Five Steps To Change Your Office Space Successfully

Many companies seek for an optimal office space and often need to move because of expansion, cost reduction or to change to suit the convenience of their client base. If your company is expanding you might have considered relocating to the CBD area to gain better proximity to clients and target businesses.

Conversely, some companies may be looking to cut overall cost, as the lease for office space continue to grow parallel to China’s enormous market. To diverge from such issues, many businesses are choosing to move to second and third tier cities to continue operations. Whether your potential office move is fueled by a financial motive or a corporate command, Legal Manager Michelle Yang at ECOVIS Beijing has posed a few points to consider before your big move.

Below are five of the most significant factors that can hinder your time and resources when changing your office address in China. They concern both foreign and domestic companies, in both provincial and district areas:

1. If you are shifting district or city, deregulation is most likely needed. However, if your company is merely moving within the same district, the process of ‘tax transfer’ should suffice. Ultimately this is displayed on the Taxation Certificate, which ought to be kept conveniently on-hand in the company files alongside your business license, in case of impromptu check-ins by bureau officials. After the move, your company must then complete the new address registration process at the local tax bureau.

Whether you are required to file for tax clearance or tax registration transfer, it can be a tedious and time consuming process and is best not attempted unless necessary. The exception of course, is to hire professional assistance to help guide you through these processes and streamline any complications. When done properly, future legal and regulatory transgressions can be prevented likewise.

2. As a foreign company it is advised to take extra diligence and care when filing tax forms. You may require extra professional assistance to navigate around clauses embedded in China’s law and regulation. As a large company whom yields high revenue and thereby contributing a higher tax margin to the community, certain tactics and experience may be needed for a successful tax bureau transfer.

If the respective company does not succeed in negotiating formal transfer agreements with their bureau, it results in the added predicament of commuting back and forth from their new office location to the original tax bureau to submit ongoing forms and clearances.

3. Another obstacle you may come across refers to the process of updating the new company address on the existing business license. In this case, the working visa is not affected, however according to Article 20 in the Regulation and Management of Employment for Foreigners in China Handbook, you will need to undergo several technical processes to update your business license at the local public security departments. This mandate must be approached in within ten days after obtaining the extension of employment in China, otherwise there may be legal consequences and higher surveillance by the tax bureau in the future.

4. When many offices move they fail to update their registration address at the Administration of Industry and Commerce (AIC). This fallacy will affect many different departments that could possibly require this information; including the police station registration, the labour, tax and statistic bureau, and more. This can often result in a collaborative and staircase effect, in which case each department would have make the approval of request (Certificate Of Approval) before the handing it to the next. If not carried out properly a written penalty will be inflicted on the company concerned, resulting in acute transgressions. The problem here is that the warning record would be displayed publicly on the Beijing Corporate Credit Website, which will not result in the best reputation or image for the company.

5. For foreign companies there is an additional step to the application process. By moving the address of your office, you will be obligated to gain the Certificate Of Approval at the commercial bureau. This may be time consuming as the headquarters of your company may be invited to offer input and resolution. It is also imperative to check the expiry date of your company’s visa, as there may be regulation for renewal after relocation of office space.

Use the flowchart below to help determine the general process of relocating your business.

Despite of all of the mentioned burdens, Michelle nonetheless recommends the move if it is financially vital or significant for the business. She indicates that it could mitigate revenue loss and serve good purpose for the long-term wellbeing of the company and it’s target customers. Provided that the company is mindful of the risks and strategically outweigh the pros and cons.

	Richard Hoffmann is a Partner at ECOVIS Beijing China. Richard obtained an honor’s degree in law and worked in Germany, America and China for various prestigious law firms prior to joining ECOVIS. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV. Contact: richard.hoffmann@ecovis.com
Ecovis Beijing is the trusted tax and legal advisor of several embassies and official institutions in China. It specializes in mid-sized international companies and focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up to our Newsletter or give us a call  +86 10-65616609 (ext 811/806)   or contact us directly via Beijing@ecovis.com