Legal address: what is it and what address to choose?
Current legislation does not explain the exact interpretation of the term “legal address”.. It defines the term “location of legal entity” as a location of executive bodies of the company, determined by the state registration in the founding documents.
Legal address of the company is important for the determination of a tax inspectorate, which will be controlling the company for correct tax payments. Prior to the state registration of a company, you need to have a draft agreement establishing a legal address of the company with the owner of the chosen office space.. After the company registration, you should have the corresponding agreement executed.
It is necessary to choose a legal address with a guarantee of its existence and the possibility to prolongate the contract.
The main factors for selecting a legal address are frequently the following:
- Proximity to the location of your company or your accounting company.
- Presence of informal friendly relationships in a particular tax inspectorate.
There are several methods to chose a suitable legal address for registering a new company:
- 1. Registration at the home address of a participant (shareholder)
In order to register the company at someone’s home address (shareholder address) it is necessary to:
- Obtain consent of all adult members of the family that resides at this address.
- Obtain a copy of the financial account statement.
- Obtain an extract from the “house book”.
Remember that a company registered at someone’s home address has to obtain an additional registration as a small enterprise and the tax inspectorate may hold internal inspections of the deignated residence..
2. Registration at an actual address
It is possible to find a real office and to agree with the owner of the premises to use this address for the company registration.
In that case, you have to check several points:
- The owner must posses all documents confirming his ownership rights (certificate of ownership, etc.).
- The owner must be registered in the tax inspectorate that controls this address.
- In the event you will receive the address from a person wishing to sublease the premises, you must check the lease contract and obtain a written consent of the owner to sublease the premises. In the event the owner is a state entity, it might be hard for you to obtain any consent at all.
3. Purchase of a legal address
Purchasing a legal address is convenient for those businessmen, who do not want to rent expensive apartments and/or would like to choose the most amicable tax inspectorate in order to exclude frequent inspections. Such a contract provides a businessman with a legal address, but other obligations of the Parties remain only on paper and do not come into force. There are several forms of contracts that can be applicable for obtaining a legal address:
- Lease contract (sublease contract). Under a contract of lease, the Lessor undertakesresponsibility to grant temporary possession and temporary use of property to the Lessee for a compensation. And as a consequence, provide the Lessee with a legal address.
- Cooperation agreement, contract on joint activity, or simple partnership contract. Subjects of these contracts are different, but they all establish among other obligations the provision of a legal address.
- Contract on provision of a legal address. This form is the most convenient form because the subject of the contract directly establishes the use of a legal address.
Typically, state authorities send correspondence to the legal address of a company. Thus, from the very beginning it is necessary to pay attention to post services, which can be purchased additionally with the legal address.