Establishment of branches and opening of representative offices of foreign companies in Russia
In order to do business in the Russian Federation, foreign investors establish limited liability companies (OOO), branches, or open representative offices. Establishment of branches or opening of foreign representative offices in Russia is connected with the accreditation procedure, which is more complex and costly compared to registration of OOO. Nevertheless, many companies choose exactly this way to perform activities. Why?
Documents for establishment of a branch / opening of a representative office of a foreign company in Russia
An indicative list of documents for accreditation of a branch / a representative office in the Russian Federation is as follows:
- 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 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 are the advantages of carrying out activity through a branch/a representative office?
- easier transfer of funds from branches or representative offices to parent companies and the possibility of direct financing from the budgets of foreign companies;
- lower currency control by state authorities compared to OOO.
In which cases accreditation can be rejected:
Accreditation of foreign branches / representative offices in Russia is most often rejected 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.
What does the accreditation procedure involve?
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 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 to obtain accreditation?
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 business 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 business days for accreditation with a competent tax authority.
What related expenses will be required for accreditation?
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.
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 all issues associated with accreditation;
- selection of a legal address and issue of documents for its confirmation;
- preparation of required applications;
- submission of documents to and their obtaining from competent authorities.