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Virtual Office and Terminology for the business location and addresses (Part 3 of Founding a Company) ​

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Introduction ​

In this third article - if you have not read it, start with the first article - I continue telling you about the highlights of incorporating two companies in a holding structure in Germany. This article focuses on the business address and the surrounding terminology.

In follow-up post(s) I'll continue with the registration with the trade office and further highlights until finally having both companies ready.

Hi 👋

This is Kai Mindermann, the CEO of NuInnovate - with the vision of creating a world where every improvement serves a meaningful purpose. Just wanted to quickly say: Enjoy your day!

Overview ​

Both of the companies, the operative (NuInnovate) and the holding, are intended to not need physical office space or production facilities. Also, the customers and partners are expected to communicate via electronic ways and not by post. So there is no requirement from the perspective of the company to have a postal address. Yet, there are numerous laws and also common sense which require the companies to have a postal address. Of course, some institutions and governmental bodies will send physical mail for which they need a physical mail address. And there are some specific requirements for the different addresses as well. I'm fine with that, because I want to have my company to be reachable.

I wouldn't write this article if I would have a physical office space for it, but I don't. Further, I didn't want to use my private address for various reasons. So I looked for cheap actual physical office space but also for virtual addresses, which means they provide a regular post mail address and scan/forward the incoming mail.

Is there more than one kind of address? ​

You need an address for the company, simple, right? It can be, but it's important to understand that there are different kinds of terminology around it.

Most important, at least for me, was that there is a difference between the address of the company and the seat. The address defines where legal texts and other post is to be sent. The seat defines which court is responsible to handle legal disputes. And these don't have to be in the same state. Most companies will have the seat and the business address in the same municipal, but it's not required.

The address includes the zip code, street name and number, like you would write it for a physical mail. The seat is only the municipal, so not a concrete address.

Virtual Office ​

So I said I don't want to mix the business address with my private address too much. That's why I was looking for a service which provides my business with an address, that fulfills the legal requirements, and routes the physical mail / post to my private address or only sends me emails with scans of documents. Of course, I could also rent a physical office space, but currently and for the foreseeable future I don't need office space.

There are many such services in Germany, especially in major cities. Their marketing is often about providing your company a prestige address. I was looking more for a simple and cheap solution.

Three such providers, after filtering out the more expensive ones with representative offices, landed on my shortlist:

Important was that they explicitly stated that the address can be used for the commercial register. For many providers this meant that a higher tier was needed.

After checking once that the address actually exists and which other companies are located there, I decided for EVE Office. You can actually register with them prior to founding your company, so you can directly use that address, but there is a limited time until you need to provide them with the official documents, e.g. the entry in the commercial register.

Permanent(?) business establishment (Betriebsstätte) ​

You think you can now use the registered address of the company for everything where you need to provide your business' address, right? Actually no.

From my understanding very important for at least two cases are the actual physical locations from where you conduct your business. These are important for the (local) business tax (Gewerbesteuer) and also the mandatory membership at the (local) chamber of commerce (Industrie- und Handelskammer). Both are location specific and the law as well as the jurisdiction defined that they depend on the actual location from where the relevant business is conducted. These are called permanent business establishments (Betriebsstätten).

Especially important here is that it's not uncommon that the location of the management, or even more concrete, the location where the management regularly makes decisions, is different from the other parts of the company! Also keep in mind that there is something called business split-up (?) (Betriebsaufspaltung) which is not controlled by you but the tax authority when they notice that you operate (as in having a permanent business establishment of some form) within their area, and they expect you to pay (a portion of the overall) taxes there as well!

There are some articles (e.g. What kind of addresses do you need to provide the tax office) describing that it's also possible to use the virtual office address for that. But it's not really established, and you should really make sure to define that together with your tax authority.

Communication with the chamber of commerce / IHK in Stuttgart and Erfurt ​

After the businesses where registered at the Amtsgericht Stuttgart, the IHK Stuttgart sent the companies a letter stating that they assume for now that they are responsible for these companies (which in this case was right, as the permanent business establishment is in their area).

After a while also the IHK Erfurt assigned both companies a membership number. When I replied that both of the companies don't have a permanent business establishment in Erfurt they acknowledged that: They will "refrain from assessing contributions for the time being. Should we receive assessment bases for business premises in the Erfurt chamber district, we will reserve the right to make a subsequent assessment."

