diff --git a/Dockerfile b/Dockerfile
index 7319eac..49d412e 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -31,6 +31,22 @@ RUN apt-get update \
 COPY backend/ ./backend/
 COPY frontend/ ./frontend/
 
+# Generate VERSION file from git (fallback for version.py when .git is not available)
+COPY .git/HEAD .git/refs/ /tmp/git-refs/
+RUN cd /tmp/git-refs && \
+    if [ -f HEAD ]; then \
+      REF=$(cat HEAD | awk '{print $2}'); \
+      if [ -f "$REF" ]; then \
+        HASH=$(cat "$REF" | head -c 8); \
+        echo "1.8.0-0-g${HASH}" > /app/backend/VERSION; \
+      else \
+        echo "1.8.0-dev" > /app/backend/VERSION; \
+      fi; \
+    else \
+      echo "1.8.0-dev" > /app/backend/VERSION; \
+    fi && \
+    rm -rf /tmp/git-refs
+
 # Create non-root user for security + data directory for auth persistence
 # Using explicit UID/GID 1000 to match common host user and docker-compose settings
 RUN groupadd -g 1000 obsigate && useradd -u 1000 -g obsigate -d /app -s /sbin/nologin obsigate \
diff --git a/backend/version.py b/backend/version.py
index eddf40d..0fcfc67 100644
--- a/backend/version.py
+++ b/backend/version.py
@@ -37,8 +37,8 @@ def get_version() -> str:
     except (FileNotFoundError, subprocess.TimeoutExpired, OSError):
         pass
 
-    # Fallback: try reading from a VERSION file
-    version_file = _ROOT / "VERSION"
+    # Fallback: try reading from a VERSION file next to this module
+    version_file = Path(__file__).parent / "VERSION"
     if version_file.exists():
         return version_file.read_text().strip()