OPTIMIZATION OF VALUE-ADDED TAX THROUGH REORGANIZATION OF A LEGAL ENTITY: THEORETICAL AND PRACTICAL ANALYSIS

Abstract

The article presents a comprehensive theoretical and practical analysis of value-added tax (VAT) optimization through the reorganization of legal entities under the current tax legislation of Ukraine. Given the fiscal importance of VAT as one of the primary sources of public revenue and its high susceptibility to avoidance schemes, the study substantiates  the necessity of strategic tax planning as a means of ensuring both legal compliance and business efficiency. Particular attention is paid to the use of corporate reorganization – especially the procedures of spin-off and division – as  legitimate instruments for reducing the tax burden without creating VAT liabilities or violating tax law provisions. The research systematizes the legal framework and accounting mechanisms that allow for the structured and tax-neutral transfer of assets and liabilities in the context of legal entity reorganization. A methodological toolkit is presented for assessing the fiscal and operational effects of such transfers. The article models and illustrates these processes through detailed accounting entries that show the impact of such operations on both the company transferring the assets and the newly created legal entity. A key emphasis is placed on the structured comparative table that captures the essence of the financial flows during reorganization, providing a practical and transparent reference for financial professionals, accountants, and tax consultants. The findings reveal that reorganization may serve not only as a tool of operational restructuring but also as a strategic component of lawful tax optimization. Such measures contribute to improved liquidity, enhanced control over tax liabilities, and stronger financial resilience, especially in periods of economic uncertainty. The study proves that this approach enables businesses to preserve working capital, reduce fiscal risks, and improve the predictability of tax burdens across operational cycles. The paper concludes that applying reorganization procedures in full compliance with applicable tax legislation enables the achievement of long-term financial sustainability while maintaining transparency, accountability, and alignment with the principles of fair and responsible taxation.