Legal Presence in Russia
Legal Presence Summary | Representative Office | Branch | JSC (AO) | LLC (OOO) | Sources |
Last updated: December 6, 2016
- Representative office (representative office of foreign company, predstavitelstvo inostrannoi kompanii, представительство иностранной компании) is a subdivision of a foreign legal entity that represents and protects its interests in Russia;
- RO is not considered as a legal entity under the Russian law acting in the name and on behalf of a foreign company (i.e. RO 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);
- RO is not entitled to undertake commercial activities and is expected to focus primarily on advertising and promoting the business, networking, collection of information (marketing research, etc.) and other auxiliary activities;
- 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 RO;
- No limitation on the number of local employees at RO, while the number of employees with foreign citizenship typically does not exceed 5 people (substantiation is required in order to employ more foreign citizens);
- RO 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;
- Limited bookkeeping and reporting obligations (tax liabilities only) in case RO is not considered as permanent establishment by tax authorities, otherwise it is treated similarly to a local legal entity and has to carry out full-scale bookkeeping and reporting;
- RO 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 RO 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 representative office acts by power of attorney.
A representative office 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 representative office in the Russian Federation (notarized copy of the translation with translator signature approved by a notary);
- Articles of a foreign representative office (Polozhenie ob Inostrannom Predstavitelstve, Положение об иностранном представительстве), which is a document setting internal rules of operations for a representative office, 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 representative office granting him / her appropriate authority to run a representative office (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 representative office (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 representative offices:
- Approval of information on the number of foreign citizens to be employed at a representative office, 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 RO’s employees with foreign citizenship (except those to be employed at representative offices 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 representative office and their families in applying for entry and stay permits;
- Issue of permits for establishing representative offices 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 representative office;
- Completed page 5 of form 15AFP with data 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 representative office);
- RUR 15 000 if there are employees with foreign citizenship.
In most cases accreditation of a representative office 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 obtain certificates of registration in the extra-budgetary funds and certificate of tax registration, which will be required for a number of legal and other actions in the course of further operations.