Support in Obtaining Defence City Resident Status

Defence City is a new special legal regime of state support for the defence-industrial complex. It gives companies in the sector access to a zero rate of corporate income tax, exemption from a number of property taxes, simplified currency and export control, and a confidentiality regime. At the same time, obtaining resident status is not a registration formality but a procedure with clear requirements as to income structure, financial reporting and audit, where any inaccuracy in the documents leads to the application being returned or refused. Dextra Law provides end-to-end support throughout this process: from assessing eligibility against the criteria to entering the company into the Defence City Register and handling annual confirmation of status.

What Defence City is and why resident status matters

The Defence City regime was introduced by the Law of Ukraine No. 4577-IX of 21 August 2025 “On Amendments to the Tax Code of Ukraine and Other Laws of Ukraine on Support for Defence-Industrial Complex Enterprises”, which entered into force on 5 October 2025. This Law supplemented the Law of Ukraine “On National Security of Ukraine” No. 2469-VIII with a separate chapter setting out the general framework of the Defence City legal regime, the requirements for residents and the procedure for acquiring status.

The aim of the regime is to build a resilient and competitive defence cluster: to scale up the production of weapons and military equipment, increase the protection of enterprises and stimulate investment in the sector during wartime. The regime is in force until 1 January 2036 or until Ukraine accedes to the European Union. The regime is administered by the Ministry of Defence of Ukraine, which maintains the Defence City Register — it has replaced the former list of defence-industrial complex enterprises.

Resident status is the legal basis for using the benefits and support instruments. Without the company being entered into the Register, none of the advantages of the regime apply, so correctly arranging the status is the starting point for all subsequent tax optimisation of a defence-industry enterprise.

Who can become a Defence City resident

The regime is open to enterprises of strategic importance for the state’s defence capability. In practice, status may be sought by manufacturers and developers of weapons, military equipment, ammunition, unmanned aerial and ground systems, electronic warfare equipment, electronics, communication systems and special-purpose equipment, as well as IT companies developing technologies for the defence sector.

The key conditions for acquiring status are:

• Corporate income tax payer status. Only a legal entity that is a payer of corporate income tax may be a Defence City resident.
• Share of qualified income. Income from defence contracts (qualified income) must amount to at least 75% of total income. For aircraft-manufacturing enterprises, a separate, lower threshold of at least 50% applies.
• Compliance with the requirements of Article 37 of Law No. 2469-VIII, confirmed by a compliance report and financial statements.
• Absence of circumstances that preclude acquiring status (in particular, being in a state of termination or bankruptcy, false information in the application, or loss of status within the preceding 12 months).

Correctly determining the share of qualified income is the most sensitive stage. The classification of contracts and of the revenue structure directly affects whether the company meets the 75% (or 50%) threshold, and this is precisely where errors most often arise — errors that cost the enterprise its status.

What benefits resident status provides

Defence City offers a package of tax, currency, customs and administrative incentives. It is important to note that the benefits do not apply automatically — their use depends on the resident’s own decisions and on compliance with the established conditions.

• Zero corporate income tax. Profit is exempt from taxation provided it is reinvested into the directions defined by law (production, development, modernisation) by 31 December of the year following the reporting year. In the event of misuse or failure to reinvest, the tax is assessed retrospectively together with penalties and late-payment interest.
• Exemption from tax on immovable property other than a land plot, in respect of objects used in the resident’s activities.
• Exemption from the land fee in respect of plots used in production processes (including those temporarily idle during relocation).
• Exemption from the environmental tax.
• Simplified currency supervision through special arrangements that may be introduced by the National Bank of Ukraine.
• Simplified export control: developers and manufacturers of military-purpose goods that are Defence City residents may export such products under a simplified procedure.
• Confidentiality regime. At the resident’s request, access to information about the enterprise in certain public registers may be restricted for the duration of martial law and for one further year after it ends.
• Support for relocation and protection. The Ministry of Defence facilitates coordination with state authorities on relocating production and increasing the protection of facilities.

It is worth noting separately that property tax benefits apply from the month following the acquisition of status and remain in force until the month it is terminated; moreover, no retrospective assessment of these taxes for the period of participation in the regime is envisaged if the company leaves it.

The procedure for obtaining status: step by step

Acquiring resident status is voluntary and consists of several sequential stages.

1. Eligibility assessment. An internal audit of the income structure, types of activity and documents to verify that the enterprise meets the requirements of Article 37 of Law No. 2469-VIII and reaches the required share of qualified income.
2. Preparation of the document package. Drawing up the application, the initial compliance report and supporting documents in the established form.
3. Submission of the application to the Ministry of Defence of Ukraine. Documents are submitted electronically with a qualified electronic signature or in paper form.
4. Review of the application. The Ministry of Defence reviews the application within 10 working days and decides to grant status, refuse it, or return the application without consideration.
5. Acquisition of status. Status arises on the day the Ministry of Defence issues its order and makes an entry in the Defence City Register. At the same time, the applicant is sent an extract from the Register.

