Eligibility

1. The activities, expenditures and measures to support Ukraine’s defence industrial capacities related to defence products and other products for defence purposes shall be eligible for assistance provided that they comply with the eligibility conditions set out in this Article.

2. Defence products shall belong to one of the following categories:

category one: ammunition and missiles; artillery systems, including deep precision strike capabilities; ground combat capabilities and their support systems, including soldier equipment and infantry weapons; small drones (NATO class 1) and related anti-drone systems; critical infrastructure protection; cyber; and military mobility including counter-mobility;

category two: air and missile defence systems; maritime surface and underwater capabilities; drones other than small drones (NATO classes 2 and 3) and related anti-drone systems; strategic enablers such as, but not limited to, strategic airlift, air-to-air refuelling, C4ISTAR systems as well as space assets and services; space assets protection; artificial intelligence and electronic warfare.

3. The activities, expenditures and measures to support Ukraine’s defence industrial capacities related to defence products or other products for defence purposes shall not contravene the security and defence interests of the Union and its Member States as established in the framework of the common foreign and security policy (CFSP) pursuant to Title V of the TEU, including respect for the principle of good neighbourly relations, or the objectives set out in Article 2 of this Regulation.

4. Defence products shall be produced in compliance with the following conditions:

manufacturers and subcontractors involved in the production of the defence products shall be established and have their executive management structures in the Union, in an EEA EFTA State or in Ukraine. They shall not be subject to control by a third country which is not an EEA EFTA State or Ukraine or by another third-country entity which is not established in the Union, in an EEA EFTA State or in Ukraine;

by way of derogation from point (a), in order to take into account industrial cooperation with non-EU partners, defence products that involve a subcontractor involved in the production which is allocated between 15 % and 35 % of the value of the contract, and that is not established or does not have its executive management structures in the Union, in an EEA EFTA State or in Ukraine, shall be eligible provided that at least one of the following conditions are met:

a direct contractual relationship related to the defence product has been established between the manufacturer and that subcontractor prior to 28 May 2025; or

the manufacturer commits to studying, within two years, the feasibility of replacing the input provided by that subcontractor with an alternative, restriction-free input originating in the Union, in an EEA EFTA State or in Ukraine, and meeting technical and time requirements;

by way of derogation from point (a) of this paragraph, defence products involving manufacturers or subcontractors established in the Union and controlled by another third country which is not an EEA EFTA State or Ukraine or by another third-country entity which is not established in the Union, in an EEA EFTA State or in Ukraine shall be eligible if that manufacturer or subcontractor has been subject to screening within the meaning of Regulation (EU) 2019/452 of the European Parliament and of the Council ( 25 ) and, where necessary, to appropriate mitigation measures, or if that manufacturer or subcontractor provides guarantees in accordance with point (d) of this paragraph, verified by the Member State in which it is established;

the guarantees referred to in point (c) of this paragraph shall provide assurances that the involvement of the manufacturer or subcontractor in the production of the defence product does 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. Those guarantees shall in particular substantiate that, for the purposes of activities, expenditures and measures, measures are in place to ensure that:

control over the manufacturer or subcontractor is not exercised in a manner that restrains or restricts its ability to carry out the activities, expenditures and measures supported; and

access by a non-associated third country or by a non-associated third-country entity to classified or sensitive information relating to the defence product produced is prevented and the employees or other persons involved in the production of the defence product have national security clearance issued by a Member State, where appropriate, in accordance with national laws and regulations;

the infrastructure, facilities, assets and resources of the manufacturers and subcontractors involved in the production of the defence products shall be located in the territory of a Member State, an EEA EFTA State or Ukraine. Where manufacturers or subcontractors involved in the production of the defence products have no readily available alternatives or relevant infrastructure, facilities, assets and resources in the territory of a Member State, an EEA EFTA State or Ukraine, they may use their infrastructure, facilities, assets and resources which are located or held outside those territories, provided that such use does not contravene the security and defence interests of the Union and its Member States;

manufacturers and subcontractors involved in the production of the defence products may be considered to fulfil the eligibility conditions referred to in this paragraph where they have fulfilled equivalent conditions under Regulations (EU) 2018/1092 ( 26 ) , (EU) 2021/697 ( 27 ) , (EU) 2023/1525 ( 28 ) , or (EU) 2023/2418 ( 29 ) of the European Parliament and of the Council or under Regulation (EU) 2025/1106 and provided that no subsequent changes call into question the fulfilment of those conditions;

the cost of components originating outside the Union, EEA EFTA States and Ukraine shall not be higher than 35 % of the estimated cost of the components of the defence product. No component shall be sourced from a third country that contravenes the security and defence interests of the Union and its Member States;

for defence products related to category two as referred to in paragraph 2, point (b), of this Article, manufacturers shall have the ability to decide, without restrictions imposed by third countries or by third-country entities, on the definition, adaptation and evolution of the design of the defence product procured, including the legal authority to substitute or remove components that are subject to restrictions imposed by third countries or by third-country entities.

For the purposes of the first subparagraph of this paragraph, ‘subcontractors involved in the production of the defence products’ means any legal entity which provides critical inputs that possess unique attributes essential for the functioning of the defence product, which is allocated at least 15 % of the value of the contract, and which needs access to classified information for the performance of the contract.

