Many entrepreneurs use the practice of opening representative offices in other regions of the country to expand their presence in the market. According to Article 55 of the Civil Code of the Russian Federation, a representative office is a division of an enterprise that does not have the rights of a legal entity. It protects the interests of the parent company in the territory of another region or state. The heads of new divisions are appointed by the enterprises that created them. They operate on the basis of a power of attorney.

What functions does the representative office of the organization perform in other regions of the Russian Federation?

Often people confuse concepts of "branch" and "representative office" . It should be clearly understood that a representative office cannot conduct activities directly related to making a profit, it only represents the company on the market. In the case when financial activities are carried out, the division is called a branch.

Functions of the representative office of the organization in other regions of the Russian Federation:

1. Representation and protection of the interests of the main enterprise
2. Negotiating and concluding contracts
3. Reception and delivery of products
4. Providing advice
5. Working with contractors

Representative offices must be mentioned in the founding documents of the parent company. The main criteria for recognizing a division as a representative office are its territorial isolation and the presence of stationary jobs. An employment contract with employees of such a company must be signed for at least 1 month.

Responsibility for the activities of the representative office lies with the enterprise that opened it.

What documents are required to open?

A representative office is opened by voting at the general meeting of the main office of the company.
The number of “for” votes must be at least 2/3 of the total number.

The package of documents required to open a representative office:

1. Written request for registration with the tax service;
2. Complete information about the taxpayer;
3. A written order signed by the CEO to create a new division;
4. Order on the appointment of the head of the new division and the chief accountant;
5. Power of attorney issued to the appointed head;
6. Constituent documents of the parent company;
7. Certificate of state registration of the company;
8. Documents for the premises rented or purchased for the representative office, address of its location;
9. Tax payer letter written by the parent company.

All of the above documents are submitted to the tax authority at the place of registration of the main enterprise and to extra-budgetary funds at the location of the opening representative office.

Not more than a month after the creation of the unit, the following documents are submitted to the tax service:

1. Notification of the opening of a representative office
2. Notification of the tax authority

For violation of the deadline for filing documents, the parent company faces an administrative fine of 5 to 10 thousand rubles.

How to organize a representative office in Russia?

In addition to divisions of Russian enterprises, foreign companies can also open a representative office in Russia. They act on behalf of and on behalf of the parent companies that create them, however, subject to Russian law.

They are opened by accreditation at the State Registration Chamber under the Ministry of Justice of the Russian Federation, and are also registered in the Consolidated State Register. Documents required for accreditation are listed below:

1. Documents on registration of a foreign enterprise in the country of location;
2. Charter of a foreign enterprise;
3. Written decision to open a representative office in Russia;
4. A letter from the bank confirming the solvency of the parent company;
5. References from several Russian business partners;
6. Certificate provided by the tax authority of the state where the company's head office is located that it is a taxpayer in its country.

The Ministry of Finance of the Russian Federation in its letters explains that if the activities of a foreign organization under a transport expedition agreement do not lead to the formation of a permanent representative office on the territory of the Russian Federation, then the income of this organization is not taxed in Russia and the Russian organization is not a tax agent. Question: What document should a Russian organization confirm that the activity of a foreign organization does not lead to the formation of a permanent establishment on the territory of the Russian Federation?

And also taking into account the norms of international agreements on the avoidance of double taxation.

The certificate of registration with the tax office in the form No. 11-SV-Accounting is issued only upon registration. The Ministry (tax inspection) will not be able to confirm in any way that a foreign company does not have a representative office in Russia.

That is, there is no special document to confirm the fact that a foreign organization does not have a representative office in the Russian Federation. There is no body that would officially confirm this fact.

It makes sense for your organization to exercise due diligence and formally request such confirmation directly from the foreign organization.

Rationale

Commentary on Article 306 of the Tax Code of the Russian Federation

“In accordance with paragraph 8 of Art. 307 of the Tax Code of the Russian Federation, if the activities of a foreign organization on the territory of the Russian Federation lead to the formation of a permanent representative office, it is obliged to independently calculate and pay income tax in Russia, as well as submit reports.

At the same time, the presence of a permanent representative office of a foreign organization in the Russian Federation is determined based on the provisions of the legislation on taxes and fees. If a foreign company is a person with a permanent residence in a state in relations with which the Russian Federation has a valid agreement on the avoidance of double taxation, when determining the presence of a permanent establishment, the provisions of the relevant international treaty take precedence.

The presence or absence of a permanent establishment in the Russian Federation, that is, their tax status, foreign organizations determine independently based on the provisions of Art. 306 of the Tax Code of the Russian Federation, as well as taking into account the norms of international agreements on the avoidance of double taxation (letter of the Ministry of Finance of Russia dated February 24, 2012 No. 03-02-07 / 1-42) *.

LETTER OF THE MINISTRY OF FINANCE OF RUSSIA DATED 24.02.2012 No. 03-02-07/1-42

“In accordance with the letter on the issue of registration with the tax authority of a foreign organization at the place of its activities and on the payment of corporate income tax, the Department of Tax and Customs Tariff Policy with the participation of the Federal Tax Service of Russia reports the following.

The presence or absence of a permanent representative office in the Russian Federation is determined by foreign organizations independently in accordance with and 308 of the Tax Code of the Russian Federation (hereinafter referred to as the Code), as well as taking into account the norms of international agreements on the avoidance of double taxation.*

So, if a foreign organization, being a general contractor, entrusts the performance of part of the contract work to other persons (subcontractors), then the period of time spent by subcontractors on the performance of work is considered to be the time spent by the general contractor himself (paragraph two of paragraph 2 of Article 308 of the Code).

The determination of whether the activities of a Swiss company in the Russian Federation for the installation of equipment leads to the formation of a permanent establishment in the Russian Federation is carried out on the basis of the provisions of the Agreement between the Russian Federation and the Swiss Confederation dated November 15, 1995 "On the avoidance of double taxation with respect to taxes on income and Capital" (hereinafter referred to as the Agreement) and the Code, taking into account contracts for the provision of installation services and other documents indicating the nature and conditions of the relevant activities of a foreign organization.

The term "permanent establishment" in accordance with paragraph 1 of Article 5 of the Agreement means a fixed place of business through which the business of an enterprise is fully or partially carried out.

Usually, the confirmation is drawn up in a foreign language, so the foreign company must provide the travel agency with its translation in Russian (clause 1, article 312 of the Tax Code of the Russian Federation).*

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1. The provisions of Articles 306 - of this Code establish the specifics of the calculation of tax by foreign organizations engaged in entrepreneurial activities in the territory of the Russian Federation, if such activity creates a permanent representative office of a foreign organization, as well as the calculation of tax by foreign organizations that are not related to activities through a permanent representative office in Russian Federation, receiving income from sources in the Russian Federation.

2. For the purposes of this chapter, a permanent establishment of a foreign organization in the Russian Federation means a branch, representative office, branch, bureau, office, agency, any other separate subdivision or other place of activity of this organization (hereinafter in this chapter - a branch), through which the organization regularly carries out business activities on the territory of the Russian Federation related to:

subsoil use and (or) use of other natural resources;

carrying out the construction, installation, assembly, assembly, adjustment, maintenance and operation of equipment, including slot machines, as provided for by the contracts;

sale of goods from warehouses located on the territory of the Russian Federation and belonging to this organization or leased by it;

the performance of other works, the provision of services, the conduct of other activities, with the exception of those provided for in paragraph 4 of this article.

For the purposes of this Code, the activity of a foreign organization on the territory of the Russian Federation is also recognized as the activity carried out by a foreign organization - the operator of a new offshore hydrocarbon field and related to the production of hydrocarbon raw materials at a new offshore hydrocarbon field.

