Physical registered office and notification to the financial office

May 18, 2015

Companies in Prague using the services of virtual registered offices obtained requests from the financial office to report data on their real registered offices. We recommended to clients that they always react to such request immediately and properly explain the reasons why they use a virtual office.

For all companies, the request was issued as a part of the existing activity of the financial offices intended to combat virtual offices with the goal of delegating local jurisdiction to the less occupied tax administrators.

In addition, it cannot be ruled out for certain companies with foreign owners or executive directors that the objective of the administrator’s activities was also to inspect and redefine the place of taxable supply, which could have a significant adverse effect on the provision of services by the Czech VAT payers of these companies. For determining the place of such taxable supply, a decisive factor is the actual registered office for the purposes of VAT. Thus, it is important to eliminate the risk the tax administrator would conclude that this physical office, and hence the place of some taxable supply, is outside the Czech Republic based on information relating to the actual manner of performing the company’s activities. Under certain circumstances, this could have an unfavourable outcome for demonstrating the entitlement to VAT deductions from such accepted supplies.