In the 21st century, in the age of widespread digitization and computerization, brick-and-mortar offices are becoming a thing of the past. Owning your own physical space creates numerous problems, and above all, generates costs that a budding entrepreneur cannot afford. Furthermore, if business is largely conducted online, the luxury of “four walls” and a desk is completely unnecessary. More and more businesses are choosing to forgo the office altogether and opt for a virtual office. Is this legal?
A virtual office isn’t a typical office. It’s safe to say that it lacks most of the features of a physical, tangible office. Broadly speaking, it’s a service that allows multiple entities to share a single business registration address. Some companies pride themselves on having dozens or even hundreds of entities registered in one location. This service is invaluable for those working in the freelance world, such as freelancers.
A budding entrepreneur, and often many other established business owners, can’t afford all the expenses. A few hundred złoty in Social Insurance contributions significantly strains their budget. Additional costs, such as office space, create such costs that running a business becomes simply unprofitable. Renting office space is pointless. This explains the high demand for virtual office services. For a relatively small fee, entrepreneurs receive the address necessary for registration. Depending on the company offering such solutions, other amenities are also available, such as mail collection, accounting support, conference room rental, and more.
A virtual office is a fully legal service that any entrepreneur can use. Contrary to appearances, it’s not exclusively intended for freelancers and startups, but for anyone looking to save money. In the past, there have been some ambiguities surrounding virtual offices, especially regarding tax issues. On several occasions, the Tax Office questioned the possibility of registering a business in this type of office and ultimately refused to issue a Tax Identification Number (NIP). In 2014, following a decision by the Supreme Administrative Court, the situation became clear. Businesses can be conducted anywhere, including using virtual offices and coworking spaces.
Given the above, no tax office can refuse a prospective entrepreneur the right to register their business if they use a virtual office. A virtual office is therefore legal in every respect. There’s only one condition: the company providing the virtual office service must have the landlord’s consent to sublease it to third parties. The tax office of the registered business will be the one with jurisdiction over the registered office of the company providing the service.
Refusal to assign a Tax Identification Number by the Tax Office
Virtual office services are relatively common among entrepreneurs, especially beginners. There was some controversy about the legality of this solution, but in 2014, everything became clear. The Supreme Administrative Court confirmed that this service is completely legal, and therefore, tax offices cannot refuse to issue a Tax Identification Number (NIP) to anyone who uses it. What is the situation now?
Between 2011 and 2013, heads of tax offices issued 371 decisions refusing to issue Tax Identification Numbers (NIPs) to entities that declared their registered office address or place of business in a virtual office. The Act of October 13, 1995, on the principles of recording and identifying taxpayers and payers (abbreviated as the NIP Act) clearly specifies when and for what reasons the head of a tax office may issue a decision refusing to issue a NIP. There are only four such cases:
Issuing a negative decision regarding a Tax Identification Number (NIP) is therefore in no way legal. Of course, the tax authority can, and even should, verify whether the registered office address provided in the declaration is correct, whether it exists, whether it is consistent with the register, etc.
The binding regulations in this matter are Council Implementing Regulation (EU) No 282/2011 of 15 March 2011, laying down implementing measures for Directive 2006/112/EC on the common system of value added tax, which states that: “the place of a taxpayer’s registered office is the place where the functions of the undertaking’s central management are exercised.” The Civil Code has a slightly shorter definition; Article 41 states that the registered office of a legal person is the place where its management body is located.
Simply put, every entrepreneur has the full right to choose any business location. Whether they choose rented premises, their own apartment, or a virtual office is up to them and their preferences. Freedom in choosing this location is limited solely by the rights and freedoms of other individuals, including their property rights. Therefore, the Tax Office cannot refuse to issue a Tax Identification Number (NIP) unless there are grounds to believe that the financial interests of the state or its citizens are at risk, for example, the virtual office is intended to facilitate tax fraud, leading to extortion, etc. Refusals may therefore occur in specific sectors, such as trading in liquid fuels, gold granules, construction work, or trading in electronic equipment.