Business splitting and unjustified tax benefit claims

What is happening

A chain of shops or cafés operates through several sole traders on the simplified regime: a shared brand, a shared accountant, the same IP address for filing returns. During the audit these become the tax office's main arguments, even though each outlet has its own staff, lease and revenue.

Some years ago a manufacturer moved its sales or logistics into a separate company, for reasons few people now remember. The tax office now says the sole aim was to stay within a special tax regime and assesses VAT and profits tax across the whole group.

An owner is considering a restructuring, or simply wants to know whether the current set-up looks like splitting. There is no audit yet, which leaves time to assess the risks calmly and decide what to do about them.

What the law says

• The limits on exercising rights in calculating taxes are set by Article 54.1 of the Tax Code: the tax base may not be reduced by misrepresenting business facts, and saving tax may not be the main purpose of a transaction.
• Tax offices usually rely on a combination of indicators: shared staff, premises, accounting, bank accounts and IT, interdependence, transfers of staff without any change in their duties, and participants' revenue sitting just below the special regime threshold.
• Such indicators do not in themselves prove splitting. What matters is whether each participant genuinely runs its own business with its own resources, and whether there were reasons for the division other than tax.
• Where splitting is established, settled practice is to determine the tax as if the arrangement had not existed: crediting the tax paid by participants under special regimes and allowing input VAT deductions. Checking that calculation often changes the final figure considerably.
• Since 2025 an amnesty has been available to those who voluntarily abandon splitting: subject to its conditions, the liability to pay amounts assessed for 2022–2024 on those arrangements may be extinguished. The conditions have to be checked against the particular group and its audits.
• Large splitting assessments also create risks for owners and directors, including subsidiary liability if the company later becomes insolvent, and we build the position with those consequences in mind.

What we do

• We analyse the group structure: how each participant came into being, its functions, staff, assets, and payments within the group and with customers.
• We reconstruct the business reasons for the division, such as different markets and risks, franchising, requirements of major customers, licences or new partners, and assemble the evidence for them.
• We take the indicators the tax office relies on one by one and prepare counter-arguments to each.
• We check the assessment: credit for tax paid by participants, VAT deductions, expenses, the base and periods, and prepare our own calculation where needed.
• We support the company through the audit: preparing staff for interviews, replying to requests and attending inspections.
• We prepare objections, the appeal to the higher tax authority and the commercial court application, and represent the company at every level.
• Where there is no audit, we assess the risks of the current structure and the options for changing it, including in the light of the amnesty conditions.

What we will need from you

• A group chart: the companies and sole traders, shareholdings, managers, dates of formation and tax regimes.
• Contracts within the group and with key counterparties: leases, franchise, agency and supply agreements.
• Staffing information: each participant's headcount, staff transfers and people holding more than one role.
• The participants' accounts and tax returns for the periods under audit.
• The audit report, decision or requests, if an audit is already under way.
• Any documents on why the separate entities were set up: minutes, business plans, correspondence with partners.