3. A permanent representative office of a foreign organization is considered established from the beginning of regular business activities through its branch. However, the activity of creating a branch does not in itself create a permanent establishment. A permanent representative office ceases to exist from the moment of termination of entrepreneurial activity through a branch of a foreign organization.

When using subsoil and (or) using other natural resources, a permanent representative office of a foreign organization is considered formed from the earlier of the following dates: the date of entry into force of the license (permit) certifying the right of this organization to carry out the relevant activity, or the date of actual commencement of such activity. If a foreign organization performs work, provides services to another person who has the specified license (permit) or acts as a general contractor for a person who has such a license (permit), when resolving issues related to the formation and termination of the existence of a permanent representative office of this foreign organization, the procedure similar to that established by paragraphs 2-4 of Article 308 of this Code is applied.

4. The fact that a foreign organization carries out activities of a preparatory and auxiliary nature on the territory of the Russian Federation in the absence of signs of a permanent representative office, provided for in paragraph 2 of this article, cannot be considered as leading to the formation of a permanent representative office. Preparatory and support activities include, in particular:

1) the use of facilities solely for the purpose of storage, demonstration and (or) delivery of goods belonging to this foreign organization, prior to the start of such delivery;

(see text in previous edition)

(see text in previous edition)

5. The fact that a foreign organization owns securities, shares in the capital of Russian organizations, as well as other property on the territory of the Russian Federation, in the absence of signs of a permanent establishment provided for in paragraph 2 of this article, cannot in itself be considered for such a foreign organization as leading to the formation of a permanent representative offices in the Russian Federation.

The fact that the manager of the foreign investment fund (company) specified in paragraph 14 of Article 25.13 of this Code, as well as the persons hired by him, their employees and (or) representatives, performs the functions of managing the assets of such a fund (company) on the territory of the Russian Federation and the fact that the functions are performed referred to in paragraph 3 of Article 246.2 of this Code, in relation to a fund or organizations (structures without forming a legal entity) in which such a fund (company) directly or indirectly participates, as well as other activities directly related to the implementation of these functions, by themselves cannot be considered as leading to the formation of a permanent representative office in the Russian Federation of the specified fund (company), foreign organizations (structures without forming a legal entity) in which such a fund (company) directly or indirectly participates, and (or) direct or indirect shareholders (participants , shareholders, partners) of the specified fund (company).

6. The fact that a foreign organization concludes a simple partnership agreement or another agreement that involves joint activities of its parties (participants), carried out in whole or in part on the territory of the Russian Federation, cannot in itself be considered for this organization as leading to the formation of a permanent representative office in the Russian Federation.

7. The fact that a foreign organization sends its employees to work in the territory of the Russian Federation or other territory under the jurisdiction of the Russian Federation, in another organization under an agreement on the provision of labor of employees (personnel) in the absence of signs of a permanent establishment provided for in paragraph 2 of this article, cannot be considered as a fact leading to the formation of a permanent establishment of a foreign organization that sent its employees, if such employees act solely on behalf of and in the interests of the organization to which they were sent.

(see text in previous edition)

8. Carrying out by a foreign organization of operations for the import into the Russian Federation or export from the Russian Federation of goods, including under foreign trade contracts, in the absence of signs of a permanent representative office, provided for in paragraph 2 of this article, cannot be considered as leading to the formation of a permanent representative office of this organization in Russian Federation.

(see text in previous edition)

9. A foreign organization shall be considered as having a permanent establishment if this organization delivers from the territory of the Russian Federation the goods belonging to it obtained as a result of processing in the customs territory or under customs control, and also if this organization carries out activities that meet the criteria provided for in paragraph 2 of this article, through a person who, on the basis of contractual relations with this foreign organization, represents its interests in the Russian Federation, acts on the territory of the Russian Federation on behalf of this foreign organization, has and regularly uses the authority to conclude contracts or agree on their essential terms on behalf of this organization, while creating legal consequences for this foreign organization (dependent agent).

(see text in previous edition)

The activity of a foreign organization does not lead to the formation of a permanent representative office in the Russian Federation if such an organization operates in the Russian Federation through a broker, commission agent, manager of a foreign investment fund (company) specified in paragraph 14 of Article 25.13 of this Code, a professional participant in the Russian securities market securities or any other person acting in the framework of their main (ordinary) activities.

(see text in previous edition)

10. The fact that a person carrying out activities on the territory of the Russian Federation is interdependent with a foreign organization, in the absence of signs of a dependent agent, provided for in paragraph 9 of this article, is not considered as leading to the formation of a permanent representative office of this foreign organization in the Russian Federation.

11. Activities of UEFA (Union of European Football Associations) and UEFA subsidiaries in the period up to December 31, 2020 inclusive, FIFA (Federation Internationale de Football Association) and FIFA subsidiaries specified in the Federal Law "On the preparation and holding of the championship in the Russian Federation 2018 FIFA World Cup, 2017 FIFA Confederations Cup, 2020 UEFA European Football Championship and amending certain legislative acts of the Russian Federation" and being foreign organizations

(see text in previous edition)

12. Activities carried out on the territory of the Russian Federation by confederations, national football associations, FIFA (Federation Internationale de Football Association) media information producers, suppliers of goods (works, services) FIFA, commercial partners of UEFA, suppliers of goods (works, services) UEFA, defined by the Federal Law "On the preparation and holding in the Russian Federation of the 2018 FIFA World Cup, the 2017 FIFA Confederations Cup, the 2020 UEFA European Football Championship and amending certain legislative acts of the Russian Federation", established, registered or based outside the territory of the Russian Federation , in connection with the implementation of the measures provided for by the said Federal Law, does not lead to the formation of a permanent representation of these organizations in the Russian Federation.

(see text in previous edition)

13. The activities of FIFA broadcasters and UEFA broadcasters carried out on the territory of the Russian Federation under an agreement with FIFA (Federation Internationale de Football Association) or UEFA (Union of European Football Associations), affiliated organizations of FIFA, defined by the Federal Law "On the preparation and holding of the championship in the Russian Federation 2018 FIFA World Cup, 2017 FIFA Confederations Cup, 2020 UEFA European Football Championship and amendments to certain legislative acts of the Russian Federation", established, registered or based outside the territory of the Russian Federation, in connection with the implementation of the activities provided for by the specified The federal law does not lead to the formation of a permanent representation of these organizations in the Russian Federation.

(see text in previous edition)

14. The provision by a foreign organization of the services specified in paragraph 1 of Article 174.2 of this Code, the place of sale of which is the territory of the Russian Federation, does not lead to the formation of a permanent representative office of this organization in the Russian Federation.

15. The fact that on the territory of the Russian Federation a foreign organization specified in subparagraph 4 of paragraph 6 of Article 246.2 of this Code, as well as persons hired by it, its employees and (or) representatives of the functions of managing such an organization, its activities related to the operation of sea vessels, ships of mixed (river - sea) navigation, aircraft and (or) activities for the international transportation of goods, passengers and their luggage and for the provision of other services related to the implementation of these transportations, cannot in itself be considered as a fact leading to the formation of a permanent establishment in the Russian Federation of the specified foreign organization, foreign organizations in which such an organization directly or indirectly participates, and (or) direct or indirect shareholders (participants, shareholders, partners) of the specified organization.

When should a foreign company open a permanent establishment?

Is a foreign company obliged to open a permanent representative office if it is going to hire a citizen of the Russian Federation?

Question: Is a foreign company obliged to open a permanent representative office if it is going to hire a citizen of the Russian Federation to conduct real estate market research activities in the interests of this foreign company.

