UPDATED ON MARCH 04, 2024
Foreign company opens a branch in Russia: step-by-step instructions
Source: SberSolutions Blog on Клерк.ру
Today, many foreign companies enter new markets when expanding the horizons of their activities. But it's one thing to work in your own country, where all the norms are known, the legislation and "rules of the game" are clear, and another thing is to start a business in a territory where everything is different. Today we will talk about how to open a branch or a representative office for a foreign organization in Russia.
What is the difference between a branch and a representative office
Coming to the territory of the Russian Federation, a foreign organization can organize business without creating a new company in two ways — by opening a branch or a representative office.
Representative office is a subdivision of a legal entity created to represent and protect the interests of the organization outside the location of the main company.
Branch is also a separate subdivision of a legal entity organized outside the territory of the parent organization, but at the same time capable of performing its functions, including those of a representative office.
Representative office is a subdivision of a legal entity created to represent and protect the interests of the organization outside the location of the main company.
Branch is also a separate subdivision of a legal entity organized outside the territory of the parent organization, but at the same time capable of performing its functions, including those of a representative office.
Below we will describe in detail the procedure for opening a branch/representative office of a foreign legal entity.
7 steps to success: a foreign company opens a branch/representative office in the Russian Federation
Before we analyze the opening of a branch/representative office step by step, we will give you a piece of advice — before filling out the documents, we recommend that you consult with specialists in order to choose the most appropriate form of business.
In addition, keep in mind that although the procedure applies to all foreign organizations, however, there may be some special features for companies in the field of civil aviation and insurance organizations.
In addition, keep in mind that although the procedure applies to all foreign organizations, however, there may be some special features for companies in the field of civil aviation and insurance organizations.
So, here are the steps:
1. It is necessary to develop regulations on the branch/representative office of a foreign legal entity.
There is no special form, it is compiled in no particular form, but, as a rule, includes a number of important elements:
• legal form, name and address of the parent company;
• name and location of the branch/representative office in the Russian Federation;
• types of activities of the branch/representative office and the purpose of its creation;
• management features;
• persons who will manage the branch/representative office, etc.
Full requirements are set out in Article 22 of Federal Law No. 160-FZ "On Foreign Investments in the Russian Federation" dated 09.07.1999.
The regulations must be approved by an authorized person/corporate body of the foreign legal entity.
1. It is necessary to develop regulations on the branch/representative office of a foreign legal entity.
There is no special form, it is compiled in no particular form, but, as a rule, includes a number of important elements:
• legal form, name and address of the parent company;
• name and location of the branch/representative office in the Russian Federation;
• types of activities of the branch/representative office and the purpose of its creation;
• management features;
• persons who will manage the branch/representative office, etc.
Full requirements are set out in Article 22 of Federal Law No. 160-FZ "On Foreign Investments in the Russian Federation" dated 09.07.1999.
The regulations must be approved by an authorized person/corporate body of the foreign legal entity.
2. Form and prepare a resolution on the establishment of a branch/representative office. Prepare documents from the parent organization.
A branch/representative office of a foreign company needs the following documents in relation to the parent company in order to obtain business accreditation in Russia:
• Constituent documents (as a rule, these are the articles of association);
• An extract from the register of foreign legal entities (trade register) or other similar document issued by the country where the company is registered, confirming the legal status of the company;
• If the taxpayer's code is not specified in the extract, then a tax certificate (statement) confirming the registration of the company as a taxpayer in this country, indicating the taxpayer's code;
• Certificate of registration in the country of origin;
• Bank details;
• Power of attorney in favor of the head of the branch/representative office.
Moreover, documents drawn up in a foreign language must also be translated into Russian and notarized in the territory of the Russian Federation. A simple translation, even one made through a company that officially translates documents, will not work. Documents from a foreign company must have consular legalization or an apostille affixed (depending on the jurisdiction of the foreign company). An exception is if an international treaty between the country of the company's registration and the Russian Federation provides for an exemption from the legalization of documents (as, for example, in the case of Kazakhstan or Belarus).
You can apply for accreditation within 12 months from the date when the resolution to establish a branch/representative office was adopted. Moreover, all documents submitted in the package must also be no older than 12 months. The full list of necessary documents and requirements for them are established by Order of the Federal Tax Service of Russia No. ED-7-14/691@ dated 27.07.2021. If your documents contain more than 1 sheet, they must be bound and numbered. The number of sheets is indicated and the signature of the responsible officer is put on the overleaf of the last sheet of the bound document. No corrections are allowed.
