Objectives
1. The Ukraine Support Instrument shall contribute to the recovery, reconstruction and modernisation of the Ukrainian DTIB with a view to increasing its defence industrial readiness, taking into account its possible future integration into the EDTIB, through cooperation between the Union and Ukraine, thereby enhancing mutual stability, security, peace, prosperity, resilience and sustainability.
2. The objective set out in paragraph 1 shall be pursued with an emphasis on enhancing cross-border cooperation between the EDTIB and the Ukrainian DTIB, taking into account the defence industrial reinforcement and defence procurement needs of Ukraine, through the creation of manufacturing capacities or their ramp-up in line with NATO standards and other relevant standards, the protection of assets, technical assistance and exchange of personnel, increased cooperation on common procurement of defence products involving Ukraine and the Ukrainian DTIB, including their maintenance, and licensing production cooperation through public-private partnerships or other forms of cooperation, such as joint ventures. Special attention shall be given to the objective of supporting Ukraine to progressively align with Union rules, standards, policies and practices with a view to future Union membership.
Additional financial resources
1. Member States, Union institutions, bodies and agencies, third countries, international organisations, international financial institutions or other third parties may provide additional financial contributions to the Ukraine Support Instrument in accordance with Article 208(2) of the Financial Regulation. Such financial contributions shall constitute external assigned revenue within the meaning of Article 21(2), point (a), (d) or (e), or Article 21(5) of the Financial Regulation.
2. Any additional amounts received under bilateral or multilateral agreements concluded pursuant to Article 17 of Regulation (EU) 2025/1106 shall constitute external assigned revenue within the meaning of Article 21(5) of the Financial Regulation and shall be used for the Ukraine Support Instrument in accordance with this Regulation.
3. Any additional amounts received under relevant Union restrictive measures shall be external assigned revenue within the meaning of Article 21(5) of the Financial Regulation and shall be used for actions reinforcing the Ukrainian DTIB.
4. Resources allocated to Member States under shared management may, at the request of the Member State concerned, be transferred to the Ukraine Support Instrument subject to the conditions set out in Regulation (EU) 2021/1060. The Commission shall implement those resources directly in accordance with Article 62(1), first subparagraph, point (a), of the Financial Regulation or indirectly in accordance with point (c) of that subparagraph. Those resources shall be used for the benefit of the Member State concerned.
5. As regards the amounts contributed in accordance with paragraph 1 of this Article, the Member States concerned may take decisions regarding the proportion of those amounts to be made available to all entities eligible for funding under this Regulation, to be made available only to the benefit of the Member States concerned or to be made available to the additional benefit of other Member States or Ukraine.
6. Where the Commission has not entered into a legal commitment under direct or indirect management for resources transferred in accordance with paragraph 4 of this Article and at the latest by 31 December 2028, the corresponding uncommitted resources may be transferred back to one or more respective source programmes, at the request of the Member State concerned, in accordance with the conditions set out in Regulation (EU) 2021/1060.
Alternative, combined and cumulative funding
1. The Ukraine Support Instrument shall be implemented in synergy with other Union programmes. An action that has received a contribution from another Union programme may also receive a contribution under the Ukraine Support Instrument, provided that those contributions do not cover the same costs. The rules of the relevant Union programme shall apply to the corresponding contribution, or a single set of rules of any of the contributing Union programmes may be applied to all contributions and a single legal commitment may be concluded. The cumulative support from the Union budget shall not exceed the total eligible costs of the action and may be calculated on a pro-rata basis in accordance with the documents setting out the conditions for support.
2. In order to be awarded a Seal of Excellence under the Ukraine Support Instrument, actions shall meet all of the following conditions:
(a)
have been assessed in a call for proposals under the Ukraine Support Instrument;
(b)
comply with the minimum quality requirements of that call for proposals;
(c)
not be financed under that call for proposals due to budgetary constraints.
3. In accordance with the relevant provisions of Regulation (EU) 2021/1060, the ERDF or ESF+ may support proposals submitted further to a call for proposals under the Ukraine Support Instrument which were awarded a Seal of Excellence.
Implementation and forms of Union funding
1. The Ukraine Support Instrument shall be implemented under direct management in accordance with the Financial Regulation or under indirect management with entities referred to in Article 62(1), point (c), of the Financial Regulation.
2. Without prejudice to Article 33(3) of this Regulation, Union funding may be provided in any of the forms laid down in the Financial Regulation in accordance with its Title X, with the exception of blending operations under the InvestEU programme.
3. With respect to activities referred to in Article 12(1), point (d), of this Regulation for which Union funding is provided in the form of a grant under the Ukraine Support Instrument and a profit is made, the Commission shall be entitled to recover the percentage of the profit corresponding to the Union contribution to the eligible costs actually incurred by the beneficiary carrying out the action, up to the final amount of the Union contribution. By way of derogation from Article 195(2) of the Financial Regulation, the profit shall be calculated by a surplus of receipts over the eligible costs of the action, where receipts are limited to Union funding, Member State funding, including procurement, other revenue generated during the action and any revenue resulting from the action. The work programmes referred to in Article 34 of this Regulation may set out further details.
