Accreditation of branches of foreign companies in Russia
Accreditation of foreign branches in Russia is a procedure for administrative control over the process of their establishment. It is obligatory if a foreign company which decided to establish a branch is going to carry out commercial activity in the territory of the Russian Federation. Interdistrict Inspectorate of the Federal Tax Service No. 47 for Moscow (MI FNS No. 47 for Moscow) is the competent tax authority performing functions of accreditation of branches of foreign companies in Russia.
Accreditation of representative offices in Russia is necessary for those foreign companies which decided to establish their divisions exclusively for representation and protection of their interests. This procedure is also carried out by Interdistrict Inspectorate of the Federal Tax Service No. 47 in Moscow.
What are a branch and a representative office?
A representative office is a unit of a foreign legal entity which is established for the purpose of representation and protection of its interests. Representative offices make transactions on behalf of foreign legal entities, control their fulfilment, ensure protection of the interests. Non-commercial activity is the most frequent aim of opening representative offices of foreign companies in Russia.
Branches have all the functions of representative offices, and besides them, can also carry out entrepreneurial activity: produce and sell goods, provide services, etc. In addition, neither branches nor representative offices are legal entities from the perspective of law.
What documents are required for accreditation?
Accreditation of a foreign branch in Russia, as well as accreditation of a representative office in Russia, is possible upon submission of the following set of documents to the competent tax authority:
- application for accreditation;
- constituent documents of a foreign legal entity with an apostille and a translation which is certified by a notary;
- extract from the register of foreign legal entities or another legally equal document confirming the legal status of a foreign legal entity, with an apostille and a translation which is certified by a notary;
- document confirming registration of a foreign legal entity as a taxpayer in the country of origin, indicating its taxpayer code (or an equivalent of the taxpayer code), with an apostille and a translation which is certified by a notary;
- resolution on establishment of a branch (opening of a representative office) of a foreign company in Russia, with an apostille and a translation which is certified by a notary;
- regulations of a foreign branch or a representative office;
- power of attorney granting the necessary authorities to the head of a foreign branch or a representative office in the territory of the Russian Federation, with an apostille and a translation which is certified by a notary;
- document confirming payment of the state duty.
What are the advantages of carrying out activity through a branch/a representative office? First of all, it is easier transfer of funds from branches or representative offices to parent companies and the possibility of direct financing from the budgets of foreign companies. Another advantage is lower currency control by state authorities compared to OOO.
What does the accreditation procedure include?
The procedure for obtaining accreditation includes the following stages:
- Submission of a set of documents to the Chamber of Commerce and Industry of the Russian Federation (RF CCI) for certification of the number of foreign employees of a branch/a representative office of a foreign legal entity.
- Submission of a set of documents to Interdistrict Inspectorate of the Federal Tax Service No. 47 for Moscow.
- Obtaining of a certificate of record in the State Register.
How long does it take? Establishment of a branch / opening of a representative office of a foreign company in Russia requires much time for preparation of duly completed documents. The procedure itself takes about 40 days, of which 1-3 working days are spent for certification of the number of employees of a company with the Chamber of Commerce and Industry of the Russian Federation, and 25 working days for accreditation with a competent tax authority.
In order to go through the accreditation procedure, a company will have to pay the state duty, which is 120 000 rubles (about 1700 euro). Expenses for certification of the number of foreign employees with the Chamber of Commerce and Industry of the Russian Federation will comprise 18 000 rubles (about 250 euro). Additional expenses include services of notaries, translators, as well as apostilles for documents.
Validity of accreditation of foreign branches/representative offices
Since 2015, accreditation approved by Interdistrict Inspectorate of the Federal Tax Service No. 47 for Moscow has been valid without limit of time, which is stated in Federal Law of the Russian Federation No. 106-FZ of 05.05.2014 “On Introduction of Amendments to Certain Legislative Acts of the Russian Federation”. Before a representative office of a foreign company could be accredited for up to 3 years, and a branch for up to 5 years.
In case accreditation had been carried out before this law came into force, it is necessary to file all relevant documents with the Federal Tax Service no later than 30 days before expiration of this accreditation. The division of a foreign company will obtain unlimited accreditation for its activity after their review.
In which cases can accreditation be rejected?
Accreditation of branches of foreign companies in Russia is most often unsuccessful in the following cases:
- The documents necessary for accreditation are not provided, or they are provided late, or the requirements for their form are not observed.
- The information provided about the company is incorrect.
- The objectives of establishment of a branch or a representative office are contrary to the legislation of the Russian Federation.
What are the difficulties of accreditation of branches/representative offices? Despite the fact that the accreditation procedure does not seem difficult, during establishment of a foreign branch or opening of a representative office in Russia it is possible to come across many pitfalls. In respect of acceptance of documents, there are particular requirements for signatures, seals, apostilles, translations and content of the documents. Non-compliance with these requirements leads to refusal of accreditation, and the amount paid as a state duty is not refundable.
If it is necessary to avoid refusal and complete the accreditation procedure as soon as possible, we recommend assistance from professionals. Experienced lawyers will prepare all necessary documents in the form required by the current legislation and file them with the relevant authorities.
VALEN Company offers a full range of services in the area of accreditation of branches and representative offices of foreign companies. We provide support at all stages of the accreditation procedure:
- advising on any issues associated with accreditation;
- selection of a legal address and issue of documents for its confirmation;
- preparation of required applications;
- obtaining of work permits for foreign citizens;
- accounting, tax and legal services for branches or representative offices;
- submission of documents to and their obtaining from competent authorities.