Some relevant laws ​

For the curious I created a list of relevant laws that mention requirements for addresses or the business seat:

  • § 8 Abs. 4 Nr. 1 GmbHG
    • "The registration must also include: 1. a domestic business address" ("In der Anmeldung sind ferner anzugeben: 1. eine inländische Geschäftsanschrift")
  • § 4a GmbHG
    • "The registered office of the company is the place in Germany specified in the articles of association." ("Sitz der Gesellschaft ist der Ort im Inland, den der Gesellschaftsvertrag bestimmt.")
  • § 40 Abs. 1 Satz 1 GmbHG
    • "list of shareholders to be submitted to the commercial register, showing their surname, first name, date of birth and place of residence." ("Liste der Gesellschafter zum Handelsregister einzureichen, aus welcher Name, Vorname, Geburtsdatum und Wohnort derselben")
  • § 5 Abs. 1 Nr. 1 Digitale-Dienste-Gesetz (DDG)
    • "Service providers must keep the following information, which must be easily recognizable and directly accessible, permanently available for business-related digital services that are generally offered for a fee: 1. the name and address at which they are established". ("Diensteanbieter haben für geschäftsmäßige, in der Regel gegen Entgelt angebotene digitale Dienste folgende Informationen, die leicht erkennbar und unmittelbar erreichbar sein müssen, ständig verfügbar zu halten: 1. den Namen und die Anschrift, unter der sie niedergelassen sind")
  • § 10 AO
    • "The place of management is the center of business management." ("Geschäftsleitung ist der Mittelpunkt der geschäftlichen Oberleitung.")
  • § 11 AO
    • "A corporation, association of persons or estate has its registered office at the place determined by law, articles of association, foundation deed or similar." ("Den Sitz hat eine Körperschaft, Personenvereinigung oder Vermögensmasse an dem Ort, der durch Gesetz, Gesellschaftsvertrag, Satzung, Stiftungsgeschäft oder dergleichen bestimmt ist.")
  • § 12 AO
    • "In particular, the following are to be regarded as permanent establishments: 1. the place of management" ("Als Betriebstätten sind insbesondere anzusehen: 1. die Stätte der Geschäftsleitung")
  • § 14 Abs. 4 Satz 1 Nr. 1 UStG
    • "An invoice must contain the following information: 1. the full name and complete address of the supplier and the recipient of the service" ("Eine Rechnung muss folgende Angaben enthalten: 1. den vollständigen Namen und die vollständige Anschrift des leistenden Unternehmers und des Leistungsempfängers")
  • Art. 246a para1 EGBGB
    • "their identity, for example their trade name, as well as the address of the place where they are established, [...] their telephone number, their e-mail address [...] the business address of the entrepreneur" ("seine Identität, beispielsweise seinen Handelsnamen, sowie die Anschrift des Ortes, an dem er niedergelassen ist, [...] seine Telefonnummer, seine E-Mail-Adresse [...] die Geschäftsanschrift des Unternehmers")

This list is not exhaustive!

What adresses and seats did I put in which form or application? ​

Summarizing a bit and making it concrete for what I did. I wanted to have

  • the business address at Johannesstr. 19, 99084 Erfurt-Altstadt (Thuringia)
  • the seat / "registered office" in Stuttgart (Baden-Württemberg)
  • the currently single permanent business establishment at my private address (which is fine because this is not made public, but only used by the tax office and similar)

Articles of association / model protocol ​

In the model protocol I provided Stuttgart as the seat for the company

For the shareholder and managing director / CEO you also need to provide details about them. This includes not the private address but, similar to the seat, the place of residence (along with the full name and birthdate). See above-mentioned § 40 Abs. 1 Satz 1 GmbHG "surname, first name, date of birth and place of residence".

This is also reflected in changes regarding the transfer of private addresses mentioned by the Bundesnotarkammer, Rundschreiben Nr. 3/2023 vom 25.05.2023. They need to identify you, obviously, and make sure the information provided for the registers like the commercial register are unambiguous to identify you again. Yet, that does not mean your private address needs to be put in there, but it is enough to provide the place (like in the municipal or town/city) of residence.

Business address for the application to the commercial register ​

For the application to the commercial register I provided the business address "Johannesstr. 19, 99084 Erfurt-Altstadt".

Questionnaire for tax registration (Fragebogen zur steuerlichen Erfassung) ​

For the questionnaire for tax registration I provided

  • as the business address same as above
  • for the different place of management I provided my private address
  • as the seat I put Stuttgart
  • as single permanent business establishment I provided one entry for the management with my private address

For the registration of the operative company (NuInnovate) I provided as address of the shareholder (holding company) its business address.

For the address required to be provided in the legal notice I use the companies business address, but also provide the seat (as that is also required).

Address for usage on invoices ​

On invoices, I use the companies business address.

Summary of Terms ​

Name (German)English
SitzSeat or registered office
SatzungssitzStatutory seat
VerwaltungssitzAdministrative seat
Ort der GeschäftsleitungLocation of the management
GeschäftsadresseBusiness address
BetriebsstättePermanent business establishment
Ladungsfähige AnschriftAddress usable for summons

See also this article from the IHK about the jurisdiction around the business seat (it's in German, though).

Next steps ​

So far I already covered a few aspects which I discovered, learned and experienced:

In the next post(s) I'll highlight the next steps, some of which I did not comprehend quickly in the - for me - necessary detail:

Disclaimer

The content provided in our articles is for informational purposes only and should not be construed as legal or tax advice. Readers are encouraged to seek professional advice from qualified professionals regarding their specific legal or tax situations.