Ukraine continues to reform its public financial management system with the support of the European Union. One of the instruments of this cooperation is the EU4PFM programme, which helps to transform budget planning, the work of the tax and customs authorities, financial control, audit, and public procurement. In June 2026, the third phase of the programme launched with a budget of €25 million, which will run until 2029.
What EU4PFM is and how the programme works
EU4PFM is a European Union initiative that has been supporting the reform of public financial management in Ukraine since 2019, in cooperation with the Ministry of Finance and other authorities. It covers the entire journey of budget funds: from revenue forecasting and expenditure planning to taxation, customs clearance, procurement, and oversight of how funds are used.
The programme does not provide payments to citizens or businesses. The EU provides expert and technical support: specialists contribute to the preparation of legislative changes, the creation of digital tools, staff training, and the modernisation of financial institutions.
The aim of this cooperation is to make public financial management more predictable and controllable, so that expenditure can be planned in advance, budget execution can be monitored, and the results of financed projects and programmes can be assessed.
A separate area of focus is the transition of financial processes to digital format. Operations that previously required large volumes of documents and manual data processing are gradually being automated. With EU4PFM’s involvement, an IT system for budget planning and monitoring was launched, which was already used in the preparation of the state budgets for 2025 and 2026. Digital development plans have also been prepared for the tax and customs authorities, and specialists are being trained to work with new tools and corruption risk prevention mechanisms.
Customs and tax authorities: how Ukraine is transitioning to European rules
One of the most notable areas of EU4PFM has been changes to the work of Ukrainian customs.
On 1 October 2022, Ukraine joined the Convention on a Common Transit Procedure and the Convention on the Simplification of Formalities in Trade in Goods. To this end, the New Computerised Transit System – NCTS – was introduced.
It is used by European Union countries and other participants in the common transit procedure. NCTS allows goods to be transported through several countries under a single procedure and enables data to be transferred between customs authorities in electronic format.
Previously, Ukraine used its own transit procedures. Following accession to the convention, Ukrainian businesses gained access to the mechanisms already used by companies in the EU and other participating states.
Photo: EU4PFM
With EU4PFM’s involvement, the fourth phase of NCTS was first launched, then the transition to the fifth phase was made. On 22 June 2026, the application of NCTS Phase 6 began.
Another element of the reform is the institution of the Authorised Economic Operator, or AEO. This status can be obtained by enterprises that meet the reliability criteria and comply with customs rules. They benefit from simplified procedures for the clearance of goods and other processes.
Legislation is also being updated in parallel. In 2026, the government approved a draft new Customs Code of Ukraine, which is intended to align Ukrainian rules with the EU Customs Code. On 19 August, the Verkhovna Rada adopted the bill in principle at its first reading, and it is now being prepared for its second reading.
The transition to European requirements involves not only a new code. Digital customs systems also need to be developed and prepared for international testing.
Reforms are continuing in the tax sphere as well. One important step has been the automatic exchange of data with other countries. To this end, IT solutions were created and tested: under the CRS standard, the tax authority can receive information on the financial accounts of Ukrainian tax residents abroad, while Country-by-Country Reporting allows for the exchange of data on the revenues, profits, and taxes paid by large international groups of companies.
This mechanism helps to compare declared information with data received from abroad and identify possible cases of income concealment.
Software for electronic audit based on SAF-T was also developed for the State Tax Service. It involves the transfer of accounting and tax data in a structured electronic format, enabling part of the verification process to be automated and large volumes of data to be processed without manual document handling.
Separate digital solutions were created for transfer pricing — transactions between related companies, including international ones. Controls in this area are needed to prevent profits from being artificially shifted to jurisdictions with lower tax rates.
At the same time, Ukraine continues to align its tax legislation with EU requirements, particularly in the areas of international cooperation and combating tax evasion.
Budget, procurement, and oversight: how public funds should be monitored
Another part of the reform concerns how Ukraine plans expenditure and verifies the use of budget funds.
