Registration of a Branch/ Representative Office of a foreign company in the Russian Federation

 

When foreign investors decide to do business in the Russian Federation, they usually establish a Limited Liability Company (LLC), a branch or open a representative office. But most companies prefer such organizational and legal forms as a branch or representative office of existing foreign companies, although the creation of a branch or the opening of a foreign representative office in Russia is associated with a more complex and costly accreditation procedure compared with the registration of an LLC. Nevertheless, many companies choose this particular way of doing business. Why? And what is the difference between a branch and a representative office?

 

A Representative Office is a division of a foreign legal entity that is created in order to represent and protect its interests. The Representative office concludes transactions on behalf of a foreign legal entity, controls their execution, and protects interests. Most often, the purpose of opening a representative office of a foreign company in Russia is non–profit activity. It is not possible to open a bank account for the representative office of the company.

 

Branches have all the functions of a Representative office, but, in addition to them, they can also conduct business activities: manufacture and sell goods, provide services and other operations.

 

At the same time, neither a branch nor a representative office is a legal entity from the point of view of the law.

So what is the advantage of these particular forms of business organization?

 

Advantages of doing business through a branch/ representative office

 

ü Facilitated transfer of funds from a branch or representative office to the parent company and the possibility of direct financing from the  budget of a foreign company;

 

ü Reduction of currency control by government agencies in comparison with LLC.

 

Legislation and regulations

 

 In accordance with Federal Law No. 160-FZ dated 07/09/1999 "On Foreign Investments in the Russian Federation" (as amended. Federal Law No. 106-FZ dated 05.05.2014 "On Amendments to Certain Legislative Acts of the Russian Federation") a foreign legal entity, the purpose of creation and (or) whose activities are of a commercial nature and which bears property responsibility for obligations assumed by it in connection with the implementation of said activities on the territory of the Russian Federation, has the right to carry out activities on the territory of the Russian Federation through a branch or representative office from the date of their accreditation, unless otherwise established by federal laws. A foreign legal entity ceases to operate on the territory of the Russian Federation through a branch or representative office from the date of termination of the accreditation of the branch or representative office (paragraph 3 of Article 4 of Federal Law No. 160-FZ of 07/09/1999).

 

Carrying out activities by a foreign legal entity through a branch or representative office in the territory of the Russian Federation without accreditation is a violation of the legislation of the Russian Federation.

 

The day of accreditation or termination of accreditation of a branch or representative office of a foreign legal entity is the day when the corresponding entry is made in the state register of accredited branches and representative offices of foreign legal entities.

 

Accreditation of a branch/representative office

 

Since January 1, 2015, by Decree of the Government of the Russian Federation No. 1372 dated 12/16/2014 "On Amendments to the Regulations on the Federal Tax Service and Invalidation of Certain Acts of the Government of the Russian Federation", the functions of accreditation of foreign branches and representative offices (with the exception of representative offices of foreign credit organizations) are assigned to the Federal Tax Service of Russia.

 

The powers of accreditation of foreign branches and representative offices (with the exception of representative offices of foreign credit organizations) by Order of the Federal Tax Service of Russia dated 12/22/2014 MMV-7-14/668@ are assigned to the Interdistrict Inspectorate of the Federal Tax Service of Russia No. 47 in Moscow (Moscow, Dolgorukovskaya str., 33, p. 1).

 

Foreign branches and representative offices accredited before January 1, 2015, included in the state register of accredited branches and representative offices of foreign legal entities, are considered accredited until the expiration of their accreditation (paragraph 7 of Article 8 of Federal Law No. 106-FZ dated 05.05.2014).

 

Foreign branches and representative offices whose accreditation period expires have the right to apply to the accrediting body within 30 calendar days before the expiration date of this accreditation for accreditation in accordance with Federal Law No. 160-FZ (paragraph 8 of Article 8 of Federal Law No. 106-FZ dated 05.05.2014).

 

In case of termination of activities by a foreign legal entity in the Russian Federation through a branch, representative office in connection with the expiration of the accreditation period or in connection with the submission to the accrediting body (Interdistrict Inspectorate of the Federal Tax Service of Russia No. 47 in Moscow) of an application for termination of accreditation of a branch, representative office, additional submission by this foreign legal entity to the tax authority at the place registration of the application for de-registration is not required.

 

Attention! Information for branches and representative offices of foreign legal entities accredited before January 1, 2015, information about which is included in the state register of accredited branches and representative offices of foreign legal entities.

 

The expiration of the accreditation period of foreign branches and representative offices and their failure to submit documents for new accreditation to the accrediting body entails the termination of accreditation and, accordingly, activities on the territory of the Russian Federation. Such foreign branches and representative offices are subject to de-registration with the tax authorities (paragraph 5 of Article 84 of the Tax Code of the Russian Federation).

