Tax risks of artificial business fragmentation: analysis of judicial practice in 2024 - 2025

This study examines tax relations arising from the use of business-splitting schemes as an instrument of tax optimization. The analysis focuses on the judicial practice of arbitrazh courts and the positions of tax authorities that shape the criteria for qualifying such schemes in 2024–2025. The article addresses the pressing issue of distinguishing legitimate tax planning from bad-faith tax evasion within the framework of Article 54.1 of the Tax Code of the Russian Federation. Particular attention is devoted to identifying the key features of artificial business splitting and to the emerging trends in case law that refine the doctrine of counteracting abuses of tax benefits. The relevance of the topic stems from the absence in current legislation of both a precise definition of “business splitting” and criteria for its legitimacy, which generates legal uncertainty and disputes. The methodological framework combines formal-legal, comparative-legal, and historical-legal approaches. The formal-legal method enabled the systematization of tax norms; the comparative-legal method allowed for a juxtaposition of domestic and foreign approaches (GAAR, substance over form); while the historical-legal method facilitated a reconstruction of the evolution of the tax benefit doctrine and the identification of persistent trends in recent case law. The aim of the research is to trace the main tendencies in judicial practice and to substantiate approaches to the assessment of business-splitting schemes. The scientific novelty of the study lies in its comprehensive analysis of recent arbitrazh practice, designed to identify consistent indicators of bad-faith business splitting and to evaluate the legal mechanisms for its prevention. The article explores both theoretical and practical dimensions of Article 54.1 of the Tax Code and advances the author’s own vision of criteria for the admissibility of business structures. The findings support the need for legislative codification of clear indicators of artificial business splitting and explicit prohibitions on the application of special tax regimes (simplified taxation system, patent system) to such schemes through amendments to Articles 11, 346.12, and 346.45 of the Tax Code of the Russian Federation. Implementation of these proposals would reduce legal uncertainty, promote consistent law enforcement, and ensure a fair balance between the interests of the state and taxpayers.

tax law, tax planning, tax optimization, tax risks, judicial practice, law enforcement practice, taxpayer’s good faith, abusive business fragmentation, business splitting, artificial business splitting