One focus area is medium-term budget planning. When preparing the budget, financial needs must be taken into account not only for the coming year but also for several years ahead. This is important for programmes and projects that last longer than one budget year. For example, social initiatives, infrastructure projects, or reforms may require funding over three, five, or more years.
It is therefore necessary to assess in advance not only the first year’s costs but also future needs. This helps to understand whether the budget will be able to meet the commitments made, whether resources will remain for other priorities, and what financial risks may arise.
EU4PFM is helping the Ministry of Finance and other institutions to improve the preparation, execution, and oversight of the budget, as well as to develop a medium-term approach.
Internal financial control plays a separate role. It operates directly within the authorities and institutions that manage budget funds, and is intended to help identify errors, risks, and cases of inefficient resource use in a timely manner.
At the same time, it is not only the accuracy of documents that is assessed, but also outcomes. For example, if funds were allocated for a particular programme, the audit should show not only whether payments were made correctly, but also whether the set task was completed and whether the same result could have been achieved at lower cost.
For the digitalisation of this area, technical requirements for a public internal financial control portal were prepared with EU4PFM’s involvement.
Another level of verification is external audit. Unlike internal control, it independently assesses the use of public funds and the results achieved.
Parliamentary oversight allows the Verkhovna Rada and its relevant committees to receive information on budget execution and audit findings, enabling them to evaluate the performance of executive authorities in the financial sphere.
Public procurement is a separate major component of the reform. Through it, state and municipal institutions purchase goods and commission works and services: from medicines and hospital equipment to transport, road repairs, and the restoration of damaged facilities.
EU4PFM is helping to bring Ukrainian procurement rules closer to EU requirements. This concerns competition between suppliers, clear conditions for participation, and the ability to verify who was paid and for what.
Specialists who carry out procurement are also being trained. Their work determines not only whether procedures are followed, but also whether the state or community receives the necessary goods or services at a reasonable price.
This is of particular importance during reconstruction. The state and communities are already receiving international financing for the restoration of housing, energy, transport, medical, educational, and other infrastructure. In such projects, it is important to trace the entire journey of funds: how much was allocated, how the contractor was selected, how much was actually spent, and whether the planned work was completed.
What has already been achieved over seven years of EU4PFM
Over the years of EU4PFM’s operation, some reforms have already moved from the preparation of legislation and IT solutions to practical implementation.
One of the most visible results is the operation of the common transit system. According to the State Customs Service, in the second quarter of 2026 alone, 56,300 transit declarations were processed through NCTS. Since Ukraine joined the Convention on a Common Transit Procedure, their total number has reached 380,800.
The use of customs simplifications is also growing. As of the end of the second quarter of 2026, the number of authorisations issued exceeded 1,520. During the same period, a further 12 enterprises received Authorised Economic Operator status.
Practical results are also visible in the tax sphere. Ukraine is already conducting automatic international exchange of information on financial accounts under the CRS standard. Based on the results of the campaign for the 2024 reporting year, the State Tax Service received data from 71 foreign jurisdictions and transmitted information to the same number of countries and territories.
In other words, international exchange is already functioning not as a pilot project but as a permanent tax authority tool.
The budget process has also changed. The new IT planning and monitoring system was used in the preparation of the state budgets for 2025 and 2026. With EU4PFM’s involvement, solutions for electronic accounting and reporting in the public sector were also prepared, along with digital tools for internal financial control.
The programme also contributed to the preparation of the new Customs Code, the development of the Authorised Economic Operator system, the modernisation of digital solutions for the tax and customs authorities, as well as changes in the areas of procurement and external audit.
After Ukraine received candidate status for EU accession in 2022, part of EU4PFM’s work became directly linked to preparations for membership negotiations.
In particular, experts helped Ukrainian institutions prepare for the official screening — the procedure during which the European Commission compares Ukrainian legislation with EU rules and identifies what still needs to be changed.
