Company Registration: Choosing the Right Registered Address

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When starting a company, one of the step is choosing a suitable registered address. While it might seem straightforward, there are numerous regulations and practical considerations to keep in mind. Whether you’re looking at a residential area, a rental property, or a business center, each option comes with its own set of advantages and limitations. This guide will help you navigate the various possibilities for selecting the right registered address for your company.

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1. Legally Acceptable Areas for Registration

 

According to the Building Act, the Building Use Zoning Regulations, and the Usage Permit Management Guidelines, the location of your business must comply with zoning and usage laws:

1. Residential Areas: Primarily for housing purposes, but certain small-scale businesses (e.g., online services or handicraft workshops) may apply for exceptions.

2. Commercial Areas: Ideal for setting up offices and conducting business activities. It is the most commonly chosen area for company registration.

3. Industrial Areas: Suitable for businesses requiring manufacturing facilities or large-scale storage spaces.

 

⚠️ Note: Registering your company at a location that does not comply with zoning regulations may result in fines or a forced relocation.

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2. Using a Rental Property

 

For many entrepreneurs, using a rental property as the company’s registered address is a cost-effective and convenient option. However, it’s important to be aware of potential issues:

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Advantages

• Cost-saving: No need to rent separate commercial space, making it ideal for startups.

• Easy setup: With your landlord’s consent, the registration process is straightforward.

 

Key Considerations

1. Tax Implications: Converting a residential property to commercial use may result in higher property and land value taxes. Landlords might pass these costs on to tenants.

2. Relocation Costs: If you need to move, changing the registered address incurs a handling fee of approximately TWD 6,000–7,000 and can be time-consuming.

3. Business Type: Rental properties are best for businesses with stable growth and low relocation needs.

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Taiwan uses a partially integrated income tax system:

• Dividends received by individual residents are included in their taxable income and taxed at progressive income tax rates.

• Individual taxpayers can apply a dividend deduction, allowing for an 8.5% deduction of total dividends received (capped at NTD 80,000 per year per household).
   

3. Borrowing an Address from Friends or Family

 

Using the address of a friend’s or family member’s home or office can also be a practical solution, especially for new businesses. However, there are potential downsides to consider:

 

Advantages

• No additional rent: Ideal for startups with limited funds.

• Simplified process: If the address is already approved for business use, no further applications are needed.

 

Disadvantages

1. Tax Bureau Scrutiny: Multiple businesses sharing the same address may attract tax bureau audits and potentially disqualify your company from small-scale business tax benefits.

2. Rental Income Tax: The tax bureau may assume the property owner receives rental income and require them to pay taxes on it.

3. Long-term Stability: Changes in the property’s use or ownership could disrupt your business operations.

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4. Business Center Registration

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For businesses that don’t need a physical office, such as online stores or consulting firms, business centers offer professional address registration services.

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Advantages

1. Affordable: Monthly fees typically range from TWD 2,500 to 3,500 in Taipei City, 1500 to 3000  in Taichung City, making this a cost-effective solution.

2. Professional Image: A business address enhances credibility with clients.

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Disadvantages

1. Input Tax Credit Limitations: Companies registered at business centers are generally restricted from applying for tax refunds and can only carry forward input tax credits.

2. Strict Audits: The tax bureau may extend the invoice review process for companies registered at business centers, potentially delaying operations.

3. Industry Restrictions: Business centers are unsuitable for industries requiring storage or physical space, such as import/export businesses.

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5. Leasing a Physical Office

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For businesses with stable operations or plans for expansion, leasing a physical office is a logical next step. The tax implications depend on whether the landlord is an individual or a corporation:

1. Individual Landlord:

   • Rent ≥ TWD 20,010 per month: Subject to 10% withholding tax and 2.11% supplementary health insurance premium.

   • Rent ≤ TWD 19,999 per month: No withholding tax required.

   • Tip: Clarify tax obligations with your landlord before signing the lease to avoid disputes.

2. Corporate Landlord:

   • No withholding tax or supplementary health insurance premium.

   • Rent invoices can be used to offset business tax liabilities, providing tax savings.

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Don't know how to calculate the withholding tax for rent. Use Songjer's withholding tax calculator

 

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6. Special Requirements for Certain Industries

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Some industries have specific requirements regarding registered addresses:

• Import/Export Trade:

  • Exporters: Tax refunds are permitted, but the tax bureau requires exporters to have a physical office, not just a business center address.

  • Importers: Companies must provide proof of storage facilities; a simple registration address may not be approved.

• Regulated Industries:

  • Certain industries, such as funeral services, require office spaces of specified dimensions, making business centers unsuitable.

 

Conclusion

Choosing the right registered address for your company is more than just finding a convenient location—it’s about aligning with your business’s needs, compliance requirements, and long-term growth plans. While rental properties and business centers are suitable for startups, stable businesses benefit more from physical offices that enhance their professional image and tax efficiency. Understanding the pros and cons of each option ensures you make an informed decision, setting the stage for your company’s success.

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