The legislation governing the activities of professional Business Address Services Providers has recently changed

A new IM Decree was recently issued, amending previous IM Decree No. 7/2017 (VI.1.), which is meant to govern the activities pursued by professional Business Address Services Providers (hereinafter referred to as “BASP”), (which earlier entered into force on 1 July 2017), the effective date of such new decree being 19 July 2017.

The most important novelty factor introduced by the new legislation is that while specialist BASPs were previously only authorised to pursue their activities with the involvement of properties, of which the BASP was the sole, registered owner in the Property Register, or properties, with regards to which the BASP was officially granted with a right of use by the property owner, and this fact being officially registered in the underlying Property Register, now BASPs will be able to offer their services in a more diverse number of cases, given that it is no longer a pre-requisite to meet the above described pre-conditions, in cases when the BASP is able to obtain the prior consent of the property owner, and provided that the parties agreeing to the provision of such services (i.e. the BASP and its Client) are able to meet one of the following additional conditions: (a) the BASP and the Client are affiliated companies, or they hold a major ownership share or business stake in the other entity, or (b) the BASP is officially registered as the Client’s formal service agent in the underlying Company Register, or (c) there is a long-term agreement in place between the parties for the provision of bookkeeping services, in addition to the BASP services being rendered, meaning that in such additional cases the BASP is now also enabled to provide the specialist services.

Other elements of the new legislation are meant to lay down the rules applicable to the Services Agreement in place between the parties to such services, the obligations of the BASP to safeguard the Client’s official documentation archives and certain assets, the rules applicable on how to display the Client’s name on the related property, i.e. serving as the Client’s business address, how to officially accept post on behalf of the Client, as well as the mandatory obligation to report on the fact of Business Address Services being provided by the BASP, with regards to each Client, to the Tax Authority. As for how to display the Client’s name on the property, the new decree states that the Client’s name must be displayed on the building by the BASP in a way properly visible from the street, and as for how to receive mail on behalf of the Client, the new decree states that mail must be accepted on behalf of the Client at the business address registered this way directly, no altering location is accepted for the receipt of mail.

The deadline set for the parties to amend the Services Agreement already in place between them, to properly reflect the changes to the rules, is extended by one year, i.e. till 30 June 2018, or in case there is no written Services Agreement as yet in place between the parties, the parties will be obliged to arrange for signing one by the same deadline.