IMPACTA DIGEST
Overview of the key regulatory, business and international developments shaping Ukraine's defence sector during 2026
July 2026
Ukraine’s defence sector is rapidly evolving into a cutting-edge, technology-driven ecosystem, in which the traditional regulatory framework is being replaced by a more market-oriented model governing production, imports and exports.
Key developments include:
transition from a fragmented market to a centralized defence-industrial and export system;
ongoing and partial transition from transaction-based approvals to a status-based access model;
growing reliance on cooperative manufacturing and industrial partnerships;
gradual liberalization of defence exports under enhanced state supervision.
І. REGULATORY UPDATES
1. The Government approved the special mechanism for the export of Ukrainian weaponry and defence technologies
The Cabinet of Ministers of Ukraine has approved the special mechanism for the export of Ukrainian weaponry and defence technologies, which establishes unified rules of interaction between the state, manufacturers, and international partners. The new mechanism provides for the possibility of direct procurements of Ukrainian products by partner states under intergovernmental agreements (specifically within the Drone Deal framework), sets a 30-day period for the review of export applications, and applies to the transfer of weapons and defence technologies valued from UAH 15 million.
Partner countries participating in the Drone Deal initiative that have concluded the relevant intergovernmental agreements with Ukraine will be able to procure Ukrainian defence products and technologies and cooperate directly with Ukrainian manufacturers.
The Ministry of Foreign Affairs will determine the list of eligible partner countries. The Ministry of Defence, together with other competent authorities, will establish the list of critical items that are not eligible for transfer.
Ukrainian defence technologies will remain protected by the state. Transfers will not involve the assignment of intellectual property rights, and any re-export or transfer to third parties will require Ukraine's prior written consent. Where products manufactured using Ukrainian defence technologies are exported to third countries, 20% of the export value will be paid into the State Budget of Ukraine.
At the same time, the priority of meeting the needs of the Defence Forces of Ukraine remains unchanged, and export is only possible provided there is no negative impact on the state's defence capability.
The introduction of this new mechanism marks a key step in reforming Ukraine’s military-technological cooperation framework. For the first time, defence exports are being placed within a transparent regulatory system with defined procedures and timelines, which should facilitate international cooperation, improve the investment appeal of Ukraine’s defence-tech sector, and strengthen the country’s integration into the European defence manufacturing ecosystem, while preserving full state control over the export of strategic goods.
Learn more on interfax.com.ua and mod.gov.ua
2. Tax incentives for robots on the frontline: The Verkhovna Rada abolished VAT on the procurement of ground drones
The Verkhovna Rada of Ukraine has enacted Law No. 4894-IX, which introduces a full VAT exemption for the supply of ground robotic complexes (GRCs) for the needs of the Defence Forces. The exemption will remain in effect for the duration of martial law and applies to state defence procurement contracts concluded with the Ministry of Defence, the Armed Forces of Ukraine, other law enforcement agencies, and enterprises co-executing such procurements. According to the Defence Procurement Agency, the measure will eliminate an unnecessary financial burden on the procurement chain, reduce the cost of acquiring unmanned ground platforms, and significantly accelerate their delivery from the manufacturer to the frontline.
Learn more: Law of Ukraine No. 4894-IX
3. The Cabinet of Ministers significantly simplified the import of components for weapons manufacturers
The Cabinet of Ministers of Ukraine has adopted Resolution No. 170, significantly streamlining the customs clearance procedure and the verification of incentives for defence-industrial complex enterprises importing foreign components and materials. The new rules abolish the requirement to submit contracts and technical passports three days prior to clearance and permit a number of documents to be entered directly into the customs declaration and produced only upon request by inspectors. These simplifications apply to defence sector enterprises, state contract co-executors, and subcontractors. The reforms are expected to minimise logistical delays and accelerate the delivery of weaponry to the frontline.
IІ. BUSINESS & INDUSTRY NEWS
1. Ukrainian AI startup Swarmer enters the Japanese market in partnership with Rakuten
Swarmer, a Ukrainian developer of artificial intelligence software for the autonomous operation of drone swarms, has announced plans to scale its operations and enter the Japanese market. The company’s strategic partner in this expansion will be Rakuten Group – the Japanese technology conglomerate and owner of Viber – which will provide market access and industry expertise. The partnership is expected to facilitate the integration of advanced Ukrainian experience in unmanned systems coordination into Japan’s defence, security, infrastructure, and robotics sectors.
Learn more on dou.ua
2. First Official Export of Combat Drones to the U.S.
Ukraine’s first official export of combat drones marked an important milestone for its defence-tech sector. F-Drones’ F10 competed in the Drone Dominance program in February 2026, which led to a contract with the Pentagon for 2,000 units. The deal was completed before the new special mechanism for the export of Ukrainian weaponry and defence technologies was enacted. State-owned Spetstechnoexport handled the transaction, and the export permit was issued by Ukraine’s State Export Control Service on 1 July 2026.