This work covered the areas of taxation, customs, financial control, and budgetary matters.
The third phase of EU4PFM: what is planned to change by 2029
On 11 June 2026, Ukraine and the European Union launched the third phase of EU4PFM. A budget of €25 million has been allocated for it, and implementation will continue until January 2029.
Five main areas have been identified: budget planning and internal financial control, public procurement, taxation and customs, the development of management processes in financial institutions, and external audit and parliamentary oversight.
Photo: Ministry of Finance of Ukraine
The programme is implemented with the participation of the Central Project Management Agency of Lithuania, the French agency Expertise France, and the Polish Solidarity Fund.
One of the main focuses of the coming years is the further alignment of Ukrainian legislation and the work of state institutions with EU rules.
“The launch of the third phase of the EU4PFM Programme for 2026–2029 and synergy with partners from CPMA, Expertise France and Solidarity Fund PL will strengthen the digital transformation of customs and the tax service, improve liquidity management and bring our legislation closer to EU and FATF standards,” stressed Yurii Draganchuk, Deputy Minister of Finance of Ukraine for European Integration.
Liquidity management is the planning of how much money is in the state’s accounts and when it is needed to make payments. In other words, it is not enough simply to provide for funds in the budget — it is also necessary to understand when they will actually be received and when they must be paid out.
A separate part of the work will concern FATF standards — international rules for combating money laundering, terrorist financing, and other illicit financial operations.
Another priority is the interoperability of digital solutions. The databases and electronic services of different agencies must automatically exchange the necessary data.
If information is already held in one state database, another institution will not have to re-enter it manually or request a separate document. For the tax service, customs, and budget authorities, this means less manual work, faster data exchange, and a lower risk of technical errors.
At the same time, Ukrainian IT solutions must gradually be integrated with European systems.
This is especially important for customs. In August 2026, the Ministry of Finance approved an updated digital development plan for the State Customs Service until 2030. It provides for the integration of Ukrainian services with the customs systems of EU countries. The document was prepared with the participation of experts from the European Commission, DG TAXUD, and EU4PFM.
Why public finance reform is needed for Ukraine’s accession to the EU
A political decision on membership is not enough for accession to the European Union.
A candidate country must bring its laws and the work of its state institutions into line with EU rules. These cover dozens of areas — from trade and competition to taxation, customs policy, budget rules, and financial control.
The Ministry of Finance of Ukraine is responsible for four negotiating chapters: “Customs Union,” “Taxation,” “Financial Control,” and “Financial and Budgetary Provisions.” In each of them, it is important not only to adopt the necessary laws but also to show that the new rules work in practice. This requires trained specialists, digital tools, data exchange between institutions, and clear procedures.
For example, European customs rules cannot be fully applied without electronic systems through which countries transmit data on goods, transit, and customs clearance.
Likewise, financial control is not limited to regulatory documents. Institutions must identify risks, verify the use of funds, and respond to problems. During membership negotiations, the European Commission assesses not only changes in legislation but also the ability of state bodies to meet these requirements.
In parallel, Ukraine is implementing the Public Financial Management Reform Strategy for 2026–2030, which the government approved on 25 February 2026. It covers European integration, the efficient use of budget funds, accountability, and the resilience of the financial system. Progress will be assessed against 56 target indicators, and the operational plan provides for 157 measures.
“Effective public financial management is the foundation on which the trust of international partners and our state’s ability to finance key priorities are built — from defence to social guarantees,” said Serhii Marchenko, Minister of Finance of Ukraine.
As a result, revenues and expenditures are to be planned over several years, financial data increasingly processed in electronic format, and the use of budget and international funding verified at various stages.
Such changes are needed not only for EU accession. The quality of public financial management also determines how well Ukraine will be able to work with reconstruction funds, monitor their use, and report on results to society and international partners.
Author: Anastasiia Havrysh
Source: Pershyi Zaporizkyi