4. By way of derogation from Article 196(2) of the Financial Regulation, financial contributions may, where relevant and necessary for the implementation of an action, cover actions started and costs incurred prior to the date of the submission of the proposal for those actions, provided that those actions did not start before 5 March 2024 and have not been completed before the signature of the grant agreement.
Eligible legal entities
1. Only legal entities established in the Union or in Ukraine and having their executive management structures in the Union or in Ukraine shall be eligible to be recipients of Union funding under this Regulation.
Legal entities established in the non-government controlled areas of Ukraine shall not be eligible for funding under this Regulation.
2. The eligibility criteria set out in paragraphs 3 to 9 of this Article shall apply in addition to the criteria set out in accordance with the Financial Regulation.
3. The infrastructure, facilities, assets and resources of the recipients of Union funding involved in an action which are used for the purposes of that action shall be located on the territory of a Member State or of Ukraine for the entire duration of the action.
4. By way of derogation from paragraph 3 of this Article, where recipients of Union funding involved in an action have no readily available alternatives or relevant infrastructure, facilities, assets and resources in the Union or in Ukraine, they may use their infrastructure, facilities, assets or resources which are located or held outside the territory of the Member States or in a third country other than Ukraine, provided that such use does not contravene the security and defence interests of the Union and its Member States, including respect for the principle of good neighbourly relations, and is consistent with the objectives set out in Article 22. The costs related to activities using such infrastructure, facilities, assets or resources shall not be eligible for support from the Ukraine Support Instrument.
5. For the purposes of an action supported by the Ukraine Support Instrument, the recipients of Union funding shall not be subject to control by a non-associated third country other than Ukraine or by another third-country entity.
6. By way of derogation from paragraph 5 of this Article, a legal entity established in the Union and controlled by a non-associated third country other than Ukraine or by another third-country entity shall be eligible to be a recipient of Union funding if guarantees approved in accordance with the national procedures of a Member State in which it is established, such as adequate measures pursuant to screening, as defined in Article 2, point (3), of Regulation (EU) 2019/452, are made available to the Commission.
The guarantees referred to in the first subparagraph of this paragraph shall provide assurances that the involvement in an action of a legal entity as referred to in that subparagraph would not contravene the security and defence interests of the Union and its Member States as established in the framework of the CFSP pursuant to Title V of the TEU, including respect for the principle of good neighbourly relations, or the objectives set out in Article 22 of this Regulation. Those guarantees shall in particular substantiate that, for the purposes of an action, measures are in place to ensure that:
(a)
control over the legal entity is not exercised in a manner that restrains or restricts its ability to carry out the action and to deliver results, that imposes restrictions concerning its infrastructure, facilities, assets, resources, intellectual property or know-how needed for the purposes of the action, or that undermines its capabilities and standards necessary to carry out the action;
(b)
access by a non-associated third country other than Ukraine or by another third-country entity to classified or sensitive information relating to the action is prevented and the employees or other persons involved in the action have national security clearance issued by a Member State, an associated country or Ukraine, where appropriate, in accordance with national laws and regulations;
(c)
the ownership of intellectual property arising from actions referred to in Article 27(1), point (b), relating to industrial reinforcement actions fostering industrialisation and commercialisation of defence products that have been developed in the framework of actions funded by the Union or other cooperative activities conducted with support of Member States, is not subject to restriction by a non-associated third country other than Ukraine or by another third-country entity nor transferred to entities established outside the territory of the Member States, of associated countries or of Ukraine, without the approval of the Member State or the associated country in which the legal entity is established or, where the legal entity is established in Ukraine, the approval of Ukraine. Such approval shall not contravene the objectives set out in Article 22.
If considered to be appropriate by the Member State in which the legal entity is established, additional guarantees may be provided.
The Commission shall inform the committee referred to in Article 77 of any legal entity considered to be eligible to be a recipient of Union funding in accordance with this paragraph.
7. The guarantees referred to in paragraph 6 of this Article may be based on a standardised template provided by the Commission, assisted by the committee referred to in Article 77, in order to ensure a harmonised approach throughout the Union.
8. When carrying out an eligible action, recipients may also cooperate with legal entities established outside the territory of the Member States or of Ukraine, or controlled by a non-associated third country other than Ukraine or by another third-country entity, including by using the assets, infrastructure, facilities and resources of such legal entities, provided that such use does not contravene the security and defence interests of the Union and its Member States, including respect for the principle of good neighbourly relations, or the objectives set out in Article 22.
There shall be no unauthorised access by a non-associated third country other than Ukraine or by another third-country entity to classified information relating to the carrying-out of the action, and potential negative effects on the security of supply of inputs critical to the action shall be avoided.
The costs related to cooperation with legal entities established outside the territory of the Member States or of Ukraine, or controlled by a non-associated third country other than Ukraine or by another third-country entity, shall not be eligible for support from the Ukraine Support Instrument.
9. Paragraphs 5 and 6 shall not apply to:
(a)
contracting authorities of Member States and Ukraine;
(b)
international organisations;
(c)
SEAPs;
(d)
the EDA.
Source: EUR-Lex (Publications Office of the EU), © European Union, reuse permitted under Commission Decision 2011/833/EU.