Answer: paragraph 3 of Art. 306 of the Tax Code of the Russian Federation, par. 1 st. 2 of the Civil Code of the Russian Federation). Moreover, if jobs are created and an employment contract is concluded with an individual, that is, the employee works in the office, then the organization is obliged to open a permanent representative office. An exception is an employment contract with a remote employee, a civil law contract with an individual for the performance of work (rendering services), as well as the implementation by a foreign organization on the territory of the Russian Federation of activities of a preparatory and auxiliary nature in the absence of signs of a permanent establishment.

Preparatory and support activities include, in particular:

1) the use of facilities solely for the purpose of storage, demonstration and (or) delivery of goods belonging to this foreign organization, prior to the start of such delivery;

5) maintaining a permanent place of business solely for the purpose of simply signing contracts on behalf of this organization, if the signing of contracts takes place in accordance with the detailed written instructions of a foreign organization (clause 4, article 306 of the Civil Code of the Russian Federation).

Rationale

Whether a branch of a foreign organization is recognized as a permanent establishment. Did a branch of a foreign organization enter into a single agreement (for example, a loan, sale of real estate, etc.) with a Russian organization?

No, it is not recognized.

A permanent representative office of a foreign organization is formed if through it the organization regularly conducts business activities in Russia (clause 3 of article 306 of the Tax Code of the Russian Federation). At the same time, entrepreneurial activity is understood as an activity aimed at the systematic receipt of income (clause 1, article 2 of the Civil Code of the Russian Federation).

The concept of "systematic" should be used in the meaning used in paragraph 3 of Article 120 of the Tax Code of the Russian Federation, twice or more during a calendar year. Such an interpretation of this concept was enshrined in paragraph 2 of section 4 of the Guidelines for the application of Chapter 25 of the Tax Code of the Russian Federation (approved by order of the Ministry of Taxes of Russia dated December 20, 2002 No. BG-3-02 / 729). To date, this document has become invalid (Order of the Federal Tax Service of Russia dated April 21, 2005 No. SAE-3-02 / 173). However, the proposed interpretation of the concept of "systematicity" remains relevant, which is confirmed by arbitration practice (see, for example, the decision of the Federal Antimonopoly Service of the Volga-Vyatka District of October 26, 2005 No. A28-4710 / 2005-34 / 29).

Thus, if a foreign organization has entered into a single agreement (for example, for the provision of a loan, the sale of real estate, etc.), then this operation cannot be classified as an entrepreneurial activity that leads to the formation of a permanent establishment for income tax purposes.

This conclusion is confirmed, for example, by the letters of the Ministry of Finance of Russia dated October 1, 2008 No. 03-08-05, the Federal Tax Service of Russia for Moscow dated August 24, 2006 No. 20-12 / 75586.

Permanent establishment of a foreign company: what is it?

Foreign organizations can carry out entrepreneurial activities in Russia both through their permanent representative offices and without their establishment.

In the first case, a foreign organization pays income tax in general in the same manner as Russian taxpayers, with the exception of certain specifics established by Article 307 and certain other articles of the Tax Code of the Russian Federation.

In the second case, income tax is withheld at the source of income payment. At the same time, certain types of income may not be taxed at all in Russia due to the norms of Chapter 25 of the Tax Code of the Russian Federation or intergovernmental agreements.

A permanent establishment of a foreign organization in Russia is understood as a branch, representative office, department, bureau, office, agency or any other separate subdivision or other place of activity of this organization through which it regularly carries out business activities in the territory of the Russian Federation (clause 2 of article 306 of the Tax Code RF).

The activities of a permanent representative office may be related to: the use of subsoil and other natural resources in Russia; with the construction, installation, installation, assembly, adjustment, maintenance and operation of equipment; with the sale of goods from warehouses in Russia; with the performance of other works, the provision of services, with the exception of preparatory and auxiliary activities (see below "Preparatory and auxiliary activities").

Representation under the Civil Code of the Russian Federation and the Tax Code of the Russian Federation: the main differences

There are two main differences between a representative office, which is defined by the Civil Code of the Russian Federation, and a permanent establishment according to Chapter 25 of the Tax Code of the Russian Federation.

Firstly, in civil law, representation only represents and protects the interests of the organization (Article 55 of the Civil Code of the Russian Federation). In tax law, a permanent establishment performs more important tasks. It must conduct independent business in another country, that is, make key economic decisions on the spot (choosing counterparties, determining prices, other essential terms of transactions, etc.).

Secondly, in civil law, a representative office is a subdivision within a legal entity (Article 55 of the Civil Code of the Russian Federation). The Tax Code establishes that a permanent establishment can be either a separate subdivision of a foreign company or any “other place of its activity”. For example, a Russian intermediary (legal entity or individual) through which a foreign company conducts its business in Russia.

Preparatory and support activities

If the activity of a foreign company in Russia is of an auxiliary or preparatory nature, then this, as a rule, does not lead to the formation of a permanent establishment.

In paragraph 4 of Article 306 of the Tax Code of the Russian Federation, preparatory and auxiliary activities, in particular, include:

Example 1

A representative office of a foreign company advertises in Russia, stores and demonstrates samples of goods, and takes orders for them. It transfers these orders to the head office, which concludes contracts with Russian customers and supplies them with goods from abroad.

The activity of the representative office in this case has an auxiliary character. Therefore, a permanent establishment for tax purposes does not arise here. Although a representative office in the civil law sense can exist for years, be accredited by the State Registration Chamber or the Chamber of Commerce and Industry, etc.

The same representative office independently imports goods into Russia and concludes contracts with buyers on the basis of a general power of attorney from the head office.

A foreign firm may carry out preparatory or auxiliary activities in Russia in the interests of another foreign firm. If such activity still leads to the formation of a permanent establishment, but at the same time it is paid outside of Russia, then the tax base should be determined by calculation. The tax base will be equal to 20% of the amount of expenses of the permanent establishment associated with this activity (clause 3 of article 307 of the Tax Code of the Russian Federation).

Permanent representation in world practice

The definition of a permanent establishment given in Article 306 of the Tax Code of the Russian Federation is borrowed from world practice. There is such an international organization - the Organization for Economic Cooperation and Development (OECD), which unites almost all industrialized Western countries.

OECD experts once developed a model agreement (convention) on the avoidance of double taxation (hereinafter referred to as the OECD Model Convention) and comments to it (hereinafter referred to as Comments on the OECD Model Convention). Although Russia is not a member of the OECD, the vast majority of double tax treaties between Russia and other countries are built on the basis of the OECD Model Convention. All key OECD tax documents can be viewed on the OECD website www.oecd.org.

The definition of a permanent establishment in Article 306 of the Tax Code of the Russian Federation is close to the definition of this term, which is given in Article 5 of the OECD Model Convention. According to Article 5 of the OECD Model Convention, a permanent establishment is “a fixed place of business through which an enterprise carries on its business in whole or in part”.

At the same time, “fixed place of business” does not necessarily mean an office officially rented or acquired by a foreign company in another country. According to paragraph 4.1 of the Commentaries to the OECD Model Convention, any form of presence of a foreign company in another country can be recognized as a permanent place of business.

Thus, paragraph 4.3 of the Commentaries to the OECD Model Convention provides the following example.

Example 2

A foreign firm sends its employee to another country to a counterparty firm. This employee has been living abroad for a long time, works in the office of the counterparty, controls how he fulfills his obligations, and resolves issues related to the execution of contracts on the spot.

Although the seconded employee uses someone else's office, nevertheless, the latter can be considered a permanent establishment for tax purposes, since his company has a "fixed place of business" in another country.

Moreover, according to paragraph 42.2 of the Commentaries to the OECD Model Convention, even a computer can be a permanent place of business, through which, through special software, goods and services are automatically sold in another country.

Example 3

The company's head office is located in Germany, and it sells its products in Russia via the Internet through a catalog. At the same time, the foreign company has a server in Moscow for receiving orders, which, under the contract, is supported and maintained by a Russian computer company.

