Legal Presence in Russia
Legal Presence Summary | Representative Office | Branch | JSC (AO) | LLC (OOO) | Sources |
Last updated: December 6, 2016
- A branch (branch of a foreign company, filial inostrannoi kompanii, филиал иностранной компании) is a subdivision of a foreign legal entity that carries out all functions or part of functions of a foreign legal entity in Russia (including functions of the representative office);
- Branch is not considered as a legal entity under the Russian law acting in the name and on behalf of a foreign company (i.e. a branch cannot act as claimant or defendant in the court, cannot be a side of an agreement, cannot own property and cannot act as separate employer);
- Branch is entitled to undertake commercial activities among others;
- State accreditation required in order to start operations (accreditation has no time limit);
- Employees with foreign citizenship shall be accredited personally in order to work at a branch;
- No limitation on the number of local employees, while the number of employees with foreign citizenship typically does not exceed 5 people (substantiation is required in order to employ more foreign citizens);
- Branch has to be registered at a tax authority in order to open bank accounts in Russia, there is also a requirement to register at extra-budgetary funds and the state statistics bodies;
- Full bookkeeping and reporting obligations, as far as a branch generally complies with criteria of permanent establishment due to regular commercial activities;
- The branch is not a subject to the Russian currency control (no additional requirements when receiving payments of foreign origin to its local bank accounts with non-resident status). However, it is treated as a non-resident when making payments to the country’s residents (i.e. appropriate transactions are subject to currency control procedures for the residents complicating their operations);
- VAT preference (in many cases VAT on payments for premises leased by the branch in Russia is not applied under Clause 1 Article 149 of the Russian Tax Code; the home country shall be in the specific list);
- Specific additional minor preferences, such as the absence of custom duties for a variety of articles imported for operations from abroad (computers, etc.);
- The head of a branch acts by power of attorney.
A branch shall be accredited by the state authorities in order to start operations in Russia. Reference: Clause 3 of Article 3 of the federal law #160-FZ “On Foreign Investments in the Russian Federation”.
Starting from the year 2015 accreditation is granted for an indefinite period (earlier the accreditation was granted for 1, 2 or 3 years).
The accreditation procedure is carried out by a territorial branch of the Federal Tax Service. The relevant branch is MIFNS #47 (МИФНС №47) located at building #1, 33 Dolgorukovskaya St., Moscow, 127006 (127006, г. Москва, ул. Долгоруковская, д.33, стр.1.)
The state tariff for obtaining accreditation is RUR 120 000. Reference: clause 5 of Article 333.33 of the Russian Tax Code.
The list of documents required for accreditation includes:
- Form 15AFP (application for accreditation, 15АФП) signed by authorized representative of a foreign legal entity. The form can be found here (in Russian);
- Incorporation documents of a foreign legal entity (notarized copy of the translation with translator signature approved by a notary);
- Extracts from register of legal entities containing information on a foreign legal entity (notarized copy of the translation with translator signature approved by a notary);
- A document confirming tax registration of a foreign legal entity containing taxpayer ID (notarized copy of the translation with translator signature approved by a notary);
- Decision of a foreign legal entity to establish a branch in the Russian Federation (notarized copy of the translation with translator signature approved by a notary);
- Articles of a foreign branch (Polozhenie ob Inostrannom Predstavitelstve, Положение об иностранном представительстве), which is a document setting internal rules of operations for a branch, its rights and obligations in relation to the foreign company. The requirements to Articles are provided by article 22 of the federal law #160-FZ “On Foreign Investment in the Russian Federation” dated July 9, 1999.
- Power of attorney for the head of a branch granting him / her appropriate authority to run a branch (notarized copy of the translation with translator signature approved by a notary);
- A document confirming payment of the state tariff;
- List of the documents provided for accreditation in 2 copies (opis dokumentov, опись документов);
- Power of attorney for an applying representative (notarized copy of the translation with translator signature approved by a notary).
Before providing the document package to the branch of the Federal Tax Service, an applicant shall receive approval of information on the number of foreign citizens to be employed at branch (page 5 to be inserted into Form 15AFP) from Chamber of Trade and Industry of the Russian Federation.
The Chamber has the following functions in relation to branches:
- Approval of information on the number of foreign citizens to be employed at a branch, which is needed for applying for accreditation (it is filed as page 5 of the form 15AFP). Please, note that the approval is needed even if there are no plans to employ foreign citizens;
- Personal accreditation of the branch’s employees with foreign citizenship (except those to be employed at branches of credit institutions and organisations belonging to the civil aviation). In case the number of those employees exceed 5, the substantiation may be required;
- Assistance to foreign employees of organisation inquiring accreditation, to employees of its branch and their families in applying for entry and stay permits;
- Issue of permits for establishing branches of foreign trade chambers, mixed trade chambers, federations, associations and entrepreneurs’ unions.
In order to get approval on the number of employees with the foreign citizenship from the Chamber, the company shall provide the accreditation package indicated above, which is supplemented by the following documents:
- Request for approval written on the letterhead of the business and signed by an executive of a foreign legal entity or head of branch;
- Completed page 5 of form 15AFP with information on the number of employees. The sample can be found here (in Russian).
The tariff for getting approval for accreditation from Chamber of Trade and Industry:
- RUR 5 000 in case there are no employees with foreign citizenship (including the head of the branch);
- RUR 15 000 if there are employees with foreign citizenship.
In most cases accreditation of a branch will take about 6-7 calendar weeks. The period required for accreditation by the Russian Tax Service is limited by 25 working days starting from the date of applying, while the period of approval of the number of employees with foreign citizenship by the Chamber of Trade and Industry does not exceed 3 working days. The certificate confirming accreditation is provided within 5 working days after the information on accreditation is added to the state register by the Federal Tax Service.
The tax authority delivers information on accreditation to extra-budgetary funds within 3 days following the accreditation of a branch, while the tax registration is carried out by the tax authority based on data from the state register. Therefore, there is no obligation to apply separately for registration in the extra-budgetary funds and for the tax registration. References: Clause 10 Article 21 of the federal law #160-FZ “On Foreign Investments in the Russian Federation”, Clause 4 Article 83 of the Tax Code of the Russian Federation.
However, it is highly recommended to collect certificates on the state registration in the extra-budgetary funds and the tax registration after accreditation. Those certificates will be required for a number of legal and other actions in the course of further operations.