Which documents are submitted

To obtain status, the following are submitted to the Ministry of Defence of Ukraine, in particular:

• an application for Defence City resident status (with the name, EDRPOU code, location, contacts, details of officers and a list of types of activity);
• an initial report on compliance with the requirements of Article 37 of Law No. 2469-VIII;
• financial statements for the reporting year;
• an auditor’s report prepared by an audit entity entitled to perform the statutory audit of public-interest enterprises;
• a certificate confirming the absence of tax debt, or a corresponding extract from the State Tax Service information system;
• a power of attorney — where documents are submitted by a representative.

The form of the application, the procedure for its submission and the methodology for calculating the share of qualified income are set out in detail in the resolutions of the Cabinet of Ministers of Ukraine adopted on 17 December 2025, which regulate the maintenance of the Register, the acquisition of status, and also the relocation and enhanced protection of residents’ production facilities.

Return of the application and grounds for refusal

An application may be returned without consideration if: there is no data on the applicant in the Unified State Register, or the applicant is in a state of termination or bankruptcy; not all documents have been submitted; or the documents are signed by an unauthorised person, drawn up in breach of requirements, not in the established form, or contain incomplete data. The Ministry of Defence sends a decision on return within 5 working days, with explanations and proposals for correction.

Status is refused if: the enterprise does not meet the requirements of Article 37 of Law No. 2469-VIII; false information is found in the documents; or the company lost resident status within the preceding 12 months (and that decision has not been revoked).

Annual confirmation of status and oversight

Resident status is not indefinite “by default” — it requires annual confirmation. The resident must, each year no later than 1 June of the year following the reporting year, submit to the Ministry of Defence of Ukraine a compliance report for the period from 1 January to 31 December of the previous year, together with financial statements and an auditor’s report.

The Ministry of Defence analyses the submitted documents, confirms the enterprise’s compliance with the requirements of the regime and monitors the targeted use of the tax-exempt profit. If signs of violations are detected, the authority may request explanations and, where there are grounds, initiate the procedure for loss of status.

Loss of status: when and what the consequences are

Resident status may be terminated voluntarily — at the enterprise’s own request — or compulsorily, where breaches of statutory requirements are established, deadlines for submitting the report are missed, or false information is revealed. The consequence is the company’s removal from the Defence City Register and the discontinuation of the incentive measures. Particular attention should be paid to reinvesting the exempt profit: its misuse results in corporate income tax being assessed on the unused portion.

Defence City or Diia City: what is the difference

Both regimes are initiated and regulated by the state, but they target different sectors and are not compatible with each other — a company cannot simultaneously be a resident of both Defence City and Diia City.

Parameter	Defence City	Diia City
Focus	Defence-industrial complex, production and weapons R&D	IT and digital services
Regulator	Ministry of Defence of Ukraine	Ministry of Digital Transformation
Corporate income tax	0% subject to reinvestment	9% on distributed capital or 18% on a general basis
Property taxes and land fee	Exemption	On a general basis
Environmental tax	Exemption	On a general basis
Data publicity	Restricted access during martial law and one year after	Open registers

How Dextra Law supports obtaining Defence City resident status

Dextra Law’s lawyers take on the full cycle of support — from preliminary diagnostics to obtaining the extract from the Register and subsequent annual reporting. Our work covers:

• Eligibility assessment. We review the income structure, types of activity and documents, calculate the share of qualified income and provide a reasoned opinion on the advisability of acquiring status.
• Preparation of the document package. We draw up the application, the initial compliance report and supporting documents in line with the Ministry of Defence’s requirements, and coordinate the enterprise’s engagement with the auditor.
• Support for submission and communication with the regulator. We handle the submission of the application, the processing of the Ministry of Defence’s queries and comments, and ensure the procedure is completed within the established deadlines.
• Structuring for the reinvestment requirement. We help structure the use of exempt profit so as to preserve the benefit and avoid additional assessments.
• Annual confirmation of status. We support the preparation and submission of the annual compliance report so that resident status remains valid.
• Protection of status. We represent the enterprise’s interests in disputes concerning refusal, return of the application or the initiation of loss of status.

Every step of the procedure is strictly regulated, and the cost of a mistake is lost time, a returned application or a refusal. Engaging lawyers at the diagnostics stage makes the path to resident status predictable and free of unnecessary risk.

Frequently asked questions

Need support in obtaining Defence City resident status?

The Dextra Law team will assess your enterprise’s compliance with the requirements of the regime, prepare the documents and support obtaining status from the submission of the application to the company’s entry into the Register. Contact us to discuss your situation and receive a clear action plan.