The tax authority is checking registered office addresses. Risks for remote businesses have increased

Recently, the tax authorities have stepped up scrutiny of the accuracy of companies’ registered office addresses. In practice, this means inspections to verify the business’s actual presence at the address stated in the state registration.

If the inspectorate determines that the company is not in fact located at its registered office address, serious consequences are possible:

• an entry (mark) being made that the information is unreliable;
• difficulties with banks;
• suspension of transactions on bank accounts.

There is a lawful solution

If the functions of the executive body are transferred to a management company, it is possible to build a compliant legal model:

• the management company provides premises by way of sublease at its own registered office address;
• the permanently acting executive body is located at that address;
• employees may work remotely.

From a legal perspective, this is a fully compliant structure: under the Civil Code, the location of a legal entity is deemed to be the location of its permanently acting executive body.

As a result:

• the address is recognised as reliable;
• the risk of accounts being blocked is reduced;
• the likelihood of disputes with the tax authority decreases.

Under this model, the supervisory authorities have no grounds for claims, including for blocking accounts. It is well suited to companies with a distributed team or without a permanent office.

Authors: Aliaksandr Antonau, Ilya Astashov.

If you are considering transferring the functions of the executive body to a management company, REVERA will help you build a safe and sustainable legal structure.