In this case, none of the employees of a foreign company or authorized representatives are present in Russia, and the activities of Russian computer scientists to support the server are purely auxiliary in nature and are not connected with the sale of goods itself. Nevertheless, according to OECD experts, such a foreign company can be recognized as having a permanent representative office in Russia.

By the way, the idea that in the field of Internet commerce, only the presence of a computer in another country indicates a permanent establishment, appeared in the Commentaries on the OECD Model Convention in 2001 and was initially the subject of controversy between experts. Not everyone agreed with this approach. So, according to representatives of the UK, the place of doing business should not be the place where the computer is, but the place where the people who manage it and all this business are located.

Dependent agents

The definition of a dependent agent is contained in paragraph 9 of Article 306 of the Tax Code of the Russian Federation. A dependent agent is a person (legal or natural) who, under an agreement with a foreign company:

1. represents its interests in the Russian Federation;

2. acts on the territory of the Russian Federation on behalf of this foreign company;

3. has and regularly uses the authority to conclude contracts or agree on their essential terms on behalf of this foreign company, while creating legal consequences for it.

If a foreign firm regularly carries out business activities in Russia through a dependent agent, this means that it has its own permanent establishment in Russia.

At the same time, according to the same paragraph, a foreign company does not have a permanent establishment for tax purposes if it operates in Russia through a broker, commission agent, professional participant in the Russian securities market, or any other person acting in the framework of its main (ordinary) activity.

Thus, a dependent agent is an intermediary that simultaneously satisfies the following conditions:

firstly, he represents the interests of a foreign company in Russia with the right to conclude contracts on its behalf or stipulate their essential conditions. These powers can be formalized by a power of attorney, a contract of agency, commission, agency, etc.;

secondly, the intermediary services that it provides are outside the normal activities for intermediaries in this market or in this type of business.

The first condition (transactions or other operations in the interests of a foreign company on the territory of Russia) is not a key one, since any intermediary (both independent and dependent) works in one way or another in the interests of another person - its client. More important in determining the status of a dependent agent in practice is the second condition - whether or not the agent's activities fit into the framework of the usual intermediary services for this market.

Determining where the usual services of an intermediary end and the activity of a dependent agent begins is sometimes quite difficult. A lot of international experience has been accumulated on this issue.

Thus, according to the Commentaries to the OECD Model Convention, there are several indications that an agent is acting outside of its normal business and has a dependent status. Here are the signs.

1. When the agent acts on the basis of "detailed instructions" from his client. In particular, as stated in paragraphs 38.3 and 38.5 of the Commentaries to the OECD Model Convention, an independent agent is responsible to the client (principal) for the results of his work, but not for how he managed to fulfill the order. If the client gives the agent not only orders for transactions or other operations, but also manages their implementation, indicates where and how to look for counterparties, etc., such an agent approaches the status of a dependent.

2. When an agent provides a client (principal) with services that are not normally practiced in this type of business (clause 38.8 of the Commentaries to the OECD Model Convention). This happens, for example, when an agent not only fulfills the client's orders for transactions as a commission agent, but also has a power of attorney for a wide range of operations with the right to conclude any contracts and uses these rights. In other words, signs of the dependent status of an agent are deviations from the norm in both directions: both too detailed control of the client over the actions of the agent, and too much freedom for the agent, which intermediaries usually do not have.

3. When the agent works in the interests of only one client (principal), that is, it depends economically on him (see paragraph 38.6 of the Commentaries to the OECD Model Convention).

4. When, under the contract, an excessively large part of business risks is transferred to the client (principal), as a result of which the agent is, as it were, “dependent” on the client. For example, as stated in paragraph 38.7 of the Commentaries to the OECD Model Convention, a sign that the agent does not bear normal entrepreneurial risks is the receipt of a guaranteed remuneration (regardless of the transactions concluded and other results of work), as well as the obligation of the client (principal) to cover the losses of the agent from business activities.

Each of the listed signs separately cannot be the basis for the conclusion about the agent's dependent status. All questions of its activity should be considered in a complex.

It should also be noted that a dependent agent and interdependent persons are not the same thing. According to paragraph 1 of Article 20 of the Tax Code of the Russian Federation, organizations are recognized as interdependent for tax purposes, one of which directly or indirectly participates in the other, and the total share of such participation is more than 20%.

Paragraph 10 of Article 306 of the Tax Code of the Russian Federation establishes the following. If a person operating in Russia is interdependent with a foreign company, but does not have the signs of a dependent agent, provided for in paragraph 9 of Article 306 of the Tax Code of the Russian Federation, this does not lead to the formation of a permanent representative office of a foreign company in Russia.

For example, the fact that a client participates in the authorized capital of an agent (even if it is a controlling stake) does not in itself speak of a dependent status, since the founder may not interfere in the current activities of his "daughter".

Permanent missions and construction activities

The construction site of a foreign company in Russia for tax purposes is considered (clause 1 of article 308 of the Tax Code of the Russian Federation):

1. the place of construction of new, as well as reconstruction, expansion, technical re-equipment or repair of existing real estate objects (with the exception of aircraft and sea vessels, inland navigation vessels and space objects);

2. a place for construction or installation, repair, reconstruction, expansion or technical re-equipment of structures (including floating and drilling rigs), as well as machinery and equipment, for the normal functioning of which they must be rigidly fixed to the foundation or to structural elements of buildings, structures or floating structures.

A construction site for a foreign general contractor, as a rule, is considered a permanent establishment from the moment of its creation. In this case, a foreign company can avoid the status of a permanent establishment only by referring to international agreements on the avoidance of double taxation.

According to Article 7 of the Tax Code of the Russian Federation, the provisions of such international treaties take precedence over national legislation. For example, paragraph 3 of Article 5 of the Agreement of December 5, 1998 between the Government of the Russian Federation and the Government of the Republic of Cyprus on the avoidance of double taxation with respect to taxes on income and capital establishes the following. A building site, a construction, assembly or assembly facility or supervisory activities related to them constitute a permanent establishment if they exist for a period exceeding 12 months. Chapter 25 of the Tax Code of the Russian Federation does not establish such a minimum period, but for Cypriot firms (and for Russian firms in Cyprus), the rules of an international agreement apply.

The minimum terms for the recognition of a construction site as a permanent establishment are established not only in the agreement with Cyprus, but also in other international treaties of the Russian Federation. Therefore, in Chapter 25 of the Tax Code of the Russian Federation there are special rules for calculating the duration of the existence of construction sites.

According to paragraph 3 of Article 308 of the Tax Code of the Russian Federation, if a foreign company is the general contractor for construction, the life of the construction site is counted either from the date of signing the act on the transfer of this site to it, or from the date of actual commencement of work, whichever happened earlier.

The end of the existence of a construction site for a foreign company-general contractor is the date of signing by the customer (developer) of the act of acceptance of the facility or a set of works. If the acceptance certificate is not issued or the work is completed after its signing, the construction site is considered to have ceased to exist on the date of the actual completion of the work.

A foreign firm-general contractor may entrust other persons - subcontractors - to perform part of the contract work. Then the period during which they carry out work at the construction site is included for tax purposes in the lifetime of the construction site for the general contractor.

There are some peculiarities for subcontractors as well. So, if the subcontractor is a foreign organization, its activities at the construction site may also create its permanent establishment. This happens if two conditions are simultaneously met (clause 2 of article 308 of the Tax Code of the Russian Federation):

firstly, the duration of the activity of a foreign subcontractor is at least 30 days in total;

secondly, the general contractor has a permanent establishment.

Tax registration of representative offices

Any foreign organization that plans to operate in Russia for more than 30 days a year is required to register with the tax office at the place of operation. She is assigned a TIN and a certificate is issued in the form 2401IMD. You must register within 30 days from the start date of your activity.

