Virtual Office and VAT Registration – Does a Virtual Address Make VAT Registration Difficult?
Many entrepreneurs starting a business face the question: if I register my business under a virtual office address, will the Tax Office cause problems with granting me VAT taxpayer status? In recent years, Poland has tightened the criteria for VAT registration to eliminate fictitious companies. This has led to concerns that a virtual address might be perceived as "suspicious." In this article, we analyze how a company's headquarters address affects the process of obtaining VAT registration and what to do to ensure it goes smoothly.
Virtual address and tax law
Let's start with the key information: Polish law does not prohibit VAT registration for a company with a virtual address. There is no regulation that would exclude such a possibility. On the contrary, there are court rulings confirming entrepreneurs' rights in this regard.
Key court ruling: The judgment of the Provincial Administrative Court in Krakow from 2016 clearly stated that the mere use of a virtual office address cannot be the sole reason for refusing VAT registration (ref. I SA/Kr 516/16).
This means that the Tax Office should assess your company in terms of actual business activity, not the form of the address.
The VAT-R form is the basic document for registering as a VAT taxpayer
Why does the problem arise in the first place?
A few years ago, tax authorities began to look more closely at new VAT registrations because many carousel frauds and fictitious companies were detected. Some of them indeed used virtual addresses, which created the impression that "virtual address = potentially fictitious company." As a result, officials in some cases demanded additional explanations or even refused to register entities without their own premises.
However, such an approach was excessive and often challenged by courts. Today, Tax Offices have guidelines to analyze the entirety of circumstances, not just the address.
How does VAT registration work with a virtual address?
Typically, to register as a VAT payer, a new company submits a VAT-R form (VAT registration application) to the tax office. In the application, you provide your details, including the company address. When the address is virtual, you can expect that the office will:
- Request a document confirming the address – most often the address rental agreement (i.e., the agreement with the virtual office provider). It's worth attaching a copy of it already when submitting the VAT-R, even if there is no formal requirement to do so – this will make it easier for the official verifying the application.
- May call you for an interview or to provide additional explanations – sometimes the Tax Office wants to make sure that the company is not a "shell company." You may receive a letter asking you to appear in person and, for example, present a business plan, agreements with future contractors, etc. This is not a rule, but you need to be prepared for it.
- Verify the reality of the company – they sometimes check whether a virtual office actually operates at the given address. Officials in large cities are well aware of the addresses of popular virtual offices (Warsaw has many of them). If your address is, for example, an office building in Wola operated by VBiuro, for an official, that's a clear signal that you're using a service, which is nothing unusual.
Additional questions from the tax office
During VAT registration, the tax office may ask about:
Place of business activity
Remember, the headquarters (registration address) is one thing, and the place of business activity might be something else. If you work from home, for example, or have a workshop in a different place than your headquarters address, it's worth noting this. Providing a virtual address doesn't exclude indicating an additional place of business activity (although for a sole proprietorship, usually place = headquarters). It's important that you can explain where you actually run your business (e.g., "I work remotely from home, and the address is for correspondence").
Existing facilities
They may ask where you keep documents, goods (if you trade), whether you have a warehouse, etc. The answers must be honest and logical: e.g., "My accounting office XYZ keeps my accounting documents," "I don't need a warehouse because I operate in intangible services," or "I store goods in a rented warehouse outside the city."
Planned transactions
A new VAT taxpayer may be asked who they plan to trade with, what amounts are involved. This is an element of risk assessment. If your company is just starting, it's natural that you don't have much data – however, it's worth showing preparation (e.g., "I have signed preliminary agreements with several clients for marketing services, I anticipate turnover of X in the first year").
Can the tax office refuse to register for VAT because of a virtual address?
Officially – no. As mentioned, the address cannot be the only reason for refusal. The tax office could refuse VAT registration if it concludes that the company doesn't exist at all or exists only pro forma (e.g., no contact with the taxpayer whatsoever, incomplete documents, contradictory information).
If you provide the required documents and respond to any summons, you have the right to expect a positive decision. In practice, the percentage of VAT registration refusals has increased in recent years, but this mainly concerns cases of obvious abuses.
An entrepreneur acting in good faith, even with a virtual address, has every chance of obtaining a VAT ID number. However, if you do experience a refusal based explicitly on the argument "because the address is virtual," it's worth knowing that you can appeal such a decision (and ultimately take the case to an administrative court where – as the cited judgment shows – the case law is favorable to entrepreneurs).
How to increase chances for smooth VAT registration?
Here are a few tips:
Attach the address agreement
As we've already suggested, submit a copy of the agreement with the virtual office along with the VAT-R. This will anticipate questions about the legal title to the premises.
Write a cover letter
You can attach a brief explanation that the business is mobile/remote in nature and that's why you're using a virtual address, while assuring that all correspondence will be collected and the company is actually operating. This is not mandatory but shows openness.
Be reachable
Provide a current phone number/email in the application and answer it. Often, before VAT registration, an official may want to call with brief questions. If they can't make contact, they'll treat it as a red flag.
Prepare for a possible visit
In extreme situations (rarely), the tax office might announce that they wish to see the place of business. In the case of a virtual office, they probably won't be looking at "your desk" because you don't have one – but they might, for example, ask for a meeting. Be ready for such a meeting at the tax office or at the virtual office headquarters.
Use a reputable virtual office
Tax offices are familiar with which addresses are professional virtual offices and which raise doubts. VBiuro, as a recognized provider in Warsaw, is well-known, which adds credibility. If a company were to use a very exotic address, it might trigger greater inquiry.
Good preparation for a tax office interview increases the chances of a positive application outcome
Example of successful VAT registration
Case study: Mr. Christopher and his online store
Mr. Christopher is establishing a limited liability company dealing with online trading. He doesn't need an office, so he chooses a virtual address at VBiuro.
When submitting registration documents to the National Court Register and VAT-R to the Tax Office, he attaches the address rental agreement and a letter explaining that he has a warehouse in Lodz (provides the address) and the office operates virtually because sales are conducted online.
The Tax Office calls him for a brief interview – an official asks about anticipated turnover and foreign contractors. Christopher presents a business plan and shows an agreement with a supplier.
A few days later, he receives a decision registering the company as an active VAT taxpayer. The virtual address was not a problem because everything was clearly documented.
Summary
A virtual address should not hinder obtaining VAT status, as long as your company actually conducts business and you can demonstrate this. The key is transparency with the Tax Office: providing the address agreement, collecting correspondence, being ready to provide explanations. Virtual office is a legal solution, and tax offices are increasingly accepting its prevalence.
Do you have concerns about VAT registration under a virtual address?
Contact VBiuro – we'll share our experience and help you prepare the appropriate documents. This will ensure that the process of registering as a VAT taxpayer goes smoothly, and you'll be able to focus on developing your business.