 

The powers of accreditation of foreign branches and representative offices (with the exception of representative offices of foreign credit organizations) by Order of the Federal Tax Service of Russia dated 12/22/2014 MMV-7-14/668@ are assigned to the Interdistrict Inspectorate of the Federal Tax Service of Russia No. 47 in Moscow (Moscow, Dolgorukovskaya str., 33, p. 1).

 

The accreditation procedure

 

The accreditation procedure includes the following steps:

 

• Submission of a package of documents to the CCI of the Russian Federation to certify the number of employees of a branch/ representative office of a foreign legal entity.
• Submission of a package of documents to the Federal Tax Service No. 47 in Moscow.
• Obtaining a certificate of entry in the state register.
• When accepting documents, there are specific requirements for signatures, seals, apostille, translations and the contents of documents. Failure to comply with these requirements entails refusal of accreditation, in which the amount paid as a state fee is not refunded.

An office/ legal address is required for the accreditation of a representative office.

We can provide a legal address, this service includes:

 

1. Provision of a legal address and documents for accreditation of a representative office and opening of bank accounts;
2. Postal services (receipt of correspondence at the specified address and its transfer to representatives of the company).

The legal address is provided for 6 months, with the possibility of further extension.

 

There are no restrictions on obtaining branch accreditation for a foreign company.

However, it is important to clarify the type of activity that the company is engaged in, and what the branch itself will do.

 

There are two ways to obtain accreditation:

- consistently: send a scan of the Charter, extracts from the commercial register, prepare a cover letter describing the activity and submit it to the Federal Tax Service No. 47 in Moscow for approval. After approval is received, you can prepare a set of documents for accreditation (apostille, send to the Russian Federation for notarized translations).

 

- in parallel: send the specified documents and immediately engage in apostille certification.

 

It takes more time sequentially, and in parallel - in case of refusal, you will have documents prepared that will not be useful later in the tax service (and this is an extra expense).

 

Duration of the accreditation procedure

 

When registering a representative office of a foreign company in Russia, it takes a lot of time to prepare properly executed documents. The procedure itself takes about 40 days, of which 1-3 working days are spent on certifying the number of employees of the company at the CCI of the Russian Federation, and another 25 working days are spent on registration with the Federal Tax Service.

 

The state fee for the accreditation of foreign branches and representative offices established on the territory of the Russian Federation, the fee for providing information contained in the state register of accredited branches and representative offices of foreign legal entities and related expenses

 

• For the accreditation of branches and representative offices of foreign organizations established on the territory of the Russian Federation, a state fee is paid – 120,000 rubles for each branch, for each representative office (paragraph 5 of Article 333.33 of the Tax Code of the Russian Federation). 
• For the provision of information contained in the state register of accredited branches and representative Offices of foreign Legal Entities – 200 rubles (Decree of the Government of the Russian Federation dated December 25, 2014 No. 1491 "On establishing the amount of payment for the provision of information contained in the State Register of Accredited Branches and Representative Offices of foreign Legal Entities, in the form of an extract from the register about a specific branch, representative office of a foreign legal entity persons or certificates of the absence of the requested information"). 
• The cost of certifying the number of employees in the CCI of the Russian Federation will amount to 21,000 rubles. 
• Additional expenses will be required for the services of a notary, an interpreter, as well as apostille affixing on documents.

List of documents for opening a representative office of a foreign company in Russia

 

An approximate list of documents for registration of a representative office in the Russian Federation is as follows:

• Application for accreditation;
• Constituent documents of a foreign legal entity with an apostille affixed and a notarized translation;
• an Extract from the register of foreign legal entities or another document of equal legal force confirming the legal status of a foreign legal entity, with an apostille and a notarized translation;
• A document confirming the registration of a foreign legal entity as a taxpayer in the country of origin, indicating the taxpayer's code (or an analogue of the taxpayer's code), with an apostille and a notarized translation;
• The resolution on opening a branch of a foreign company in Russia with an apostille affixed and a notarized translation;
• Regulations on the foreign branch, representative office;
• A Power of Attorney granting the head of a foreign branch or representative office in the territory of the Russian Federation the necessary powers with an apostille and a notarized translation;
• A document confirming the payment of the state fee.

 In what cases can accreditation be refused?

 

Most often, registration of foreign companies in Russia is refused in such cases:

• Lack of documents, violation of deadlines and requirements for their registration.
• Submission of false information about the company.
• The goals of establishing a branch or representative office contradict the legislation of the Russian Federation.
• Type of activity (for example, strategic).

Our services

 

We provide a full range of services in the field of accreditation of branches and representative offices of foreign companies, as well as support at all stages of the accreditation procedure:

 

• Advising on all issues related to accreditation
• Selection of the legal address and registration of documents for its confirmation
• Preparation of necessary statements
• Translation and notarization of documents
• Submission and receipt of documents to/ from authorized bodies.