July 15, 2022
A foreign company opens a branch in Russia: step-by-step instruction
Source: SberSolutions blog on Klerk.ru
Today, many foreign companies, expanding the horizons of their activities, enter new markets. However, it's one thing to work in your own country, where all the rules are known, the legislation and the "rules of the game" are clear, and another thing is to start a business in a territory where everything is different. Now we will talk about how to open a branch or a representative office for a foreign organisation in Russia.
What is the difference between a branch and a representative office?
Coming to the territory of the Russian Federation, a foreign organisation can organize a business without creating a new company in two ways - by opening a branch or a representative office.
A representative office is a subdivision of a legal entity created to represent and protect the interests of an organisation outside the location of the main company.
A branch is also a separate subdivision of a legal entity, organized outside the territory of the parent organisation, but at the same time capable of performing its functions, including those inherent in a representative office.
A representative office is a subdivision of a legal entity created to represent and protect the interests of an organisation outside the location of the main company.
A branch is also a separate subdivision of a legal entity, organized outside the territory of the parent organisation, but at the same time capable of performing its functions, including those inherent in a representative office.
We will describe in details the procedure for opening a branch/a representative office of a foreign legal entity.
So, let's go:
1. It's necessary to develop a regulation on a branch/a representative office of a foreign
legal entity. There's no any special form, it is drawn up freely, but as a rule, it includes a number of important elements:
1. It's necessary to develop a regulation on a branch/a representative office of a foreign
legal entity. There's no any special form, it is drawn up freely, but as a rule, it includes a number of important elements:
- Legal form, name and address of the parent company;
- Name and location of the branch/the representative office in the RF;
- Types of activity of the branch/the representative office and purposes of its creation;
- Management features;
- Persons, who will manage the branch/the representative office and etc. The full requirements are set forth in article 22 the Federal Law of 09.07.1999 No.160-FZ "On Foreign Investments in the Russian Federation". The Regulation shall be approved by an authorized person/a corporate body of a foreign legal entity.
2. Form and prepare a decision on the establishment of a branch/a representative office. Prepare documents from the parent company.
For the accreditation of business in Russia, a branch/a representative office of a foreign legal entity needs the following documents with respect to the parent company:
Documents from a foreign company shall have a consular legalization or an apostille (depending on the jurisdiction of the foreign company). An exception is when an international agreement between the country of the company registration and the Russian Federation provides for the exemption from documents legalization (as, for example, in case with Kazakhstan and Belarus).
It's possible to submit documents for accreditation within 12 months since making a decision on the creation of a branch/a representative office, whereas all documents, submitted in a set, shouldn't be older than 12 months.
A full list of necessary documents and requirements thereto was set forth by the Decree of the FTS of Russia of 27.07.2021 № ED-7-14/691@.
If your documents contain more than one list, they shall be bound and numbered. On the back of the last list of the bound document, please indicate the number of lists and put signature of the responsible person. No corrections are allowed.
For the accreditation of business in Russia, a branch/a representative office of a foreign legal entity needs the following documents with respect to the parent company:
- Foundation documents (as a rule, this is a Charter);
- An extract from the Register of Foreign Legal Entities (Trade Register) or another similar document, issued by the country where the company was registered, which confirms the legal status of the company;
- If the taxpayer's code isn't indicated in the extract – a tax certificate, confirming registration of the company in kind of a taxpayer in this country with indication of the taxpayer's code;
- Certificate of registration in the country of origin;
- Bank details;
- A power of attorney for the branch/the RO head.
Documents from a foreign company shall have a consular legalization or an apostille (depending on the jurisdiction of the foreign company). An exception is when an international agreement between the country of the company registration and the Russian Federation provides for the exemption from documents legalization (as, for example, in case with Kazakhstan and Belarus).
It's possible to submit documents for accreditation within 12 months since making a decision on the creation of a branch/a representative office, whereas all documents, submitted in a set, shouldn't be older than 12 months.
A full list of necessary documents and requirements thereto was set forth by the Decree of the FTS of Russia of 27.07.2021 № ED-7-14/691@.
If your documents contain more than one list, they shall be bound and numbered. On the back of the last list of the bound document, please indicate the number of lists and put signature of the responsible person. No corrections are allowed.
3. Fill out (in Russian) an application on the form 15AFP.
This application shall be signed by an authorized representative of a legal entity.
4. Apply to the Chamber of Commerce and Industry of the RF.
It's necessary to submit to the Chamber data on the quantity of foreign employees of the branch/the representative office and verify it.
It is always necessary to verify data, even when the number of such employees is zero.
Along with the data, you need to send a letter in a free format with a request to verify this data, as well as submit the documents, confirming activities of the branch of the foreign organisation in Russia.
A fee shall be paid for the verification of the quantity in the Chamber of Commerce and Industry of the RF. The amount depends on the method of documents submission, because its rate is periodically changed.
