the Rada to confirm the appointment of three outstanding experts to the selection commission for members of the Board of the Accounting Chamber of Ukraine. Condition 3.10 requires the establishment of 10 fully functioning audit committees in specifically identified ministries and central executive bodies.

Condition 3.9 deserves particular attention — it requires the State Audit Service to prepare a proposal for delineating the functions of inspection and audit. Implementing this condition requires amendments to the Law on the Basic Principles of State Financial Control and effectively contemplates the restructuring of one of the central executive bodies.

From a legal standpoint, such conditions are not in themselves unconstitutional. But they illustrate how deeply the conditionality of macro-financial assistance penetrates the architecture of the national institutional system. This is not a criticism — it is a statement of fact that must be taken into account in the legal assessment of the Memorandum.

Harmonization with EU Legislation

Council Directive (EU) 2016/1164 on Anti-Tax Avoidance

Conditions 2.1, 3.3, and 3.4 of the Memorandum provide for the phased alignment of Ukraine’s corporate tax system with Council Directive (EU) 2016/1164. The mechanisms to be introduced include:

• Article 4 of the Directive — interest limitation rules;
• Article 5 — exit taxation;
• Article 6 — the General Anti-Abuse Rule (GAAR);
• Articles 7–8 — Controlled Foreign Company (CFC) rules;
• Articles 9, 9a, 9b — hybrid mismatch rules.

This is the most systemic package of tax legislative changes in the past decade. Some of these mechanisms are partially present in Ukraine’s Tax Code — in particular, CFC rules were introduced by Law №466-IX of January 16, 2020 — but full harmonization requires substantial revision of Chapters III, V, and XIX of the Tax Code.

From a legal technique standpoint, harmonization with an EU directive that does not constitute mandatory acquis communautaire for Ukraine — which is not an EU member state — is a political commitment implemented through national legislation. Parliament retains formal freedom to determine the manner and timetable of implementation, but the substance of the rules is effectively determined by the European act.

Council Directive 2006/112/EU on the Common VAT System

Condition 3.1(iv) provides for steps toward aligning the preferential tax regime with Directive 2006/112/EU. This is a fundamental reform: Ukraine’s simplified tax system for sole traders (fizychni osoby-pidpryyemtsi) is a national feature of Ukrainian tax regulation with no direct equivalent in the tax systems of EU member states.

From a legal standpoint, full harmonization with Directive 2006/112/EU would mean the elimination of the simplified system in its current form — at least with respect to VAT. The Memorandum does not require such a radical change, limiting itself to the formulation of “steps toward alignment,” but the direction of reform is unambiguously set.

Condition 3.2 also deserves attention: it provides for the simplification of VAT administration for sole traders through the introduction of quarterly reporting, monthly rather than daily tax invoices, advance tax declarations, and the simplification of the unblocking of tax invoices. These changes have the character of technical modernization of tax administration and do not disturb the structural principles of the simplified system.

Customs reform

Conditions 1.6 and 3.12 provide for the submission and adoption of a new Customs Code of Ukraine, harmonized with the EU Customs Code (Regulation (EU) №952/2013). This is a large-scale reform that affects not only customs procedures but the architecture of foreign economic activity as a whole.

The 2013 EU Customs Code is a unified codified act that provides for electronic declaration, unified processing procedures, the Authorized Economic Operator (AEO) system, and modern risk management mechanisms. Implementing these standards requires not only new legislation but also the technical modernization of customs infrastructure — which is precisely why condition 3.13 separately provides for the approval of technical specifications for national customs IT systems.

Systemic Legal Questions

Delegation of legislative powers

One of the most debated legal questions is whether the ratification of the Memorandum constitutes a form of delegation of the Verkhovna Rada’s legislative powers to an external actor. Formally — no: the Verkhovna Rada retains exclusive competence to adopt laws. In substance — to a degree: the content of legislative decisions is substantially determined by an external document.

The Constitutional Court of Ukraine, in its decision of November 26, 1998, №16-rp/98 (the case on the status of local council deputies), formulated the principle that delegation of legislative powers is permissible only within limits expressly provided for by the Constitution. Whether memoranda on macro-financial assistance are consistent with this principle is an open question requiring doctrinal elaboration.