If a foreign organization does not plan to carry out activities in Russia, but at the same time opens an account with a Russian bank, it is registered at the location of the bank. The tax inspectorate issues her a certificate in the form 2402IM, which indicates the KIO - Code of the foreign organization.

In addition, foreign companies operating in Russia for no more than 30 days a year must send notifications of income from activities in the Russian Federation in the form 2503I. The notification shall be sent prior to the start of the activity to the tax office at the place where this activity is carried out and to the Ministry of Taxation of Russia.

Foreign companies that do not have a permanent establishment in Russia, but receive income from sources in Russia, are required to inform the tax authorities about these incomes. To do this, they must send notifications of income received (form 2504I) to the tax office at the location of the source of income payment and to the Ministry of Taxation of Russia. Such notification must be sent within a month from the date of the emergence of the right to receive income separately for each source of payment.

Answered by Alexander Sorokin,

Deputy Head of the Operational Control Department of the Federal Tax Service of Russia

“CCP should be used only in cases where the seller provides the buyer, including its employees, with a deferral or installment plan for paying for their goods, works, services. It is these cases, according to the Federal Tax Service, that relate to the provision and repayment of a loan to pay for goods, work, and services. If an organization issues a cash loan, receives a return of such a loan, or itself receives and repays a loan, do not use the cash desk. When exactly you need to punch a check, look at

The developing Russian market is quite attractive for foreign enterprises whose goal is to develop and expand outside their own country. Therefore, it is not unusual for management to decide to open a branch or representative office of a foreign company in Russia. At the same time, one of the effective tools that can improve the economic situation of any state is the policy of attracting foreign investment in its economy. But in order to carry out commercial activities in our country and invest their capital, foreign organizations need appropriate guarantees, including the scope of taxation. Legal Status of Separate Subdivisions of a Foreign Organization

The Russian state continues to work on improving the system of legal regulation of taxation, trying to take into account the interests of the budget, the interests of foreign organizations operating in Russia.

Establishing a representative office or branch of a company on the territory of Russia implies an independent active business of a foreign company - this approach should not be confused with passive investment in Russian organizations.

Control over the functioning of separate subdivisions of foreign companies in Russia is carried out in accordance with the provisions of the Federal Law "On Foreign Investments in the Russian Federation" dated July 9, 1999 No. 160-FZ. More precisely, the law applies exclusively to branches of foreign organizations.

It talks about opening in Russia (commercial companies with) and branches, but nothing is said about the establishment of representative offices (because nothing is invested in the Russian economy). Accordingly, there is no definition of representation in the text of the law, and no legal regime is established for it, even in the case of accreditation.

Both a representative office and a branch are a separate subdivision of a legal entity that is located outside its location, only the duties of the first include representing the interests (and protecting them) of this legal entity, the task of the second is to perform the functions of this legal entity (or only a certain part of them). ) and its representatives.

Neither form is in itself a legal entity and has no legal capacity: their legal status will be governed by the law of the state in which the head office was registered. Separate subdivisions manage the property of the legal entity that founded them and operate in accordance with the provisions approved by it.

In other words, despite being located on the territory of the Russian Federation, representative offices and branches of foreign companies will be subject to the laws of the country where the parent organization is located in relation to:

• creation process,
• rights and obligations,
• schemes of work and its completion,
• rules for the appointment of management and the scope of its powers, etc.

However, before the unit begins to function at all, it will be necessary to obtain permission from the Russian authorities, that is, to pass accreditation. When representative offices or branches are accredited, they must also be registered with the Federal Tax Service in order to control their tax deductions to the Russian budget.

The legal status of a branch of a foreign company in the Russian Federation regulates all the most important issues related to this unit. It should reflect the main data on the features of the functioning of a branch in Russia that do not contradict the laws of the Russian Federation:

• full name (foreign parent company and the branch itself);
• organizational and legal form of management;
• branch location address;
• legal address of the head office;
• goals pursued by the management of the branch;
• activities;
• size, composition and time of capital investment;
• management rules.

Information about representative offices and branches of foreign organizations must be entered in the Consolidated State Register of Representative Offices and Branches of Foreign Companies Accredited in the Russian Federation. The proof of inclusion in the register is the presence of a corresponding certificate from the company's division as a guarantee of confirmation of the official status of a foreign company at the federal level, since without it it will be impossible to open a bank account, carry out transportation through customs, etc.

The optimal form of doing business by a foreign company in Russia

Forms of doing business in Russia by foreign organizations may be different. A foreign management company must have a representative office or branch in Russia or do without it, for example, by hiring an individual resident of the Russian Federation, signing contracts directly with counterparties from Russia, etc.

There is also the option of opening a resident subsidiary and doing business through it. A competent choice of the form of business organization will help to avoid losses associated with the payment of taxes, the amounts of which could be lower, or the payment of which could have been avoided altogether.

General characteristics of branches and representative offices of foreign organizations in the Russian Federation are:

• exist in the form of a separate division separately from the parent company and operate in accordance with its norms;
• the parent company is financially responsible for their actions;
• the management is empowered by the foreign parent company in the amounts prescribed in the power of attorney issued to them;
• use a share of the property of the parent company, accounted for separately from the company;
• do not have independent legal capacity, are not recognized as legal entities and act on behalf of the parent company;
• are created and liquidated by the decision of the head office;
• are not required to prepare financial statements.

Despite a large number of common points, a representative office and a branch are not the same thing. A branch of a foreign company has a wider list of functions compared to a representative office, since it has the authority not only to represent the interests of the company and protect them, but also to carry out the same business activities as the foreign founder.

We will conduct a comparative analysis of the taxation of various forms of activity of a foreign organization.

So, when choosing the optimal mode of operation, a foreign company should pay attention to the following points:

1. Resident subsidiaries pay all taxes at standard rates, however, they are entitled to apply a special tax regime. They also have the opportunity to use the possibilities of international tax planning.
2. Doing business without establishing a permanent establishment in Russia is suitable only for those companies whose work in the Russian Federation is episodic, since this form of business activity has a limited scope, although it involves a small tax burden.
3. The creation of a permanent representative office is not beneficial in terms of taxation due to the fact that it will have to pay all taxes approved by the tax legislation of the Russian Federation without the right to switch to a special regime for their payment.

If you choose between a branch and a representative office, you need to decide for what purpose a separate subdivision is created - to conduct full-fledged activities and perform all the same functions as the parent organization abroad, or only to represent and protect the interests of the head office. In the second case, it will be sufficient to establish a representative office, and in the first case, one cannot do without opening a branch on the territory of the Russian Federation.

Features of opening a branch of a foreign company in Russia

A branch is sometimes called a permanent establishment, these are identical concepts, but the key word here is “permanent”. A representative office is recognized as such, which on a regular basis conducts entrepreneurial activities in the Russian Federation related to:

• to the sale of goods from their own warehouses located in Russia;
• to the implementation of construction, installation, installation, adjustment, assembly, operation, maintenance of equipment in accordance with the concluded agreements (equipment can also be understood as slot machines);
• to the exploitation of subsoil and/or other natural resources;
• to perform any other work, except for those listed in paragraph 4 of Art. 306 of the Tax Code of the Russian Federation.

Branches of foreign organizations accredited in Russia are characterized by the following features of their activities:

• Branches have the right to engage in entrepreneurial activities.
• Branches as non-legal entities:
  • not liquidated due to bankruptcy;
  • do not have authorized capital;
  • do not prepare financial statements;
  • do not pay VAT on the lease of residential and office premises without furniture and equipment;
  • do not consolidate tax returns.
• The branch is not a resident in terms of currency legislation.