The case is significant because it was the first authorization for a fully operational combat system, confirming Ukraine’s ability to meet international standards and deliver under wartime conditions.
Learn more on thedefender.media
3. URC 2026: More than 160 agreements worth over €10 billion signed in Gdansk
Following the results of the Ukraine Recovery Conference 2026, held on June 25–26 in Gdansk, Ukraine and its international partners concluded more than 160 agreements with a total value of over €10 billion. Among the key results are the signing of an agreement with the World Bank for $3.39 billion, the launch of the first €3.2 billion tranche within the new EU credit program, and the creation of the European Flagship Fund for the Reconstruction of Ukraine, which aims to mobilize around €500 million in private investments as early as this year.
The concluded agreements cover projects in the fields of energy, critical infrastructure, transport, defence industry, manufacturing development, and support for Ukrainian business. The conference confirmed the transition from a donor-based support model to attracting long-term investments and developing international industrial partnerships.
Learn more on www.urc-international.com
4. Eurosatory 2026: Ukrainian manufacturers concluded new international partnerships at Europe's largest defence exhibition
During Eurosatory 2026, held in Paris on June 15–19, Ukrainian defence manufacturers significantly expanded international cooperation by concluding a series of agreements with European defence companies regarding joint development, localized production, and integration of Ukrainian technologies into European supply chains.
Among the key agreements:
Ukrainian company Fire Point entered into a partnership with German company Hensoldt regarding the integration of TRML-4D radars into the prospective FREYA anti-missile defence system; the company is also in talks with Kongsberg and Thales on further cooperation;
Ukrainian manufacturer Ukrainian Armor and Czech AviaNera Technologies (part of CSG) signed a strategic agreement on the localization of production, assembly, and testing of jet engines for cruise missiles and unmanned systems in Ukraine, with a view to creating a joint venture.
Following the insights of Illya Tkachuk, Julian Ries and Krystyna Khripkova, who attended the event, Ukraine’s presence was not only about showcasing wartime-tested technologies, but also about demonstrating how battlefield experience is reshaping global defence innovation — from drones and electronic warfare to air defence, resilience and scalable production.
Learn more on www.eurosatory.com and ain.ua
5. Battle Proven 2026: Brave1 is looking for cutting-edge defence-tech solutions for the frontline
The defence tech cluster Brave1, with the support of the Ministry of Defence, has announced the call for applications for the annual startup competition Battle Proven, which will take place this September in Lviv within the framework of the large-scale Defence Tech Valley 2026 forum. Ukrainian and foreign developers whose products are already being used in combat, or are expected to enter operational deployment within the next year, are invited to take part in the competition. Their solutions will be evaluated directly by combat units, including the Unmanned Systems Forces, the Third Army Corps of the Armed Forces of Ukraine, and the Khartia Brigade of the National Guard of Ukraine. Based on the selection results, 30 finalists will be chosen across three categories, from concepts to technologies ready for scaling, and will have the opportunity to present their projects to international investors. Applications were due by 15 June 2026.
Learn more on mod.gov.ua
IІI. GOVERNMENT & INTERNATIONAL COOPERATION
1. The US plans to lift the automatic ban on the import of Ukrainian weapons and drones
The US Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), which is part of the structure of the American Department of Justice, has proposed removing Ukraine from the 1997 list that blocked the import of firearms and ammunition. The adoption of these changes will remove artificial regulatory barriers and allow applications to permanently import Ukrainian firearms and ammunition to be considered on an individual case-by-case basis, rather than being denied automatically by country of origin. According to Ukrainian diplomats, the changed legislation would also legally unblock the US market for Ukrainian military drone developers.The public discussions of the initiative will last until 6 July 2026.
Learn more on dou.ua
2. Ukraine and the US are preparing a defence agreement for the joint production of drones and export of technologies
The Governments of Ukraine and the United States have prepared a draft memorandum that is intended to become the first step toward the export of Ukrainian military technologies and the joint production of UAVs with American companies. According to CBS News, domestic developers are already integrating into the US defence sector, and the Pentagon has even invited Ukrainian companies to join a billion-dollar drone selection program for the US Army. At the same time, the conclusion of the final agreement is currently delayed by political obstacles in Washington and, on the Ukrainian side, by strict requirements concerning intellectual property protection and the priority supply of Ukraine’s own defence forces.
