Is it permitted to register a letterbox company as the registered office?
The establishment of a so-called letterbox company, where a company moves its legal address to a place where it is virtually inactive, is a topic that is often discussed in the business world.
There may be various reasons for this approach, including tax advantages, discretion, representative purposes or legal considerations. But is it permissible to register a letterbox company as your registered office?
The answer to this question is complex and depends on various factors and the laws of the country in question. There are some important aspects to consider here:
1. legality
The legality of letterbox companies varies from country to country. In some countries it is perfectly legal and accepted to register a company in a place where it does not conduct any operational business. In other countries, however, such practices are illegal and can be prosecuted.
It is not prohibited per se in Germany. Non-residents of Germany can also register a business.
In general, according to § 14 GewO, a business that is to be taken up in Germany must be properly registered.
The forms used for this purpose require the business premises to be specified. Since the incorrect or incomplete registration of the trade according to § Section 146 para. 2 No. 2 GewO constitutes an administrative offense and mere correspondence addresses cannot replace the permanent establishment, the address from which the company operates must be indicated.
Can the address of a logistics and fulfillment service provider be specified as the company headquarters?
No, this does not meet the requirements of the legislator.
The address at which the company operates must be stated in the business registration.
A logistics and fulfillment service provider is only a vicarious agent, even if it stores the retailer’s goods and ships them to the end customer.
The service provider does not take over the main activity of the registered company.
- It must be possible to send documents (including business and legal correspondence) to the company at the registration address by post.
- A company must have its own telephone and fax numbers at the registration address.
- The company must have permanent access to the address with secure storage of important company records and documents.
- The registration address at which a company is domiciled must be a summonable address.
In relation to companies, a summonable address is a postal address at which a legal party can be found in order to facilitate rapid communication.
For example, the logistics service provider for companies would have to store the mail, telephone and important company documents. However, if the debtor defaults, the creditors are also at the door, because the service provider would be the contact person for the registered company.
Add more company addresses
Now some companies want to have a prestigious address, for example on Ballindamm in Hamburg, Berlin or Frankfurt and not in Buxtehude.
Or a company wants to set up a subsidiary with a different business address and telephone number.
A company can have several business addresses in Germany, but only one registered office
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For such cases, for example, the service provider ebuero ➚ fulfills the above-mentioned points of correspondence.
2. tax advantages
Tax advantages are a common reason why companies set up letterbox companies. In countries with more favorable tax rates, registering a company there can result in the company having to pay less tax.
So-called offshore companies are legal entities that are registered in a jurisdiction other than the owner’s home country. They are often used for international business transactions and to protect assets from seizure by creditors.
It is important to note that tax avoidance or tax evasion is illegal and will be prosecuted.
For example, a letterbox company in Ireland is not really an option. Ireland wants offices, permanent employees and local managers. As Ireland has no natural resources, they are happy to promote foreign investment and start-ups. Ireland is very popular with tech companies such as Google, Apple, IBM, Twitter, Amazon and TikTok.
3rd business activity
In some countries, such as Germany, a company must actually demonstrate economic activities at the location of its registered office in order to be classified as legal.
This means that simply registering in a place where no business is conducted can be problematic.
This is why fulfillment service providers generally do not offer this service, even though it is obvious to the customer due to the storage of the goods and order processing.
4. reputation
The use of a letterbox company can have both a positive and negative impact on a company’s reputation.
While good-sounding business addresses are promising, the approach can be considered dubious if it becomes known.
5 Legal consequences
The use of a shell company can have legal consequences, especially if it is used to avoid legal obligations or liability issues.
The legal situation can be complicated, so it is advisable to seek legal advice before deciding on such a structure.
Conclusion:
The use of a letterbox company as a registered office is a complex issue that depends on many factors, including the country in which the company operates, the nature of the business and the tax rules.
It is crucial to understand the laws and regulations in your country and seek legal advice where necessary to ensure you are operating within the legal boundaries.
In any case, transparency and compliance with the law is an important principle that is highly valued in the business world.