5. By way of derogation from paragraphs 2 and 4 and in full respect of paragraph 3, where there is an urgent need for the delivery of a given defence product stemming from Russia’s war of aggression against Ukraine, the procurement of a defence product which does not comply with one or more of the conditions set out in paragraphs 2 and 4 shall be eligible for financial assistance under this Chapter provided that:

there is no equivalent product that responds to that urgent need which complies with the conditions set out in paragraphs 2 and 4 or it is not available at the required scale and whose delivery lead time is commensurate with the urgency of the situation and Ukraine’s immediate operational needs; or

the delivery lead time for such defence product is significantly shorter than for a defence product which would comply with the conditions set out in paragraphs 2 and 4 of this Article, even if that defence product was subject to a priority-rated request as referred to in Article 19.

In such a case, Ukraine shall provide the information reasonably available to it demonstrating that the conditions for the application of this derogation are met. That information shall be checked by the Commission after consultation with the Expert Group referred to in Article 15 without undue delay.

The procurement of defence products from manufacturers established in third countries other than EEA EFTA States and Ukraine shall be made only where there are no other alternatives available in the Union, EEA EFTA States and Ukraine under the conditions set out in the first subparagraph, points (a) and (b). In the context of the first subparagraph, points (a) and (b), that information shall include a legal commitment on compliance with the delivery lead time.

The Commission shall approve the derogations referred to in this paragraph by means of implementing acts, acting in accordance with the examination procedure referred to in Article 27(3).

6. Where applicable, Participating Member States shall ensure that the procurement procedures and contracts for other products for defence purposes resulting from procurements receiving support under the Ukraine Support Loan contain appropriate eligibility conditions to protect the security and defence interests of the Union and its Member States.

7. By way of derogation from paragraph 4, contributions in accordance with paragraph 8, point (e), shall be utilised in line with the eligibility conditions of the Union programme concerned.

8. Activities, expenditures and measures related to defence products or other products for defence purposes shall be implemented in accordance with one of the following methods of implementation:

procurements by Ukraine, subject to the procurement and delivery being validated by the Commission or Participating Member States. Ukraine shall be responsible for such procurements in accordance with Ukrainian law, where validations by the Commission or Participating Member States shall include, on a sample basis, checks on contractual documentation, invoices and delivery certificates, physical inspections to suppliers and physical verification of deliveries;

procurements by Ukraine that are a common procurement in accordance with Regulation (EU) 2025/1106;

agreements between Ukraine and Member States or the European Defence Agency (EDA);

procurement agreements between Ukraine and international or intergovernmental organisations; or

contributions by Ukraine to the Ukraine Support Instrument established by Regulation (EU) 2025/2643, the Ukraine Investment Framework established by Regulation (EU) 2024/792 for dual-use goods or other Union programmes.

Activities, expenditures and measures related to other products for defence purposes may also be implemented by procurements by Ukraine for procurements below EUR 7 000 000, provided that sound financial management and the protection of the financial interest of the Union are ensured.

9. Contracts entered into by Ukraine relating to procurements, agreements or contributions referred to in paragraph 8 shall be eligible if signed after 14 January 2026 provided that they comply with this Article.

10. The Commission is empowered to adopt delegated acts in accordance with Article 26 to supplement this Regulation by extending eligibility to third countries other than EEA EFTA States and Ukraine that do not contravene the security and defence interests of the Union and its Member States, provided that those third countries have concluded an agreement with the Union in accordance with Article 17 of Regulation (EU) 2025/1106. Each delegated act shall specify, for each of the third countries concerned, to which of the defence products this provision shall apply. Upon entry into force of a delegated act, the third country shall be considered to be included among the EEA EFTA States and Ukraine for the purpose of Article 13(4) as regards those defence products.

11. Notwithstanding paragraph 10, the Council, acting on a proposal from the Commission, may adopt an implementing act to determine that a third country other than EEA EFTA States and Ukraine that does not contravene the security and defence interests of the Union and its Member States and that has not concluded an agreement with the Union in accordance with Article 17 of Regulation (EU) 2025/1106, fulfils the following cumulative conditions:

the third country has committed to provide a fair and proportionate financial contribution to the costs arising from borrowing, commensurate with the value of contracts awarded to entities established in that third country. Such contribution shall take the form of cash to the borrowing costs subsidy on the basis of a contribution agreement between the third country and the Union. It shall constitute external assigned revenue in accordance with Article 21(2), point (e), of Regulation (EU, Euratom) 2024/2509;

the third country has entered into a Security and Defence Partnership with the Union; and

the third country is providing financial and military support to Ukraine in a significant manner.

The Council implementing act shall specify, for each of the third countries concerned, to which defence products this provision is to apply, taking into account the conditions of this paragraph.

Upon entry into force of the Council implementing act, the third country shall be considered to be included among the EEA EFTA States and Ukraine for the purpose of Article 13(4) as regards those defence products.

The Council, acting by qualified majority, may amend the Commission’s proposal and adopt the amended text by means of an implementing decision.

REGULATION (EU) 2026/467 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 24 February 2026 implementing enhanced cooperation on the establishment of the Ukraine Support Loan for 2026 and 2027