Several sole proprietors in one spot: allowed or not?

Regulatory framework: what is expressly allowed and not prohibited
Ukrainian legislation does not contain a direct ban on two or more single‑tax sole proprietors operating in the same premises or at the same retail spot. Each entrepreneur may choose the same address for business activities, register this site with the tax authorities and conclude a separate lease or sublease agreement.
Tax practice also confirms that having several sole proprietors at one address is not, by itself, a violation and may be a lawful way of doing business without creating a legal entity. At the same time, fiscal authorities carefully examine such cases for signs of “business splitting” and hidden employment relations, which creates additional risks for entrepreneurs.

Mandatory formalities for each sole proprietor
If several sole proprietors work in one booth, each of them must:
file form No. 20‑OPP, indicating the shared address as their own place of business;
have their own lease agreement (or other legal title) for use of part of the retail space or the entire premises;
use their own cash register/POS (if required for the type of activity) and hold a separate licence for excisable goods;
possess their own source documents for the goods and keep separate income records.
Only under these conditions can the tax authorities recognise that several independent business entities operate at one retail spot, rather than a single “split” business.

Staff and cash register: key risk areas
The most sensitive issues are staff and the organisation of settlements. If only one salesperson works at the point of sale and actually sells goods on behalf of two sole proprietors, the risks include:
recognition of undeclared employment (when the salesperson is formally employed by only one entrepreneur but sells goods for both);
additional tax assessments and penalties for hidden labour relations, as well as claims that the structure constitutes “business splitting” to reduce the single tax.
From the regulators’ point of view, it is safer when each sole proprietor has separate employees, or the same salesperson is officially employed by several entrepreneurs at once (under different employment contracts and payrolls). It is also crucial to clearly separate goods and cash discipline: one cash register — one sole proprietor, separate receipts, separate reports.

Single‑tax group and sales format
For sole proprietors in group 1 of the single tax, additional restrictions apply: they may trade only from market stalls and may not use hired staff. If the “booth” is located at a market and officially registered as a retail place, several sole proprietors may work there, but each must comply with the rules of their own tax group.
For groups 2–3 and the general tax system, a shared address is less problematic, yet the tax authorities still analyse income levels, cost structure, staff and business management for signs of artificial splitting of one business into several sole proprietors. If they find evidence of a single management centre and unified business, they may reassess taxes under the general regime and apply anti‑avoidance rules.

Joint activity as an alternative model
One way to legalise a de facto “shared booth” is to conclude a joint activity agreement between the entrepreneurs without creating a legal entity. Such an agreement allows the parties to formally set out responsibilities: ownership shares, rules for distributing income and expenses, and management of staff and risks.
Although the agreement itself does not necessarily have to be registered with the tax authorities, the parties must carefully record joint operations and income to avoid claims that they have created a hidden legal entity or misclassified payments. This model is better suited to long‑term partnerships where entrepreneurs genuinely pool resources rather than merely “splitting” the cash register to keep within single‑tax limits.

Practical conclusions for entrepreneurs
Single‑tax sole proprietors may trade in one booth or at one retail spot only as independent entities, with separate contracts, cash registers, staff and documentation for goods. The mere fact of a shared address is not illegal, but without proper formalisation the tax authorities may treat the situation as business splitting or undeclared employment, with all related financial and criminal consequences.
If you have any questions or issues related to organising joint trading by several sole proprietors at one retail spot, arranging staff, choosing the single‑tax group or minimising the risks of “business splitting”, please seek tailored legal and tax advice — properly structuring your business model will protect you from fines and conflicts with the regulators.

Author – Yuliia Popadyn, attorney in tax and housing law at the law firm “Legal Company ‘WINNER’.