Registered address – virtual office in Poland – dispute resolved in favour of entrepreneurs

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Recently, running a business at a virtual office address is becoming more and more popular. This option is convenient and attractive for entrepreneurs for numerous reasons. However, this form of running a business raised some doubts on the part of tax authorities that did not want to respect the consequential address information, demanding the address of conducting actual business operations.

The dispute was finally resolved by the Supreme Administrative Court, whose resolution is also binding in the broader context and also covers the issues of selecting the address as the company seat in the Register of Business Activity and National Court Register.

What is virtual office service?

In the basic form, virtual office service is about providing an address under which business activity is registered. There are entrepreneurs who run business registered at their address of residence, but this solution constitute a sort of invasion of their privacy.

Virtual office service allows to separate the private sphere and keeping the private residential address for oneself, from the professional sphere and registering the business at a different address. Virtual office service does not need to be limited to using the provided address. It may be extended to include additional services related to administrative support or correspondence handling.

This solution allows to avoid spending associated with keeping a regular office and the costs connected with acquiring front office equipment and employing office staff. Thanks to using such service, correspondence is forwarded to the entrepreneur at the e-mail address of their choice in the form of scans.

What was the dispute about?

A limited liability company submitted a NIP-2 identification request to a tax office. Pursuant to the Act on the rules for registration and identification of taxpayers and tax remitters of 13 October 1995, an identification request of taxpayers who are not natural persons specifically includes the full and shortened name (business name), organizational and legal form of business, company seat, REGON identification number, registering authority or recording authority together with the number assigned by the authority, a list of bank accounts, the address at which the accounting books are kept and the subject of business activity stipulated in accordance with current classification standards.

Tax authorities denied the assignment of a NIP number to the company, claiming that the identification request does not meet the specific guidelines for the request, as it does not include a precise company address (office number).

What is more, Head of Tax Chamber indicated that there are no management functions of the company carried out at the indicated address and that the address is merely lent for the purpose of company registration and collecting correspondence on the company’s behalf.

In response to the decision, the company filed a complaint to Voivodeship Administrative Court, which on 5 August 2014 gave an important decision that ended the dispute over whether tax authorities may deny to issue a NIP number to an entrepreneur who indicated virtual office as company seat.

The decision of the tax office was not lawful. The court indicated that contrary to the stance of the tax authority, the company’s identification request is compliant with Article 5.3 of the Act on rules for registration and identification of taxpayers and tax remitters and specifically includes company seat address.

From the provisions of the current regulations one cannot draw a conclusion that company seat address has to also include, apart from a city, street, and number, an office number, especially in the situation when real estate does not have separate offices or apartments.

According to the court, in the process of assigning a NIP number, authorities are not entitled to verify whether there are management functions are carried out at the indicated address. Moreover, the circumstance that at the indicated address there are other companies registered must not have any impact on the issue of assigning a NIP number.

A cassation complaint against the aforementioned decision was filed to Supreme Administrative Court by Head of Tax Chamber in Łódź, and was denied with the decision of 5 August 2014 regarding the case no. II FSK 3549/13, and thus the stance of Voivodeship Administrative Court in Łódź and the company was upheld.

The court highlighted the fact that it is in the company’s competence to assert the proper collection of correspondence at the indicated address and it is not within the competence of the tax authority to determine whether in the future there will be difficulties in letter collection or carrying out tax inspections. Not meeting the obligations in this matter brings the danger of the provisions of Article 151a of Tax Ordinance Act of 29 August 1997.