Learn more on dou.ua
3. Drone Deal Framework: Ukraine discusses the export of surplus drones and EW with 20 countries
The President of Ukraine has announced that Ukraine is conducting negotiations with approximately 20 countries regarding cooperation within the new Drone Deal framework, with four agreements already officially signed. The core of the initiative lies in selling surplus Ukrainian weaponry – primarily drones, missiles, and electronic warfare systems – to foreign partners, provided that the needs of the Armed Forces of Ukraine are 100% met. This model is designed to help domestic developers generate revenue for scaling by using excess production capacity, which in some sectors reportedly reaches 50%. At the same time, it allows the state to secure predictable financial returns and ensure a stable flow of supplies.
Learn more on dou.ua
4. Brave Germany: Ukraine and Germany launch a joint program for Defence Tech development
The Minister of Defence of Ukraine and Federal Minister of Defence of Germany signed a letter of intent to launch the Brave Germany program, which will be implemented jointly with the Brave1 defence innovation cluster. The initiative provides for grant support to defence start-ups from both countries and the joint development of innovative solutions for unmanned systems with artificial intelligence, laser technologies, and secure communications. Separate strategic directions of cooperation will include the creation of a European anti-ballistic capability through simplified data exchange between enterprises, as well as the joint production of tactical and long-range drones with an operational radius of up to 1,500 km.
Learn more on ain.ua
5. Brave Lithuania: Ukraine and Lithuania launch a grant program for defence start-ups
The Governments of Ukraine and Lithuania signed a letter of intent to launch the joint grant program Brave Lithuania during the NATO-Ukraine Defence Innovators Forum in Vilnius. The project, which will be implemented on the Ukrainian side by the Brave1 defence innovation cluster, aims to provide financial support to developers and accelerate the deployment of technologies for the needs of the Defence Forces of Ukraine. Among the key priorities of the program are the joint development of unmanned systems, electronic warfare equipment, artificial intelligence, and modern communication systems that will undergo testing under real warfare conditions.
Learn more on mod.gov.ua
6. BRAVE FRANCE: Ukraine and France launch a joint €20 million grant program for defence companies
Ukrainian Brave1 defence innovation cluster and the French Defence Innovation Agency (AID) signed an agreement at the Eurosatory 2026 exhibition in Paris to launch a joint funding program for defence start-ups called BRAVE FRANCE. The total budget of the initiative is €20 million (€10 million from each country), and the maximum size of a single grant for developers will reach €1 million. The program will focus on the creation of missile technologies, unmanned systems, and air defence equipment, with the first start-up competition scheduled for September 2026, and the testing of developments taking place under real combat conditions on the Test in Ukraine platform.
Learn more on thedefender.media
7. Defence Partnership: Ukraine and Canada launch joint production of reconnaissance UAVs
The Ministry of Defence of Ukraine and the Ministry of National Defence of Canada signed an agreement to launch the joint production of Ukrainian reconnaissance drones in Canada. To implement the project, Ukrainian defence-tech company Airlogix and Canadian developer Sentinel Research and Development are establishing a joint venture, Airlogix-Sentinel. The manufactured unmanned systems will be promptly supplied to the Defence Forces of Ukraine for reconnaissance operations, while simultaneously providing Canada with access to cutting-edge technological solutions of modern warfare.
Learn more on mod.gov.ua
DEFENCE CITY:
UKRAINE'S LEGAL FRAMEWORK FOR
THE DEFENCE INDUSTRY
Purpose of the Regime
Establishes a special legal framework designed to strengthen Ukraine's defence industrial base by providing tax incentives, streamlined regulatory procedures, and a dedicated export regime for defence manufacturers.
Legislative Basis
Law of Ukraine
No. 4577-IX
"On Amendments to the Tax Code of Ukraine and Certain Other Laws of Ukraine
Regarding Support for Defence Industry Enterprises"
Customs Code
(as amended by Law No. 4577-IX)
Who Can Become a Resident?
Ukrainian legal entities that:
Manufacture or develop defence products or perform defence contracts
Derive at least 75% of qualifying revenue from eligible defence activities
(50% for aerospace companies)
Included in the Defence City Register upon application to the Ministry of Defence of Ukraine
Tax Benefits
Corporate income tax exemption
(subject to reinvestment of retained profits)
Land tax
exemption
Real estate tax
exemption
Environmental tax
exemption
Import Facilitation
Simplified customs procedures
for importing components, materials, and equipment
required for defence production
Export Regime
Export approvals within approximately 7–15 days
Simplified export control procedures administered by the State Export Control Service
No separate Cabinet-level approval for individual export transactions
Access to multiple export models (special exporter, partnership model, or direct exporter)
Faster issuance of general and open export licences upon implementation of an Internal Compliance Program (ICP)
Governance and Compliance
State Register maintained by
the Ministry of Defence
Centralized
governmental oversight
Monitoring of the use
of retained profits
Enhanced
end-use controls
Mandatory operational reporting
and compliance obligations
UPCOMING
Kyiv
Scale 100x
The event is designed to help companies transition from a promising product to a scalable business. Taking place this July in Kyiv, it will bring together founders and executives of Ukrainian defence tech companies. Practical sessions and working groups will be led by experienced founders, investors, technical experts, and representatives of the international defence ecosystem.
