Business Splitting Among Sole Proprietors: One Wi-Fi Point and You Are Already "Splitting"

You share an office with two other sole proprietors (ФОП). The accountant sits at the next desk. One router. One internet connection. That is enough for the tax authority to flag you.

How the tax algorithm works

Every quarter the system of the State Tax Service automatically reviews the logs of the taxpayer's electronic cabinet. It sees a single IP address. It counts how many taxpayers use it. If there are more than seven of them and each has sales of over UAH 4 million, you acquire a risk of minor degree. That risk then quietly makes its way into an information and analytical report, and it can pull you into the audit schedule.

Order of the Ministry of Finance No. 524 of 2 June 2015 expressly allows this. No inspector manually verifies whether you are genuinely related. Just the algorithm.

We covered the other data sources the tax service draws on in What the tax authority sees in 2026.

One court of appeal, two opposite approaches

And this is where it gets interesting. The courts still cannot agree among themselves on whether that figure is enough.

In case No. 420/7777/25 the Fifth Administrative Court of Appeal put it plainly: the Procedure does not require any breakdown. The tax authority owes no explanation. The audit stood.

In cases No. 420/12564/25 and No. 420/14023/25 the same court of appeal ruled the other way. With no period stated, no methodology and no list of the "neighbours" sharing the IP address, the report proves nothing. The audit was set aside. The court even referred to earlier positions of the Supreme Court holding that the absence of a methodology is itself a violation.

One instance. Three cases. Two opposite approaches. While the Supreme Court stays silent on the IP criterion specifically, the outcome of your dispute depends on which panel you draw.

An IP address is only a flag

An IP address on its own does not prove business splitting. It is only a flag. But it is that flag that brings the audit to your door. And once the audit is under way, the inspector will be looking for whether you are in fact selling a single product through several sole proprietors, whether the same people keep the books for all of you, and whether the log-in dates in the electronic cabinet coincide.

Most accounting firms and coworking spaces still operate on one external address. Many sole proprietors have no idea that their "Wi-Fi point" has already been counted.

For the wider picture see Business splitting after 2028, Part I and Part II: foreign economic activity.

What can be done now

When the audit order arrives, try demanding that the tax officials produce the full information and analytical report with a breakdown. If it states no period and no methodology, the audit results are worth challenging. Where it is practical to do so, separate your internet connections. At least for reporting purposes.

While the courts argue with themselves, the worst thing you can do is sit and wait in the hope that it will pass you by. The algorithm is already running. It is not waiting for you to work things out.

Frequently asked questions

How many sole proprietors on one IP address create a risk?

Under the current approach of the State Tax Service, a risk of minor degree arises when more than seven taxpayers use a single IP address and each has sales exceeding UAH 4 million.

Does a shared IP address prove business splitting?

No. It is only a risk indicator that may lead to inclusion in the audit schedule. Splitting is proven by a combination of facts: a single product, shared bookkeeping, and matching log-in dates in the electronic cabinet.

Can an audit triggered by the IP criterion be challenged?

Yes. Part of the case law of the Fifth Administrative Court of Appeal (cases No. 420/12564/25, No. 420/14023/25) sets aside audit results where the report contains no period, no methodology and no list of the taxpayers sharing the IP address.

What should a coworking space or accounting firm do?

Where technically possible, separate internet channels for different taxpayers and document the independence of each business: separate contracts, staff and product flows.

Court decisions relied on

• No. 560/2155/25 (Khmelnytskyi District Administrative Court, 5 June 2025; Seventh Administrative Court of Appeal, 13 April 2026)
• No. 420/7777/25 (Odesa District Administrative Court, 30 June 2025; Fifth Administrative Court of Appeal, 30 March 2026)
• No. 420/12564/25 (Fifth Administrative Court of Appeal, 24 February 2026)
• No. 420/14023/25 (Fifth Administrative Court of Appeal, 31 March 2026)
• No. 420/5034/25
• No. 500/3664/24 (Eighth Administrative Court of Appeal, 28 January 2025)
• No. 520/813/26 (Second Administrative Court of Appeal, 10 July 2026)