5. Pay the state duty for accreditation.
The amount of the state duty is 120 000 RUB per a branch. We would recommend attaching a confirmation of the state duty payment to the package of documents, submitted for accreditation.
6. Submit documents for accreditation to the Interdistrict Inspection of the FTS of Russia No.47 for Moscow.
At the stage of preparing and submitting documents, errors often occur that lead to accreditation being denied or suspended, for example, an incomplete set of documents, violation of the deadline or form of submission, discrepancies in the submitted documents with the requirements for their execution in the legislation, inaccurate or false information, contradiction of the goals of establishing a branch with international and Russian legislation, requirements for the organization of activities, etc.
This application shall be signed by an authorized representative of a legal entity.
4. Apply to the Chamber of Commerce and Industry of the RF.
It's necessary to submit to the Chamber data on the quantity of foreign employees of the branch/the representative office and verify it.
It is always necessary to verify data, even when the number of such employees is zero.
Along with the data, you need to send a letter in a free format with a request to verify this data, as well as submit the documents, confirming activities of the branch of the foreign organisation in Russia.
A fee shall be paid for the verification of the quantity in the Chamber of Commerce and Industry of the RF. The amount depends on the method of documents submission, because its rate is periodically changed.
5. Pay the state duty for accreditation.
The amount of the state duty is 120 000 RUB per a branch. We would recommend attaching a confirmation of the state duty payment to the package of documents, submitted for accreditation.
6. Submit documents for accreditation to the Interdistrict Inspection of the FTS of Russia No.47 for Moscow.
At the stage of preparing and submitting documents, errors often occur that lead to accreditation being denied or suspended, for example, an incomplete set of documents, violation of the deadline or form of submission, discrepancies in the submitted documents with the requirements for their execution in the legislation, inaccurate or false information, contradiction of the goals of establishing a branch with international and Russian legislation, requirements for the organization of activities, etc.
Legal support of a foreign company in Russia – consulting on the issues of opening a branch, preparation of documents, accreditation of branches and representative offices, support on labor, tax, business law, migration support of staff and other services from SberSolutions.
7. If you did everything correctly in the previous steps, the Federal Taxation Service will accredit you within 15 working days from the date of submission of the package of documents. During no more than 5 working days, the FTS will send or issue an information list on making an entry to the State Register of Accredited Branches, Representative Offices of Foreign Legal Entities, confirming the fact of accreditation. At practice, the FTS doesn't always comply with the established deadlines, that's why be ready that the actual deadline may be longer, but not significantly.
You can check the accreditation using the FTS service.
Now it remains to get the following:
According to pp.2 p.2 art.6 the Federal Law of 06.12.2011 No.402-FZ "On Accounting", a branch of a foreign company has the right not to maintain accounting pursuant to the Russian standards, but at that perform accounting of incomes and expenses for the purposes of taxation only in compliance with the RF laws.
This means that representative offices of foreign companies can perform accounting according to the International Financial Reporting Standards (IFRS), which are now largely used for the maintenance of accounting in Russia.
If a company chooses to perform accounting pursuant to Russian standards, it should be considered that accounting in the Russian Federation doesn't completely coincide with international accounting and reporting standards, whereas it has its own specific features.
Whichever option is chosen by a foreign organisation, it will need a local specialist or an outsourcing company, possessing the required knowledge and experience.
You can check the accreditation using the FTS service.
Now it remains to get the following:
- A certificate of registration in the tax inspection;
- Notifications on registration in the off-budget funds – FSS and PFR;
- It will be also required to open an account in a Russian bank for the performance of calculation transactions and to order a seal;
- Prepare the necessary documents for problem-free entry of foreign employees to the RF. Organize maintenance of bookkeeping and tax accounting.
According to pp.2 p.2 art.6 the Federal Law of 06.12.2011 No.402-FZ "On Accounting", a branch of a foreign company has the right not to maintain accounting pursuant to the Russian standards, but at that perform accounting of incomes and expenses for the purposes of taxation only in compliance with the RF laws.
This means that representative offices of foreign companies can perform accounting according to the International Financial Reporting Standards (IFRS), which are now largely used for the maintenance of accounting in Russia.
If a company chooses to perform accounting pursuant to Russian standards, it should be considered that accounting in the Russian Federation doesn't completely coincide with international accounting and reporting standards, whereas it has its own specific features.
Whichever option is chosen by a foreign organisation, it will need a local specialist or an outsourcing company, possessing the required knowledge and experience.
SberSolutions will undertake the preparation of all reports and maintenance of accounting for a branch or a representative office of a foreign company. Entrust professionals in the field of international reporting standards and Russian tax legislation to perform your accounting. It is easy to accredit a branch/a representative office of a foreign company in Russia, if you entrust it to professionals.