The date is disclosed after registration.
Learn more on 100x.darkstar.ee
August 15
online
Kyiv Miltech Conference 2026
The event will bring together Ukraine’s defence-tech ecosystem – founders, manufacturers, military R&D teams, government stakeholders, investors and international partners – to align battlefield needs, industrial capabilities and financing.
For foreign investors, it offers a practical view of Ukraine’s miltech market, from startup scaling and production to state cooperation, NATO engagement and international sales.
Learn more on miltech.org.ua
August 22-25
Essen
EUDEX 2026
EURO DEFENCE EXPO, held concurrently with the renowned Security Essen exhibition, a leading event in the field of civil security. The two exhibitions create a unique platform for bridging civil and military security technologies, engaging key partners, and fostering an active exchange of experience among policymakers, business leaders, and military tech end-users at the European level.
Learn more on www.eurodefenceexpo.de
September 21-22
London
UAV Technology Conference
An international conference dedicated to the development and strategic impact of Unmanned Aircraft Systems (UAS), a market experiencing exponential growth driven by shifting modern operational requirements. The event brings together leading developers, industry leaders, and military experts – including representatives from the Armed Forces of Ukraine, the UK, the US, and Australia – to discuss innovations in intelligence, surveillance, and reconnaissance (ISR), mini-UAVs for tactical awareness, and combat drones for precision strikes. The key focus of the event is centred on demonstrating advanced platforms, technological breakthroughs, and shaping the future of unmanned systems in defence.
Learn more on www.smgconferences.com
September 26-27
Lviv
IT ARENA 2026
A tech conference bringing together thousands of IT leaders, entrepreneurs, investors, and tech enthusiasts to drive the development of the digital ecosystem. The event features specialized tracks in business, product management, start-ups, and software development, along with a significantly expanded sector for defence tech and cybersecurity. The program offers keynotes from leading global experts, an exhibition of innovative products, extensive networking opportunities, and the country's main start-up battle for securing investment.
Learn more on itarena.ua
RECENT EVENTS
June 24–26
Gdańsk
Ukraine Recovery Conference 2026
The Ukraine Recovery Conference 2026 in Gdańsk addressed both Ukraine’s reconstruction agenda and the growing role of defence tech in the country’s resilience and long-term security. Alongside discussions on recovery, investment and infrastructure, the conference highlighted Ukrainian innovation, battlefield-tested technologies and international partnerships as essential elements of Ukraine’s future capacity.
IMPACTA LAW also co-organised an official side event during URC 2026, contributing to the wider dialogue on Ukraine’s recovery, investment and long-term strategic cooperation with international partners.
Learn more on ua.urc-international.com
June 24–26
online
Joint webinars with TEGOS
IMPACTA LAW and TEGOS held two joint webinars focused on practical defence-sector cooperation between Ukraine and the Baltic states. The first session introduced Baltic businesses to opportunities in Ukraine’s defence industry, covering key legal and regulatory aspects of operating in Ukraine, including UBO disclosure, Defence City and Diia City regimes, procurement, workforce reservation and the “Build with Ukraine” framework.
The follow-up webinar shifted the focus to Ukrainian defence and technology companies entering the Baltic market, with practical guidance on defence procurement, offset requirements, licensing, foreign investment screening, security clearance and financing aspects in Estonia, Latvia and Lithuania.
March 26
Düsseldorf
Frontline Innovation - Opportunities in Ukraine & the Baltics 2026
Organised by IHK Düsseldorf, Frontline Innovation brought together industry, government and innovation leaders to discuss defence-tech business opportunities, with a focus on Ukraine and the Baltics.
Dmytro Marchukov attended the event, which addressed market developments, frontline innovation, export controls, financing and ecosystem-building for security and dual-use technologies.
Learn more on www.ihk.de
February 26
Kyiv
War 2026: Humans vs Machines
The Ukrainska Pravda conference “War 2026: Humans vs Machines” brought together defence manufacturers, military representatives, major businesses and Ukraine’s partners to discuss the future of Ukraine’s defence sector.
The discussion focused on how technology, exports, institutions and human capital will shape Ukraine’s defence capacity, with the IMPACTA LAW team attending and joining the broader professional dialogue.
Learn more on www.pravda.com.ua