Parliamentary oversight of implementation

The Memorandum contains no detailed provisions for a mechanism of parliamentary oversight of the implementation of its conditions. This creates a legal gap: after ratification, the Verkhovna Rada in effect delegates implementation of the conditions to the Government without retaining instruments of monitoring.

Article 87 of the Constitution provides for parliamentary oversight through votes of no confidence and other forms. However, with respect to the specific conditions of the Memorandum — such as the preparation of the Budget Declaration, the conduct of expenditure reviews, and the reform of the State Audit Service — no clear parliamentary oversight procedures are provided.

Transparency and access to information

The Memorandum requires Ukraine to submit macroeconomic and financial data to the European Commission on a quarterly/monthly basis (Annex II as published). The question of the extent to which this data is accessible to Ukrainian society and to the Verkhovna Rada is not directly addressed.

In view of Article 5 of the Law on Access to Public Information and the constitutional guarantee of the right to information (Article 34 of the Constitution), such data are as a general rule subject to public disclosure. However, practice in dealings with international financial organizations includes instances where a significant portion of information exchange takes place in a restricted-access mode.

Conclusions and Recommendations

Conclusions

The Memorandum between Ukraine and the EU on financial assistance of €8.35 billion is a complex legal instrument that combines elements of an international treaty, a budgetary commitment, and a political-economic reform obligation. Its ratification creates a series of legal consequences that extend well beyond the simple receipt of funds.

First, ratification effectively determines the content of the Verkhovna Rada’s legislative work for at least a two-year horizon. At least ten laws expressly required by the Memorandum’s conditions must be adopted within prescribed timeframes and with specifically defined content.

Second, the conditionality of the Memorandum penetrates deeply into the architecture of national institutions — from the customs service to the Accounting Chamber, from the State Tax Service to the State Audit Service. This creates a precedent for large-scale external influence on institutional design.

Third, the Memorandum does not provide for symmetric legal positions of the parties: Ukraine assumes detailed obligations while the European Commission retains discretion over the disbursement of funds even in the event of Ukraine’s formal fulfilment of all conditions.

Fourth, the constitutional-legal aspects of the Memorandum — in particular, questions of its relationship to the principle of fiscal sovereignty under Articles 67 and 92 of the Constitution — require deeper doctrinal elaboration.

Recommendations

In light of the foregoing, the following recommendations appear appropriate.

Parliamentary oversight. It would be advisable to establish within the Verkhovna Rada a permanent mechanism for monitoring the implementation of the Memorandum’s conditions — for example, a dedicated subcommittee within the Committee on European Integration, which would consider the state of implementation on a quarterly basis.

Constitutional-legal review. It would be appropriate to initiate an academic review of the Memorandum for conformity with the constitutional principles of fiscal sovereignty and the exclusive legislative competence of the Verkhovna Rada. Such a review should be conducted by academic institutions — the National Academy of Legal Sciences of Ukraine and the Institute of Legislation of the Verkhovna Rada — and published.

Elaboration of implementation mechanisms. In adopting the laws arising from the Memorandum’s conditions, it will be necessary to elaborate in detail the mechanisms of their interaction with existing national legislation, in order to avoid legal conflicts and gaps.

Transparency of reporting. It would be advisable to establish by law that the Government’s reports to the European Commission on the fulfilment of the Memorandum’s conditions are simultaneously submitted to the Verkhovna Rada and published in the public domain.

Harmonization strategy. Reforms arising from the Memorandum should be integrated into the overall strategy for harmonizing Ukrainian legislation with EU acquis in the context of future EU membership. This will help avoid a situation in which individual reforms are conducted on a piecemeal basis without a systemic vision.

Ratification of the Memorandum is not merely the act of accepting financial assistance. It is an act that will shape the contours of Ukraine’s legal and fiscal framework for years to come. This is precisely why the legal review of its provisions should be as rigorous as possible, and parliamentary oversight of its implementation as effective as possible.