diff --git a/org.eclipse.jgit.test/tst/org/eclipse/jgit/transport/UploadPackLsRefsFileRepositoryTest.java b/org.eclipse.jgit.test/tst/org/eclipse/jgit/transport/UploadPackLsRefsFileRepositoryTest.java
new file mode 100644
index 000000000..7d5fc6101
--- /dev/null
+++ b/org.eclipse.jgit.test/tst/org/eclipse/jgit/transport/UploadPackLsRefsFileRepositoryTest.java
@@ -0,0 +1,123 @@
+/*
+ * Copyright (C) 2021, Saša Živkov <sasa.zivkov@sap.com> and others
+ *
+ * This program and the accompanying materials are made available under the
+ * terms of the Eclipse Distribution License v. 1.0 which is available at
+ * https://www.eclipse.org/org/documents/edl-v10.php.
+ *
+ * SPDX-License-Identifier: BSD-3-Clause
+ */
+package org.eclipse.jgit.transport;
+
+import static org.hamcrest.MatcherAssert.assertThat;
+import static org.hamcrest.Matchers.is;
+import static org.junit.Assert.assertTrue;
+
+import java.io.ByteArrayInputStream;
+import java.io.ByteArrayOutputStream;
+import java.io.IOException;
+import java.util.Objects;
+import java.util.function.Consumer;
+
+import org.eclipse.jgit.internal.storage.file.FileRepository;
+import org.eclipse.jgit.junit.LocalDiskRepositoryTestCase;
+import org.eclipse.jgit.junit.TestRepository;
+import org.eclipse.jgit.lib.Sets;
+import org.eclipse.jgit.revwalk.RevCommit;
+import org.eclipse.jgit.revwalk.RevTag;
+import org.junit.Before;
+import org.junit.Test;
+
+// TODO: refactor UploadPackTest to run against both DfsRepository and FileRepository
+public class UploadPackLsRefsFileRepositoryTest
+		extends LocalDiskRepositoryTestCase {
+
+	private FileRepository server;
+
+	private TestRepository<FileRepository> remote;
+
+	@Before
+	@Override
+	public void setUp() throws Exception {
+		super.setUp();
+		server = createWorkRepository();
+		remote = new TestRepository<>(server);
+	}
+
+	@Test
+	public void testV2LsRefsPeel() throws Exception {
+		RevCommit tip = remote.commit().message("message").create();
+		remote.update("master", tip);
+		server.updateRef("HEAD").link("refs/heads/master");
+		RevTag tag = remote.tag("tag", tip);
+		remote.update("refs/tags/tag", tag);
+
+		ByteArrayInputStream recvStream = uploadPackV2("command=ls-refs\n",
+				PacketLineIn.delimiter(), "peel", PacketLineIn.end());
+		PacketLineIn pckIn = new PacketLineIn(recvStream);
+
+		assertThat(pckIn.readString(),
+				is(tip.toObjectId().getName() + " HEAD"));
+		assertThat(pckIn.readString(),
+				is(tip.toObjectId().getName() + " refs/heads/master"));
+		assertThat(pckIn.readString(), is(tag.toObjectId().getName()
+				+ " refs/tags/tag peeled:" + tip.toObjectId().getName()));
+		assertTrue(PacketLineIn.isEnd(pckIn.readString()));
+	}
+
+	private ByteArrayInputStream uploadPackV2(String... inputLines)
+			throws Exception {
+		return uploadPackV2(null, inputLines);
+	}
+
+	private ByteArrayInputStream uploadPackV2(
+			Consumer<UploadPack> postConstructionSetup, String... inputLines)
+			throws Exception {
+		ByteArrayInputStream recvStream = uploadPackV2Setup(
+				postConstructionSetup, inputLines);
+		PacketLineIn pckIn = new PacketLineIn(recvStream);
+
+		// drain capabilities
+		while (!PacketLineIn.isEnd(pckIn.readString())) {
+			// do nothing
+		}
+		return recvStream;
+	}
+
+	private ByteArrayInputStream uploadPackV2Setup(
+			Consumer<UploadPack> postConstructionSetup, String... inputLines)
+			throws Exception {
+
+		ByteArrayInputStream send = linesAsInputStream(inputLines);
+
+		server.getConfig().setString("protocol", null, "version", "2");
+		UploadPack up = new UploadPack(server);
+		if (postConstructionSetup != null) {
+			postConstructionSetup.accept(up);
+		}
+		up.setExtraParameters(Sets.of("version=2"));
+
+		ByteArrayOutputStream recv = new ByteArrayOutputStream();
+		up.upload(send, recv, null);
+
+		return new ByteArrayInputStream(recv.toByteArray());
+	}
+
+	private static ByteArrayInputStream linesAsInputStream(String... inputLines)
+			throws IOException {
+		try (ByteArrayOutputStream send = new ByteArrayOutputStream()) {
+			PacketLineOut pckOut = new PacketLineOut(send);
+			for (String line : inputLines) {
+				Objects.requireNonNull(line);
+				if (PacketLineIn.isEnd(line)) {
+					pckOut.end();
+				} else if (PacketLineIn.isDelimiter(line)) {
+					pckOut.writeDelim();
+				} else {
+					pckOut.writeString(line);
+				}
+			}
+			return new ByteArrayInputStream(send.toByteArray());
+		}
+	}
+}
diff --git a/org.eclipse.jgit/src/org/eclipse/jgit/transport/UploadPack.java b/org.eclipse.jgit/src/org/eclipse/jgit/transport/UploadPack.java
index 988901526..e88e59b9a 100644
--- a/org.eclipse.jgit/src/org/eclipse/jgit/transport/UploadPack.java
+++ b/org.eclipse.jgit/src/org/eclipse/jgit/transport/UploadPack.java
@@ -1086,6 +1086,7 @@ private void lsRefsV2(PacketLineOut pckOut) throws IOException {
 
 		rawOut.stopBuffering();
 		PacketLineOutRefAdvertiser adv = new PacketLineOutRefAdvertiser(pckOut);
+		adv.init(db);
 		adv.setUseProtocolV2(true);
 		if (req.getPeel()) {
 			adv.setDerefTags(true);