Institutional Principles of Developing the Budgetary Space of Ukrainian Regions in Comparison With European Financial Practices

In view of the need for the country’s restoration, the study of regional-level budget processes in Ukraine in relation to European financial practices is of particular importance in the context of building a national model of financial support. The aim of the study is to determine the strategic directions of institutional reform of the budget space of the regions of Ukraine through a comparative analysis of fiscal decentralization models of EU countries. The study employed the following: methods of comparative institutional analysis, statistical comparisons, and legal analysis of regulatory changes in 2021–2024. The analysis made it possible to assess the impact of martial law on the autonomy of local budgets and identify key differences from European practices. The results showed that a high level of revenue autonomy in Ukraine (68.9%) involves targeted subventions with a strong influence of the central government. At the same time, some countries (Poland, Romania) having a low level of autonomy (over 30%) prove their adaptability to macroeconomic shocks. The need to establish independent fiscal institutions, codify medium-term goals for local budget autonomy, and restore accountable local agencies after the end of martial law is identified. The budget space of the regions evolved unstably in 2021–2024. Decentralization combined revenue autonomy with resilience, but centralized war financing removed personal income tax, exacerbating inequality and reducing efficiency. Compared with the EU, Ukraine has lower fiscal autonomy due to limited powers, transfer dependence, and vulnerability to central government decisions. It is proposed to enshrine 75–80% community autonomy, create independent fiscal institutions by EU standards, accelerate governance reform, and restore self-government. Further research should focus on empirically assessing institutional quality and the ability of the governance system to adapt to post-conflict recovery.