A branch/representative office of a foreign company needs the following documents in relation to the parent company in order to obtain business accreditation in Russia:
• Constituent documents (as a rule, these are the articles of association);
• An extract from the register of foreign legal entities (trade register) or other similar document issued by the country where the company is registered, confirming the legal status of the company;
• If the taxpayer's code is not specified in the extract, then a tax certificate (statement) confirming the registration of the company as a taxpayer in this country, indicating the taxpayer's code;
• Certificate of registration in the country of origin;
• Bank details;
• Power of attorney in favor of the head of the branch/representative office.
Moreover, documents drawn up in a foreign language must also be translated into Russian and notarized in the territory of the Russian Federation. A simple translation, even one made through a company that officially translates documents, will not work. Documents from a foreign company must have consular legalization or an apostille affixed (depending on the jurisdiction of the foreign company). An exception is if an international treaty between the country of the company's registration and the Russian Federation provides for an exemption from the legalization of documents (as, for example, in the case of Kazakhstan or Belarus).
You can apply for accreditation within 12 months from the date when the resolution to establish a branch/representative office was adopted. Moreover, all documents submitted in the package must also be no older than 12 months. The full list of necessary documents and requirements for them are established by Order of the Federal Tax Service of Russia No. ED-7-14/691@ dated 27.07.2021. If your documents contain more than 1 sheet, they must be bound and numbered. The number of sheets is indicated and the signature of the responsible officer is put on the overleaf of the last sheet of the bound document. No corrections are allowed.
3. Fill out (in Russian) an application according to 15AFP form. This application is signed by an authorized representative of the legal entity.
4. Apply to the Chamber of Commerce and Industry (CCI) of the Russian Federation.
Information on the number of foreign employees of the branch/representative office must be submitted to the Chamber of Commerce and Industry and certified. The information must be certified in all cases, even if the number of such employees is zero. Together with the information, a letter in any form is sent with a request to certify this information, as well as documents confirming the activities of the branch of a foreign organization in Russia. A fee must be paid for the certification of the number of employees in the CCI of the Russian Federation. The amount depends on the method of filing documents; its size changes from time to time.
5. Pay the state fee for accreditation.
The amount of the state fee is 120,000 rubles per branch. Since 31.08.2023, the amount of fees for accreditation of a branch or representative office in the Russian Federation has been reduced to 4,000 rubles for foreign companies from the Eurasian Economic Union (Subclause 5 of Clause 1 of Article 333.33 of the Tax Code of the Russian Federation). We recommend that you attach the confirmation of payment of the fee to the package of documents submitted for accreditation.
6. Submit documents for accreditation to the Interdistrict Inspectorate of the Federal Tax Service of Russia No. 47 for the city of Moscow.
At the stage of preparation and submission of documents, errors often occur that lead to refusal of accreditation or its suspension, for example, an incomplete set of documents, violation of the deadline or form of submission, discrepancies in the submitted documents with the legal requirements for their execution, inaccurate or false information, contradiction of the goals of establishing a branch with international and Russian legislation, requirements to the organization of activities, etc.
4. Apply to the Chamber of Commerce and Industry (CCI) of the Russian Federation.
Information on the number of foreign employees of the branch/representative office must be submitted to the Chamber of Commerce and Industry and certified. The information must be certified in all cases, even if the number of such employees is zero. Together with the information, a letter in any form is sent with a request to certify this information, as well as documents confirming the activities of the branch of a foreign organization in Russia. A fee must be paid for the certification of the number of employees in the CCI of the Russian Federation. The amount depends on the method of filing documents; its size changes from time to time.
5. Pay the state fee for accreditation.
The amount of the state fee is 120,000 rubles per branch. Since 31.08.2023, the amount of fees for accreditation of a branch or representative office in the Russian Federation has been reduced to 4,000 rubles for foreign companies from the Eurasian Economic Union (Subclause 5 of Clause 1 of Article 333.33 of the Tax Code of the Russian Federation). We recommend that you attach the confirmation of payment of the fee to the package of documents submitted for accreditation.
6. Submit documents for accreditation to the Interdistrict Inspectorate of the Federal Tax Service of Russia No. 47 for the city of Moscow.