Some activities of foreign organizations are controlled by the Russian authorities in a special way. An example is the work of foreign insurers in Russia.

The conditions for the activities of branches of foreign insurance companies seem to be more stringent compared to other types of activities due to the desire of the Russian authorities to maintain and develop the national insurance market, and this requires strict regulation of the integration of foreign capital into this area.

The total quota for the participation of foreign capital in the authorized capital of insurance companies is 25%, and the share of foreign investors in the authorized capital of Russian insurers cannot exceed 49%.

In addition, foreign firms are prohibited from engaging in:

• life insurance;
• compulsory insurance (including state insurance);
• insurance of property related to state supplies and performance of contract work for state purposes;
• insurance of property interests of municipal and state enterprises.

9 years after Russia's accession to the WTO (August 22, 2012), foreign organizations will be able to establish direct branches in Russia if the assets of the firm as a whole turn out to be more than $5 billion at the end of the year before the application for the establishment of a branch is submitted.

Many also worry about whether a branch of a foreign company can be a declarant. The Customs Code, among others, recognizes as declarants:

• foreign legal entities if they are official representative offices of foreign states or transport certain goods (in accordance with international agreements of the Russian Federation);
• foreign firms that have established a representative office on the territory of the Customs Union and import certain goods for the personal needs of the representative office.

Features of opening a representative office of a foreign company in Russia

The representative office is engaged in representing the interests of a legal entity and protecting them, but the answer to the question of whether a representative office of a foreign company is a legal entity will be negative.

Typically, the purpose of the functioning of the representative office is:

• facilitating the work of the company's head office in the Russian Federation;
• preparation of contracts with clients in Russia for the head office;
• advertising and promotion of goods, works, services of a foreign organization;
• marketing research;
• dissemination of information about the head office;
• search for clients among Russians;
• development of business contacts;
• conflict resolution.

Representative offices of foreign organizations in Russia have limited purposes: they cannot conduct foreign trade or business activities and do not conclude transactions on their own.

The active development of representative offices in the Russian Federation is explained by a number of advantages inherent in this form of doing business by foreign companies in Russia:

1. Availability of VAT exemptions in relation to the lease of premises (if the exemption is mentioned in the international agreement).
2. Accounting is kept only for the calculation of tax liabilities, no more.
3. Exemption from certain customs duties - for the period of accreditation in the Russian Federation, no fee is charged for the import of property required for the operation of the representative office.
4. Facilitated registration of foreign labor - representative offices are not required to obtain permission to hire accredited foreign workers.

Work of a foreign organization in Russia without a representative office

Any representative of a foreign business, however, not only a foreign one, working in another country, strives to minimize its costs, so it is extremely important for him to know whether a foreign company can operate in Russia without a representative office. After all, even without establishing a representative office in Russia, foreign companies can derive income from activities in its territory, for example, by entering into contracts with domestic organizations directly.

The Russian authorities are very well aware of this, so they have taken measures to indirectly tax the activities of foreign firms. Although they do not pay taxes (for example, unified agricultural tax and property tax) as registered taxpayers, however, this is done for them by a Russian company with which they are cooperating. In this situation, it will be the tax agent of the foreign partner.

A list of income of foreign companies from which taxes are paid through the source of payments has been compiled:

1. Funds after the division of property.
2. Dividends from participation in Russian joint-stock companies.
3. Interest on debts of third parties.
4. Profit from the sale of shares.
5. Funds from the use of intellectual property on the territory of the Russian Federation (foreign films in Russian cinemas, for example).
6. Revenue from international transportation (if there is at least one point of acceptance and dispatch in Russia).
7. Remittances from the sale or rental of personal property (property must be company property and located in Russia).

One of the ways to reduce costs in such a situation is to register an individual entrepreneur instead of representing a foreign company by a resident of Russia, which will perform representative functions.

Often this is more profitable in terms of taxation and definitely easier in terms of documentation. An agency agreement or a work contract is concluded with an individual entrepreneur, after which, according to the terms of the agreement, he begins to represent the interests of a foreign organization, receiving remuneration for this.

Where to register a separate division of a foreign company in Russia

Consider how to register a representative office of a foreign company in Russia. The registration procedure must certainly precede the start of the activities of a foreign company. To do this, you need to contact the MIFNS of the Russian Federation No. 47 for the city of Moscow: since 2015, it is she who has been authorized to accredit branches and representative offices of foreign companies in the Russian Federation.

If a separate division of a foreign company is going to carry out activities in the field of civil aviation, one should apply for accreditation from the Federal Air Transport Agency.

Representative offices of foreign credit companies must be accredited by the Bank of Russia (however, the Federal Tax Service of Russia is in charge of issuing a certificate of making an entry in the state register of accredited representative offices).

Both in the case of aviation and credit companies, personal accreditation is required for foreigners who plan to work in a branch or representative office established in the territory of the Russian Federation. This issue is dealt with by the Chamber of Commerce and Industry of the Russian Federation.

If a foreign firm (company) is going to open a representative office in Moscow, then this procedure, unlike that in other regions of the country, does not require the preliminary execution of a document confirming the coordination of the location of a separate subdivision on the territory of a constituent entity of the Russian Federation with local authorities.

The main stages of establishing a foreign representative office in the Russian Federation

The procedure for registering credit institutions with foreign investments in Russia seems to be quite long and complicated and consists of the following stages:

• preparation of the necessary documentation;
• applying to a body that has the authority to accredit companies with a chosen line of business, submitting documents (the procedure also includes certification of the number of foreign personnel by the Chamber of Commerce and Industry);
• waiting for the issuance of a permit to establish a representative office and a certificate of entry in the Consolidated State Register of accredited representative offices;
• printing production;
• applying to the tax authorities for registration (for example, to open a representative office in Moscow, you need to contact the MIFNS No. 47 of Moscow);
• obtaining a document on registration in the statistical register of Rosstat;
• registration in off-budget funds;
• opening a bank account and notifying the tax service about it.

Accreditation of foreign companies in Russia

Registration of a representative office or branch of foreign legal entities on the territory of the Russian Federation is impossible without prior accreditation.

Accreditation is the recognition and confirmation of the legal status of a separate subdivision of a foreign organization.

Today in Russia there is no single body that would deal with accreditation, and therefore this responsibility is delegated to various government agencies, depending on the field of activity of a foreign company.

Until 2015, accreditation of foreign representative offices and branches was carried out by:

1. Chamber of Commerce and Industry of the Russian Federation.
2. State Registration Chamber under the Ministry of Justice of the Russian Federation.
3. Ministry of Justice of the Russian Federation.
4. Ministry of Foreign Affairs of the Russian Federation.
5. Bank of Russia.
6. Federal Aviation Service of the Russian Federation.

Since 2015, the functions of the accrediting body have been transferred to the Federal Tax Service (MIFTS No. 47).

Tax registration of representative offices of foreign companies

Any corporate entities, including representative offices, branches and organizations themselves, legally capable and established under the laws of foreign states, are recognized as legal entities for tax purposes. The creation of a permanent representative office is not considered a corporate form of a subdivision: it can be recognized for the purpose of tax accounting as a branch, representative office, commercial enterprise of legal entities or individuals working on behalf and in the interests of a foreign company.

A separate subdivision of the company, which will operate in Russia, must register with the registering tax authorities within 30 days. This procedure is approved by the Ministry of Finance of the Russian Federation, however, its violation does not provide for punishment, including a fine.

Without exception, all branches and representative offices of foreign companies are required to register with the tax service of the region of the Russian Federation in which its activities are actually carried out or vehicles and real estate are located.

If work is carried out in several districts at once, each of them must be registered with the local inspectorate of the Federal Tax Service.

