Business practice often distinguishes between a virtual office, and a virtual address. Typically, a virtual address is a registered office address, provided for a consideration for the purpose of company registration, including a mail receiving service and, in some cases, a mail forwarding service. Beyond that basic level of service, however, a virtual office should include an opportunity to lease a meeting room, a mail forwarding service via e-mail or a dedicated phone line and an assistant.
The provider should designate the virtual office or address with the company’s corporate name and identification number. Otherwise, the company may face a fine of up to CZK 100,000. If the company is a VAT payer, it is required to notify the tax administrator of its actual registered office. Otherwise, the tax authority may impose a fine on the company of up to CZK 500,000, declare the company an unreliable taxpayer, and/or cancel its registration for VAT straight away.
Now and then, opinions are expressed that companies use virtual addresses or offices to avoid obligations to authorities, and other third parties. However, current legislation does not play into the hands of such dishonest businesses. Under the Civil Code, everyone (even a private entity) may invoke the actual registered office of a company as its primary place of business. Also, tax administration has recently carried out several audits to determine whether the information provided regarding the actual registered office of the company is correct. And in this respect, the tax administration requires proof in the form of documents to substantiate that the business activity is actually carried out in the given place.
It should be emphasised that the absolute majority of businesses use virtual addresses with good and absolutely legal intent. Such services are mainly suitable for those who do not need their own dedicated premises for their activities for various reasons, and the use of virtual space offers them lower costs and an opportunity to invest the money saved for implementing their business plans.
Common users of virtual offices are also the holding companies that do not implement business and are used solely for the purpose of holding and managing equity investments in subsidiaries, as is increasingly customary in the case of the so-called family or private holdings.