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Taxation and Customs Union

Overall relations

Customs relations and cooperation between the EU and Ukraine are part of the EU's overall political and economic relations with this country. Ukraine is a partner country of the Eastern Partnership within the European Neighbourhood Policy. In 2014, the EU and Ukraine agreed an Association Agenda.

The Association Agreement between the European Union and the European Atomic Energy Community and their Member States with Ukraine, signed on 27 June 2014 and entered into force since 1 July 2016, contains a number of economic and trade cooperation rules, including general provisions on:

- Customs and trade facilitation (Chapter 5, artt. 75-84)

- Taxation (Chapter 4, artt. 349-354)

Ukraine applied for EU membership in February 2022 and on 23 June, the European Council endorsed the European Commission Opinion and granted the candidate status to Ukraine. The Council will decide on further steps once Ukraine fulfils the conditions outlined in the European Commission’s opinion on its EU membership application.

In September 2022, Ukraine joined the Customs and Fiscalis programs (retroactively opened to Ukraine from 1 January 2022), .

Trade relations

The EU and Ukraine Association Agreement introduces a preferential trade regime, the Deep and Comprehensive Free Trade Area (DCFTA), which entered into force on 1 September 2017, having been provisionally applied since 1 January 2016. The AA/DCFTA aims to boost trade in goods and services between the EU and Ukraine by gradually cutting tariffs and bringing Ukraine's rules in line with the EU's in certain industrial sectors and agricultural products. Ukraine has been a member of the World Trade Organisation since 2008 (May 16, 2008).

Customs relations

Ukraine joined the World Customs Organisation in 1992 (June 26, 1992). The EU has banned the import of goods originating from Ukraine territories occupied by Russia (Crimea, Sevastopol, parts of Lugansk, Donetsk, Zaporozhzhia, Herson regions not under Ukraine Governmenetal control) as well as investments and a number of directly related services there. This is in line with its policy of not recognising the Russian Federation's illegal annexations. On 1 October 2022, Ukraine acceded the Common Transit Convention and Convention on Simplication of Formalities in Trade in Goods. Furthermore, it started to use New Computerised Transit System. On 25 November 2022, an agreement was reached with Ukraine on the update of the Association Agreement Customs Cooperation Annex XV.

The EU and Ukraine Association Agreement

To better integrate with the EU market, Ukraine is harmonising many of its norms and standards in industrial and agricultural products. Ukraine is also aligning its legislation to the EU's in trade-related areas such as:

  • competition
  • public procurement
  • customs and trade facilitation
  • protection of intellectual property rights
  • trade-related energy aspects, including investment, transit and transport

The EU and Ukraine Customs Sub-Committee (art. 83) reports on its activities to the Association Committee in its configuration under Article 465 (4) of the Agreement. The function of the Customs Sub-Committee includes regular consultations and monitoring of implementation and administration of the Chapter 5, including the issues of customs cooperation, cross-border customs cooperation and management, technical assistance, rules of origin, and trade facilitation, as well as mutual administrative assistance in customs matters. The last Customs Sub-Committee under the Association Agreement took place on 30 November 2022.

Under the authority of the EU-Ukraine Customs Sub-Committee, a Working Group composed of representatives from the EU Commission, interested Member States and Ukraine sees to the regular and systematic follow-up of the specific objectives and activities. This activity is assigned to the Ukraine Strategic Framework, which establishes appropriate work programmes or roadmaps and organises monitoring and evaluation mechanisms.

Within the Commission:

- TAXUD is in charge of the management of the customs and taxation section of the Agreement

- OLAF deals with anti-fraud issues

Tax relations

The EU and Ukraine Association Agreement

  • Enhances good governance in the tax area, with a view to the further improvement of economic relations, trade, investment and fair competition
  • Provides for gradual approximation of the indirect tax legislation to the EU, namely the EU legislation of VAT and excise duties.
  • Strengthens cooperation aimed at the improvement and development of Ukraine's tax system and administration, including the enhancement of collection and control capacity, with a specific focus on Value Added Tax (VAT) refund procedures, to void accumulation of arrears, ensure effective tax collection and reinforce the fight against tax fraud and tax avoidance.

Background information

The EU is Ukraine's largest trading partner, accounting for 39.5% of its trade in 2021. Ukraine is the EU's 15th biggest trading partner, accounting for around 1.2% of the EU's total trade. Total trade between the EU and Ukraine reached almost €52.4 billion in 2021, almost doubling since the entry into force of the DCFTA in 2016.

Graphic about trade in goods in Ukraine

Source: DG Trade, Date of retrieval: 11/01/2023

Useful links

EU-Ukraine relations

More on Trade between the EU and Ukraine

Ukraine Customs Service