Changing the legal address of a representative office of a foreign company involves adjusting the registration data: FTS employees must be notified about this in a timely manner. If we are talking about transferring a company to the territory of another subject of the Russian Federation, it will have to be removed from tax records and re-registered with the Federal Tax Service of the region that the company has chosen to carry out commercial activities.

Important: if the representative office / branch or the foreign company itself has changed or will change the information that is included in the Consolidated Register, the management of the separate subdivision is obliged to notify the registering authority about this and make changes to the register no later than 15 calendar days from the date of loss of relevance of the relevant information.

It should be noted that the basis for registration with the Federal Tax Service of Russia is not only the opening of a division of a foreign company in the Russian Federation, this can include the purchase of real estate or vehicles in Russia, including those imported into the country, opening accounts in Russian banks and making profit from sources In Russian federation.

In the process of registration, the tax authority assigns a TIN and KPP to a foreign company at the same time, but sometimes a KIO (code of a foreign organization) is indicated instead of a TIN. Both codes are indicated in the certificate issued upon completion of the registration procedure (in the form 2401IMD).

Registration of a representative office of a foreign company in off-budget funds

After a foreign company has opened its representative office in the Russian Federation, settled all relations with the tax service, it must register with extra-budgetary funds - the Pension Fund and the Social Insurance Fund, for which the law has 30 days from the date of completion of registration.

The registration procedure takes 5 days, but if any of the required documents are not submitted, the process will be delayed for a longer period due to the necessary request for information from the Federal Tax Service and the Rosstat branch in such a situation.

Upon request, the representative office / branch is assigned, like all legal entities in Russia, statistics codes:

• OKPO,
• OKOGU,
• OKATO,
• OKVED,
• OKSF,
• OKOPF.

It is not required to submit any documents to the Compulsory Medical Insurance Fund (FOMS) on your own: the Pension Fund will provide information about the branch / subdivision.

Production of a seal for a branch / representative office of a foreign organization in the Russian Federation

The seal of a representative office of a foreign company cannot be made on the basis of the preferences and decisions of the founders or heads of separate divisions in the territory of the Russian Federation. The sketch of the seal of the created branch or representative office must first be registered with the Ministry of Taxes and Taxes of the Russian Federation, for which it will be necessary to prepare the following set of documents:

1. Application for printing.
2. Sketch approval document (for example, an order from the head of a separate subdivision).
3. A notarized copy of the permission to establish a representative office.
4. A notarized copy of the certificate of entering information about the subdivision of a foreign company in the Consolidated Register of Accredited Institutions.
5. Regulations on a branch or representative office (notarized copy).
6. A copy of the head of the department.
7. Power of attorney issued to the head of a separate subdivision.

The production of the seal will begin only after it has been assigned a number in the City Register of Seals (usually issued by the manufacturer - an organization accredited at the Moscow Registration Chamber). You will need to present two notarized copies of:

1. Permissions to establish a separate division of a foreign company.
2. Certificate of entry into the Consolidated State Register.

The entire procedure for assigning a number and making a seal takes no more than 3 days. The minimum cost of such a service is 100 rubles and depends on the equipment, method and urgency of printing.

Opening a current account in a Russian bank

To complete the procedure for registering a branch or representative office of a foreign company in Russia, it is necessary to open a current account in a Russian bank. Authorized banks open accounts on the basis of concluded bank account agreements on behalf of accredited representative offices.

Opening bank accounts for the purpose of performing fiscal operations by separate subdivisions of foreign organizations involves the submission of additional documents:

• regulations on branch/representative office;
• power of attorney issued to the head of a separate division.

In addition to the papers listed above, in order to open a current account with a bank, a foreign legal entity will also need to collect a standard set of documents. The authority to open accounts (ruble and currency) is held by the head of a separate subdivision of a foreign company.

To learn about the composition of the complete set of required documents for opening an account for a division of a foreign company in a Russian bank, read the information about.

Required documents for opening a representative office of a foreign company in Russia

A separate subdivision of a foreign company can start its activities only after submitting the required package of documents to the Federal Tax Service (MIFNS No. 47) - for accreditation, to the tax authorities - for tax registration and to extra-budgetary funds - also for registration.

Documents for opening a branch of a foreign legal entity that must be collected:

1. An extract from the register of legal entities of the state in whose territory the organization is registered, a certificate of incorporation (or other document that contains information about the registration number, date, place of registration, registration authority and is issued in a foreign state upon registration).
2. The decision to establish a branch / representative office or a copy of the agreement on the basis of which work is carried out on the territory of Russia (with the signature of the head of the branch or other authorized representative).
3. A power of attorney issued to the appointed head of a new branch/representative office, giving him the appropriate authority (usually, this is a general power of attorney, which is unlimited abroad, but it is recognized by the Russian authorities as valid for only 1 year).
4. An ordinary power of attorney for a representative of a foreign company who submits and receives documents (if he is not the head of a branch).

Additional set of papers for presentation to the accrediting body:

1. Written application to MIFTS No. 47 for Moscow (form 15AFP) signed by the head of the branch / representative office or a person authorized to certify documents.
2. Constituent documents (charter) of a foreign organization.
3. Certificate received from the authorized body of the state in which the head office of a foreign company is opened, on the registration of the organization as a taxpayer (must contain a taxpayer code or its equivalent).
4. A copy of the identity card and certificate of registration with the tax authority (TIN, if any) of the head of the representative office or branch.
5. Card of information about the representative office or branch of a foreign organization.
6. Letters of recommendation from Russian business partners (minimum 2).
7. A document proving that the location of a branch/representative office of a foreign company outside Moscow has been agreed with local executive authorities.

Additional set of documents to be submitted to the registration authorities for registration with the tax authority:

1. Application form for registration of a foreign organization with tax authorities (2001I).
2. Regulations on a branch or representative office.
3. Charter of the foreign parent company.
4. A certificate from the tax service of the state in which the head office of a foreign company is located that the company in question pays taxes. It must contain a taxpayer code or an equivalent that replaces it (no more than six months should pass from the moment it is issued to the presentation to the Federal Tax Service of Russia).
5. Permission to establish a branch or representative office.
6. Certificate of entry into the Consolidated Register of Accredited Representative Offices.

Russian tax authorities are not entitled to demand other documents.

An additional set of papers for submission to extra-budgetary funds:

1. Application for registration in non-budgetary funds.
2. Regulations on the branch / representative office.
3. A copy of the certificate of registration with the tax service in Russia (certified by a notary).
4. Permission to establish a branch/representative office on the territory of the Russian Federation.
5. Certificate of entering information about the branch / representative office in the Consolidated Register of Accredited Representative Offices.
6. Statistical codes assigned to a division of a foreign company.
7. Documents confirming information about the legal address (usually a letter of guarantee).
8. An order on the appointment of an accountant or a certificate of the absence of an accountant in a subdivision of a foreign organization.

Documents submitted by foreign companies to Russian state institutions are valid for 12 months from the date of issue.

The documents must contain the following information about the foreign company and its subsidiaries established in the territory of the Russian Federation (if such information is not in the papers, they must provide it to the state services of the Russian Federation in the form of additional data):

• direction of activity of the organization and its divisions;
• location of the foreign company;
• contact details of the company itself and subdivisions located in Russia (e-mail, Internet resource address, telephone number);
• information about the head of the organization, the founder of the head office (as an individual or legal entity - registration number, day of registration, name and address of the registering authority, taxpayer code), head of the representative office or branch (passport data, registration address, date and place of birth, TIN );
• full name of the servicing banking institution, current account number, SWIFT code;
• the size of the authorized capital;
• the number of employees and the planned number of foreign employees of the branch/representative office in Russia;
• income for the previous year;
• Russian business partners.

Legalization and translation of documents of foreign companies

Each foreign document must have an apostille or a genuine mark of legalization in a consular office abroad.

