Ukraine Lets Private Developers Dig Its Arms Plants Underground. Denmark Backs the Route Abroad

Kyiv's October 22 decisions let private developers build protected underground space and rent or sell it to arms makers, and cut import taxes for partner-funded weapons production.

Ukraine is turning protected factory space into a product that developers can sell or rent to arms makers, shifting the upfront cost of shielding its industry from Russian strikes toward private capital. Prime Minister Serhii Koretskyi announced on October 22 that private companies could begin building such facilities that day, tying the decision to intensifying Russian attacks. A companion decision exempts imports for partner-funded weapons production from duty and VAT.

Resolution No. 1494, amended

The Ministry of Defence's announcement widens who can commission underground production facilities under Cabinet Resolution No. 1494 of November 19, 2025. Investors and developers can finance construction with their own or borrowed funds, then transfer whole facilities or parts through ownership, lease or other permitted use. The mechanism covers underground workshops and the above-ground structures needed to run and protect them.

Eligible manufacturers include Defence City residents, companies on the register of state-contract contractors and firms the ministry designates as critically important. An investor-enterprise agreement signed before construction must set financing, timelines, transfer procedures and terms of use.

Any partial transfer must cover at least 25% of the facility's total area and be fit for production. A lease or fixed-term use right must run at least one year, extendable at the enterprise's request until martial law ends. The ministry has five working days to review the draft agreement and the investor's documents.

Koretskyi also announced duty- and VAT-free imports for weapons production financed by foreign partners, with clearance simplified through a "single window." The customs resolution covers materials, units, assemblies, equipment and components. One decision supplies the protected floor space; the other lowers the cost of the inputs that partner money buys.