Splitting a Business Into Multiple Companies Because of VAT?

Divide and conquer?
However, if you use corporate restructuring to evade taxes, it could end up costing you dearly.

Many business owners believe that as long as the law does not explicitly prohibit owning multiple companies, such a structure cannot be problematic. The reality, however, is considerably more complex.

The risk arises primarily when companies lack an economic rationale and exist mainly to split up revenue, avoid VAT registration, or secure lower tax rates.

The Financial Administration is investigating, in particular:
– the same business activity conducted through multiple companies;
– switching between companies after reaching a certain level of revenue;
– dividing clients between VAT-registered and non-VAT-registered entities.

Ownership of multiple companies is not a problem in and of itself. What matters are the reasons for their existence, their actual independence, and the real economic substance of the entire structure.

Together with Tomáš Demo, we discussed this in more detail on the Highgate Talks podcast: