Punjabi is not alone in using another company’s registered address, as well as its outsourced services, as a way to legally get started in an overseas market. The sharing of domicile addresses is accepted in Europe as an ideal way to start up in a new market. This tactic helps bridge language and culture barriers and provides an easy alternative for setting up in a foreign country where one might notknow the language and business culture. Virtual offices are making foreign markets not so foreign.

A U.S. Commerce Department study found that companies that export grow 15 to 20 percent faster than those focusing solely on the domestic market. These exporting companies are 17 percent more profitable and pay wages 15 percent higher than their domestic-focused counterparts. The result is that companies are finding it possible to sell goods and services on a global level without jeopardizing their base business in the United States.

Exporting goods and services and setting up subsidiaries in a European country can bring profits through tapping into new markets. Knowing how to do this cost effectively while lowering the risks will increase the return on investment.

Within the European Union (EU), Germany, for example, is seen as an attractive market for foreign businesses, thanks to its skilled workforce, educated population, well developed infrastructure, and use of the Euro currency. Foreign investors traditionally have felt welcomed in Germany. In particular, there is neither a specific law governing foreign investment in Germany nor any requirement for German participation in ownership or management of any business established by foreign investors.

Another of Germany’s attractions is its lack of restrictions on foreign ownership of real estate. Foreign investors may freely remit dividends and interest abroad (often without withholding tax, according to the specific tax treaty). Germany also has treaties for the avoidance of double taxation. It is important to structure an investment in Germany to take advantage of these treaties.

A company that is considering setting up a legal entity in Germany should first obtain a registered address. For those not ready to spend cash on a foreign market, it is wise to purchase a domicile address. A foreign company can rent an address in Germany to begin the paperwork process that leads to the formation of the company’s German legal entity.

As would any postal address, the German domicile address allows mail to be sent and received and serves as the virtual establishment for the newly registered company. Just one address in Germany can house multiple virtual offices.

Mail is recipient-based, not "address-based, in Germany. This means that mail will be delivered only to an address where the name of the company or person is also displayed. It is therefore necessary to have the company’s sign prominently displayed at the address as well as on the mailbox.

Obtaining a domicile address for a virtual office often is done at an office center or office services company, where there is administrative support that can forward the mail on, or where the office services company can assist in setting up the corporate entity.

Taking a walk through a virtual office would seem more reality than virtual reality. The customer’s company logo welcomes you, signaling that the visitor has come to the right place. If the CEO of the virtual office establishment flew into Germany to check on the German operation or simply to have a meeting with his new contacts on the German market, he would be greeted by the bilingual receptionists, given his sorted (and translated) mail, and could either sit at his desk or meet in one of the many conference rooms available. If the telephone rings into the reception area for him, the phone displays the name of the company the caller is trying to reach so that the receptionist answers according to the company name. From the caller’s side, the virtual office seems very real.

"Most of the companies coming to office service companies offering virtual offices through a domicile address grow quickly and healthily, as they have made their experiences here on the market and can steer corrections before going into the investment phase," said Anne Koark, founder and president of Trust in Business, Hallbergmoos, Germany.

"Companies wanting to enter the German market profit from the low risk and low cost setup of a fully operational German address–the domicile address," said Koark. "This gives them recognition as being on the market but leaves them the opportunity to first test the ground without long-term liabilities of office leases and office equipment investments."

In the age of e-mail, the reaction times of the companies involved are not impaired and the market is worked as if the company was fully in Germany. Marketing measures also are easier to implement.

A firm does not necessarily need to transfer employees to its office abroad to set up operations. By not transferring employees, budgets are spared from expensive expatriate packages. In some cases, the expatriate package might cover such costs as housing rent paid by the company, a company car, language or cultural training for the employee and family, additional relocation costs, and all that revolves around creating a "homelike" environment for the employee placed on an overseas assignment.

An employee-free virtual office acts as a remote-controlled location with an administrative department fulfilling the roles of human resource support, office management, marketing, public relations, graphic design, and advertising support. The staff can even translate the mail from German to English and redirect it, answer the phone in different languages, and send mail with the company’s logo on the postage label. All services work together in collaboration with the U.S. corporate office to get the branch office on its feet in the new foreign market.

But transferring employees to the overseas location is also a viable alternative. In this case, the role of the virtual office changes to a business center–yet the address stays the same. The office services company that rented the domicile address typically also can rent fully equipped office rooms. Administrative support can be outsourced to assist the relocated staff in areas that they are not able to handle themselves.

For example, most companies bring a core staff of sales and technical employees over to Germany and, through their office services company, outsource human resource support, payroll, bookkeeping, marketing, public relations, advertising, translations, and training. With a short-term agreement as well as fully equipped offices, telephones and telephone reception, in-house copy machines, and large and small conference rooms for meetings, the business center allows companies the freedom and flexibility to grow at their own pace and not be locked down with high investments. Once the company is ready to leave the nest, it can choose to buy, rent, or build an independent office for itself.

Small and medium-sized firms as well as start-ups can benefit from the low cost and lack of investment offered by the virtual office concept. Larger global companies can get a feel for a new market through their virtual office experience before deciding on a permanent location for their European subsidiary.

A virtual office is an ideal way to test the waters overseas before jumping into the deep end of the pool.

Amy Hart is an international business development consultant at Trust in Business, Hallbergmoos, Germany. She can be reached by telephone at +49-811-555-070, by e-mail at Amy@Trustib.com, or at the website www.trustib.com.

Stacey van Hooven is an attorney affiliated with the law firm, Jacob Associates and consultant on American-related business and legal issues. She can be reached by e-mail at Stacey@aol.com.