War Damage and Loss Assessment under Ukraine's Official Methodology

When business assets in Ukraine are damaged or destroyed as a result of the armed aggression, the key question for an owner, lender or investor is how to document the losses so that the figures hold up before a court, a compensation body or an international institution. Ukraine has a dedicated legal framework for this: the Damage Determination Procedure approved by Cabinet of Ministers Resolution No. 326 and the Methodology approved by Joint Order No. 3904/1223 of the Ministry of Economy and the State Property Fund of Ukraine. Kanzas performs damage and loss assessments strictly within this framework — and knows it from the inside: the firm's valuers completed training on this Methodology at the State Property Fund of Ukraine.

What the official Methodology covers

The Methodology (Joint Order No. 3904/1223 of 18 October 2022, registered with the Ministry of Justice on 2 December 2022 under No. 1522/38858) applies to enterprises of all forms of ownership and covers three mechanisms: assessment of direct (actual) losses caused by the loss, destruction or damage of property; assessment of lost profits caused by the impossibility of, or obstacles to, business operations; and assessment of recovery needs. The mechanisms are built on national and international valuation standards and on World Bank damage-assessment guidance — which is what makes reports prepared under the Methodology suitable for international compensation mechanisms and cross-border litigation support.

How the framework is structured

Resolution No. 326 of 20 March 2022 approved the state-level Procedure for determining damage and losses caused to Ukraine by the armed aggression. It divides all damage into categories — from housing to the environment — and assigns a responsible authority and a calculation methodology to each. Damage and lost profits of enterprises fall under sub-paragraphs 18 and 19 of paragraph 2 of the Procedure, implemented through Order No. 3904/1223. In short: the Resolution defines who counts what, and the Methodology defines how to count.

Key rules an international client should know

• The valuation date is any date from 24 February 2022 onwards (but not earlier than 23 February 2022) up to the filing of a claim or compensation application; a damage assessment report remains valid until the date of actual compensation.
• Direct losses are measured as the difference between the value of the asset before and after the damage; the relevant bases of value include market value, replacement cost, reproduction cost and gross development value.
• The Methodology uses the US dollar as the unit of account: book values as of 31 December 2021 are converted at UAH 27.28 per dollar, and the result is translated into hryvnia at the National Bank of Ukraine rate as of the valuation date — a structure designed with international claims in mind.
• A statutory supporting document confirming that the loss resulted from the armed aggression is mandatory — survey acts and records of the State Emergency Service of Ukraine and other authorised bodies.
• Physical inspection is performed subject to security and access restrictions; the Methodology expressly allows the use of technical means and information sources — photo and video records and Earth remote-sensing data.

The Methodology covers all principal asset categories: real estate, machinery and equipment, vehicles, inventories and biological assets, and integral property complexes.

Lost profits and recovery needs

Direct losses are only part of the picture. A dedicated section of the Methodology governs lost profit assessment: foregone profit is calculated from the pre-war financial statements and documents confirming full or partial suspension of operations. A further mechanism is recovery needs assessment, based on the concept of a modern equivalent asset — an asset of similar purpose and equivalent utility, but built to a modern design with modern materials and technologies.

Quality control: state review of the report

For state and municipal property, an expert review of the damage assessment report by the State Property Fund of Ukraine is mandatory. In any dispute — including litigation — deficiency of an assessment can be established only through such a review, so a weak report means a repeated valuation and lost time. Kanzas has passed this test at the most demanding level: the firm's damage assessment report for the State Emergency Service of Ukraine successfully passed the State Property Fund's review. International institutions have already returned poorly substantiated loss calculations, so the quality of a Methodology-compliant report is not a formality — it protects the claimant's money and time.

Questions and answers

Can the report be used outside Ukraine? The Methodology is aligned with international valuation standards and World Bank guidance, uses the US dollar as its unit of account, and is designed to support compensation claims, including before international bodies. We prepare the underlying analysis so it can be presented to foreign advisers and institutions.

As of what date are losses assessed? As of the date fixed in the engagement: not earlier than 23 February 2022 and not later than the filing of the claim or compensation application. The report remains valid until compensation is received.

Is a state review of the report mandatory? For state and municipal property — yes, it is arranged by the State Property Fund of Ukraine. For private property, a review is performed at the request of an interested party, and courts rely on its results whenever the quality of an assessment is disputed.

How much does a damage assessment cost? We quote the fee and timeline after receiving the list of damaged assets with technical details, the available supporting documents and the purpose of the assessment: we evaluate the scope and agree a fixed fee and schedule before the contract is signed.

Write to us at [email protected] or message us in Telegram, Viber or WhatsApp — we advise international clients entirely in writing, from the first scoping question to delivery of the report.

---

Related services: War damage assessment · Lost profit assessment (war-related) · Recovery needs assessment · War damage to real estate