Liquidation of a foreign legal entity

Jan, 22 2024


Liquidation of a foreign legal entity is a multi–stage procedure provided by the state in order for the company to cease its activities. After the company is officially closed, this information is entered into the appropriate register and it is listed among the liquidated. At the same time, all its subsidiaries abroad must also begin the liquidation procedure in accordance with the legislation.

You can close a foreign branch or representative office in Russia in the following cases:

  • liquidation of a foreign company;
  • the decision of the parent organization to close;
  • the decision of the authorized tax authority on the liquidation of a foreign branch/representative office.

In the first two cases, the procedure consists of several stages: the signing of the liquidation decision, the approval by the head, the examination of documents by the tax service and the removal of the unit from the register. In the latter case, the decision to close is made by the tax authorities. The reason may be a violation of the Constitution by a foreign enterprise, a refusal to submit financial statements to the Federal Tax Service or the absence of any operations during the year.

Signing of the decision of the parent company to close abroad

To start the liquidation process, it is necessary to issue a decision on closure signed by an authorized person. It must contain a provision on the termination of activities on the territory of the Russian Federation through its branch/representative office, even if the reason was the liquidation of a foreign legal entity.

Sometimes there is a situation that a foreign company has already been liquidated, but its branches in Russia have not been closed. In this case, you should obtain an extract from the register of companies of the country of origin and attach to it the decision of the head of the department to terminate the accreditation in connection with the liquidation of a foreign legal entity.

Documents issued or certified by the competent authorities of foreign states are submitted to the MIFNS No. 47 in Moscow in the presence of an apostille or consular legalization of these documents, unless otherwise specified in an international agreement of the Russian Federation.

Application for termination of accreditation of a branch/representative office

To close a division in Russia, you will also need to prepare an application for termination of the accreditation of a branch/representative office of a foreign legal entity in form No. 15PFP. Since there are still no established requirements for completing this application, it is necessary to adhere to the established practice of paperwork. The application for liquidation must be signed by the head of the division of a foreign enterprise and submitted to the MIFNS No. 47 together with the other documents necessary for the closure of the division.

Removal of a foreign organization from tax accounting

No later than within fifteen calendar days from the date of the decision to close the branch in Russia, you need to submit documents to the MIFNS. They can be submitted either personally by the head of the liquidated division, or by an authorized person acting by proxy.

Then the employees of MIFNS No. 47 in Moscow check the documents for compliance with the current legislation within 10 working days. Upon successful consideration, a request is sent to the tax authority in which the liquidated representative office of a foreign company is registered. If there are no debts to the budget and creditors, the tax service will approve the decision on liquidation. At this stage, the Federal Tax Service may initiate an on-site tax audit.

A mandatory condition is that employment relations with employees of a foreign organization’s division must be terminated even before its closure.

After the end of the inspection and approval of the decision to terminate the activity within 5 working days, the MIFNS issues:

  • an information sheet confirming the entry of an entry on the termination of accreditation in the state register of accredited branches, representative offices of foreign legal entities (RAFP).
  • notification of the de-registration of a foreign organization with the tax authority (if only one unit was accredited).

De-registration with the Pension Fund

Following the entry of information about the closure in the RAFP, it is necessary to remove the foreign branch / representative office from the Pension Fund, the Social Insurance Fund, the Federal State Statistics Service. After submitting applications from a foreign company and based on the results of possible reconciliation of settlements with the specified authorities, documents confirming the removal of the unit from the register are issued.

The liquidation of a representative office of a foreign company can also be carried out on the initiative of the MIFNS. The Law provides for the following cases in which a decision on liquidation is made administratively:

A branch of a foreign legal entity has not submitted tax reports for twelve months, it is impossible to contact it at the address specified in the RFP, and the division has not carried out transactions on at least one Russian bank account for a year.

The activity of the foreign branch contradicts the Constitution of the Russian Federation, international treaties, legislation, poses a threat to the sovereignty, political independence, territorial integrity and national interests of the Russian Federation.

Our services

VALEN provides a full range of services related to the liquidation of branches and representative offices of foreign enterprises. We provide support at all stages:

  • advising on all issues related to liquidation;
  • development of necessary documents;
  • organization of translations into foreign and Russian languages;
  • submission of documents to the authorized bodies and their receipt;
  • accounting support at closing;
  • registration of termination of employment relations with employees during liquidation.
Author of the article
Liquidation of a foreign legal entity
Valentina Khlavich
Managing Partner
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