All papers are submitted to Russian state institutions translated into Russian, and the translation must be performed by an organization accredited for this, and then certified by a notary or consulate of the country of origin.

Powers of attorney and decisions must be notarized by the signatures contained in them and the powers of the signatories.

With some states, Russia has concluded agreements that abolish the legalization of documents. If the country of incorporation is a party to such an agreement, it does not need to legalize securities when doing business in the territory of the Russian Federation.

The cost and terms of the procedure for registering a foreign representative office in the Russian Federation

For the accreditation of each branch opened in Russia, the head office of a foreign organization will have to pay a state fee, the amount of which is 120 thousand rubles for any period of accreditation. No fee is charged for the accreditation of a representative office.

The terms for consideration of documents will be:

• 18 working days at the State Registration Chamber;
• 5-10 business days at the Chamber of Commerce.

Surcharge to the State Registration Chamber for urgency (readiness of the certificate within 5 days) is 15 thousand rubles, the Chamber of Commerce and Industry does not conduct urgent procedures.

In addition, the services of the State Registration Chamber for issuing a certificate of accreditation of a branch or representative office of a foreign company are paid, the amount of payment varies depending on the period of accreditation:

The tax authorities of Russia carry out the registration of a foreign company as a taxpayer within 5 working days.

The process of obtaining permits to attract foreign labor by a branch of a foreign company can take 3-12 weeks. Deadlines depend on the type of work permit.

The head of a foreign separate subdivision, his rights and obligations

A foreign citizen may be appointed to the position of head of a branch or representative office of a foreign organization located in Russia only after. It is also necessary to obtain a special permit to attract foreign personnel to work in a branch of a foreign company (can be issued only after the completion of the accreditation procedure).

Representation of the interests of a foreign legal entity, their protection, execution of orders from the head office, ensuring the functioning of a separate subdivision in Russia are the main tasks of the head of a branch/representative office of a foreign company.

The executive body (general director) of the head office must issue an order to appoint an individual to the position of head, with whom they conclude an employment contract, and stipulate the conditions for remuneration for work.

The salary of the head of a representative office of a foreign company will depend on the scale of the foreign founding organization and the scope of duties assigned to him.

Any actions the head of a separate subdivision of a foreign company performs on the basis of a power of attorney issued to him and a regulation on a branch / representative office on behalf of the founding organization.

The text of the regulation on a branch/representative office, approved by the governing body of a foreign company, sets out the procedure for managing a branch/representative office, which describes:

• management procedure in detail;
• the method, rules and terms of bringing the orders of the company's managers to the heads of departments;
• clear instructions about who the leader reports to and to whom he reports;
• the procedure for carrying out inspections of the work of managers.

The power of attorney is issued personally to the head, and not to the unit as a whole, it indicates:

• date of registration;
• list of powers of the head;
• his right to resolve issues that have arisen in the course of operational and current work;
• his right to sign contracts, make transactions (contract amounts may be limited, restrictions on the subject of the agreement may be announced, etc.);
• the right of the head to open a current account in a banking institution (ruble or foreign currency), manage money;
• his right to issue powers of attorney and transfer his powers in case of unforeseen situations, the conditions for such actions.

The change of the head of the representative office is not a personal decision of the founders of the head office, this event should be notified to the Russian structures controlling the activities of the division. Information about this must be documented, on its basis, appropriate changes will be made to the Consolidated Register of Accredited Subdivisions.

Accounting and reporting of foreign representative offices

After registration, a separate subdivision of a foreign organization is obliged to maintain accounting records, namely, to draw up internal reporting for the head office. It is prepared in the language and in the manner prescribed by the laws of the state in which the parent company is established.

Closing of a foreign representative office or branch in Russia

Liquidation of a representative office or branch of a foreign company is a procedure aimed at terminating the activities of a unit and deregistering it with the tax service.

The closing of a representative office of a foreign organization in Russia must be carried out in accordance with the rules provided for by the current legislation of the Russian Federation.

The grounds for terminating the work of a representative office may be:

1. The expiration of the accreditation, the renewal of which was not taken care of in time.
2. Closing of the head office in the state where it was registered.
3. Systematic violations of Russian laws by subdivisions of a foreign organization and the subsequent decision of the accreditation body to liquidate them.
4. Termination of an international agreement between Russia and the state where the company is registered, which opened a representative office in the Russian Federation on the basis of this agreement.
5. The decision to close the representative office, taken by the founders of the parent company.

Before starting the procedure for closing a separate division of a foreign organization, it is necessary:

• Write an application for liquidation (form 15PFP), which is certified by the signature of the head of the branch or an authorized person and which contains the following information:
  • reasons for termination of economic activity;
  • registration number;
  • day of accreditation;
  • period of validity of the permit.
• Draw up an application in the form 11SN-Accounting.
• Make a notarized copy of the official minutes of the decision of the meeting to close the separate subdivision.
• Prepare constituent documents, company charter.
• Raise the minutes of all meetings during which it was decided to open a branch / representative office and appoint a leader.
• Issue a certificate of closing a current account in a banking institution.
• Issue a power of attorney to the head of the branch / representative office.
• Issue a power of attorney for the attorneys of a foreign company who will be instructed to carry out the liquidation procedure on behalf of the head office.
• Raise the previously received certificate of registration of the unit in Russia, indicating:
  • changes made;
  • taxpayer number.

To deregister with the FIU, you will additionally need:

• application in the form of the PFR;
• all reports to the Pension Fund on the closing day (2 copies of the originals and copies in electronic format);
• extract or information sheet from the tax service;
• notice of deregistration with the Federal Tax Service.

To deregister with the FSS, you will additionally need:

• application in the form approved by order No. 576 n dated October 25, 2013;
• liquidation report (Form 4 FSS);
• notification of the amount of insurance premiums;
• insurance certificate (or notice);
• a letter of refusal from the funds remaining on the account in favor of the Russian treasury (if the money is not withdrawn to the company's account).

To deregister with Rosstat, you must provide:

• notification with OKTEI codes;
• a letter requesting deregistration of the unit.

Step-by-step instructions for liquidating a branch of a foreign company located in Russia:

• Organization of a meeting of the founders of the parent company and making a decision on liquidation.
• Registration of all required documents, including income declaration and calculation of the full amount of tax.
• Notification of interested parties, including employees.
• Conducting staffing activities.
• Sending a notification to the MIFTS No. 47 on deregistration and termination of the unit (within no more than 15 days from the date of the decision on liquidation).
• Notification of the regional branch of the Pension Fund about the closure of a branch / subdivision (up to 15 days from the date of the decision).
• Notification of the local division of the Social Insurance Fund about the closure (in the same time frame as the MIFTS, PFR).
• Passing the reconciliation in the MIFNS:
  • in the input department (with the presentation of a declaration of income);
  • in the department of cameral checks (with the presentation of an extract on transactions on the current account);
  • in the department for work with taxpayers and the department of debt settlement (with the presentation of a register of information on the income of employees of the department and reconciliation of tax payments);
• Submission of an application to the MIFNS on the completion of the closing procedure.
• Deregistration in the FIU.
• Deregistration in the FSS.
• Receiving notification of deregistration from Rosstat.
• Closing a bank account.

It takes 14 days from the date of submission of a set of papers to the tax authorities to consider documents and an application for closing a separate subdivision, the total liquidation period is approximately 30 days.

If it is necessary to carry out inspections, the process is delayed until their final completion and lasts about 3 months.

The Pension Fund announces its decision within 10 days, the Social Insurance Fund will only need a week.

In general, the entire process of closing a branch or representative office, from the preparation of documents to the issuance of a decision by tax authorities and extra-budgetary funds, takes about six months.

How a foreign company can open a representative office or create a branch in Russia: Video