At the stage of preparation and submission of documents, errors often occur that lead to refusal of accreditation or its suspension, for example, an incomplete set of documents, violation of the deadline or form of submission, discrepancies in the submitted documents with the legal requirements for their execution, inaccurate or false information, contradiction of the goals of establishing a branch with international and Russian legislation, requirements to the organization of activities, etc.
Legal support of a foreign company in Russia — consulting on opening a branch, preparation of documents, accreditation of branches and representative offices, support in labor, tax, entrepreneurial law, migration support for personnel and other services from SberSolutions.
7. If you correctly followed all previous steps, the Federal Tax Service will provide accreditation within 15 business days from the date of submission of the package of documents.
Within no more than 5 business days, the Federal Tax Service will issue or send an information sheet on making an entry in the state register of accredited branches and representative offices of foreign legal entities confirming the fact of accreditation.
In practice, the Federal Tax Service does not always comply with deadlines, so be ready that the actual deadline may be longer, but not significantly.
You can check the accreditation using the FTS service.
Now only the following steps remain:
• receive a certificate of registration with the tax authority;
• receive a notification of registration and statistics codes from Rosstat;
• receive notifications of registration with non-budgetary funds - Social Insurance Fund and Pension Fund of Russia;
• open a current account with a Russian bank for conducting settlement transactions, order a seal;
• make out necessary documents for the smooth entry of foreign employees into the Russian Federation;
• organize bookkeeping and tax accounting.
You will also need to open a current account with a Russian bank to conduct settlement operations, and order a seal. Make out necessary documents for the smooth entry of foreign employees into the Russian Federation. Organize bookkeeping and tax accounting. In accordance with Subclause 2 of Clause 2 of Article 6 of Federal Law No. 402-FZ "On Accounting" dated 06.12.2011, a branch of a foreign company shall have the right not to keep accounting records according to Russian standards, but at the same time to keep records of income and expenses for tax purposes only under the legislation of the Russian Federation.
This means that representative offices of foreign companies can keep accounting records in accordance with IFRS (International Financial Reporting Standards), which are now largely used for accounting in Russia.
If the company chooses to keep accounting records according to Russian standards, then it should be mentioned that accounting in the Russian Federation does not completely coincide with international accounting and reporting standards and has its own features.
Whichever option a foreign organization chooses, it will need a local specialist or an outsourcing company with the necessary knowledge and experience.
Within no more than 5 business days, the Federal Tax Service will issue or send an information sheet on making an entry in the state register of accredited branches and representative offices of foreign legal entities confirming the fact of accreditation.
In practice, the Federal Tax Service does not always comply with deadlines, so be ready that the actual deadline may be longer, but not significantly.
You can check the accreditation using the FTS service.
Now only the following steps remain:
• receive a certificate of registration with the tax authority;
• receive a notification of registration and statistics codes from Rosstat;
• receive notifications of registration with non-budgetary funds - Social Insurance Fund and Pension Fund of Russia;
• open a current account with a Russian bank for conducting settlement transactions, order a seal;
• make out necessary documents for the smooth entry of foreign employees into the Russian Federation;
• organize bookkeeping and tax accounting.
You will also need to open a current account with a Russian bank to conduct settlement operations, and order a seal. Make out necessary documents for the smooth entry of foreign employees into the Russian Federation. Organize bookkeeping and tax accounting. In accordance with Subclause 2 of Clause 2 of Article 6 of Federal Law No. 402-FZ "On Accounting" dated 06.12.2011, a branch of a foreign company shall have the right not to keep accounting records according to Russian standards, but at the same time to keep records of income and expenses for tax purposes only under the legislation of the Russian Federation.
This means that representative offices of foreign companies can keep accounting records in accordance with IFRS (International Financial Reporting Standards), which are now largely used for accounting in Russia.
If the company chooses to keep accounting records according to Russian standards, then it should be mentioned that accounting in the Russian Federation does not completely coincide with international accounting and reporting standards and has its own features.
Whichever option a foreign organization chooses, it will need a local specialist or an outsourcing company with the necessary knowledge and experience.
SberSolutions will take over all reporting and accounting for the branch and representative office of a foreign company.
Entrust professionals in the field of international reporting standards and Russian tax legislation to keep your accounting records.
It is easy to carry out the accreditation of a branch/representative office of a foreign company in Russia if you leave it to professionals.
Entrust professionals in the field of international reporting standards and Russian tax legislation to keep your accounting records.
It is easy to carry out the accreditation of a branch/representative office of a foreign company in Russia if you leave it to professionals.