Legal entities are seeking to expand their sphere of influence and find new markets in the context of rapidly developing globalisation. In the article "Formation of a foreign business in Russia", we talked about the ways of expanding the geographical boundaries of business, opening a foreign business in Russia, their pros and cons, and the specifics.
This article focuses on one of the ways of opening a business in Russia, and that is the accreditation of a representative office (branch) of a foreign commercial legal entity. We will go over the accreditation procedure, present the step-by-step instructions developed by our specialists and tell you about the costs of opening a foreign representative office.
First, let's talk about the differences between a branch and a representative office.
A representative office differs from a branch office in that it only represents and protects the interests of the legal entity. It cannot carry out economic activities. A branch is an economically autonomous subdivision of a legal entity, which is located outside of the company location and exercises all or part of its functions, including the function of a representative office (Article 55 of the Civil Code of the Russian Federation).
It should be noted that a representative office will be deprived of the opportunity to engage in commercial activities, therefore, the main activity of such organisations is usually advertising the goods of the parent company and recruiting advertising agents and dealers. In the legal regulation of the mechanism of opening a representative office (branch), there is a certain symbiosis of the law of the country where the legal entity itself is located and the law of the country where the representative office is opened. Therefore, some difficulties may arise in the use of this instrument.
Opening of a representative office (branch) of a foreign company in Russia is regulated by Federal Law № 160-FZ "On Foreign Investments in the Russian Federation" dated 09.07.1999. This law establishes general conditions and procedure for opening a representative office. Detailed regulation of some nuances is reflected in the regulations, explaining the letters from the registering authority. The procedure for establishing and terminating the activities of representative offices of foreign banks and other foreign credit organisations and insurance companies in the Russian Federation is also regulated by special laws.
The procedure outlined in this article applies only to the creation of a branch (representative office) of a commercial organization. The creation of a branch (representative office) of a foreign NPO in the Russian Federation has a number of features and is regulated by separate provisions.Read about opening representative offices (branches) of foreign NPOs here.
Based on our practical experience of accreditation of representative offices (branches) of foreign companies in Russia we have prepared detailed step-by-step instructions.
STEP-BY-STEP INSTRUCTIONS "ACCREDITATION OF REPRESENTATIVE OFFICES AND BRANCHES OF FOREIGN COMPANIES IN RUSSIA"
STEP 1. PREPARE THE BRANCH (REPRESENTATIVE OFFICE) REGULATIONS
The Regulation on a branch (representative office) of a foreign legal entity in the Russian Federation shall be drawn up in a free form.
The following information shall be obligatory indicated in the Regulation on the branch (representative office) of the foreign legal entity: organizational and legal form, name of the foreign legal entity, address of the foreign legal entity in the country of registration, name of the branch (representative office), its location on the territory of the Russian Federation, purpose of foundation, opening and types of activity of the branch (representative office), procedure of branch (representative office) management of the foreign legal entity. The regulations of the branch (representative office) of the foreign legal entity may include other information reflecting the peculiarities of branches, representative offices in the territory of the Russian Federation, but not contradicting the legislation of the Russian Federation.
STEP 2. DECIDE ON ESTABLISHING A BRANCH (REPRESENTATIVE OFFICE) OF A FOREIGN LEGAL ENTITY IN THE RUSSIAN FEDERATION. COLLECT REGISTRATION DOCUMENTS OF THE FOREIGN LEGAL ENTITY AND PREPARE A NOTARIAL TRANSLATION OF THESE DOCUMENTS.
The decision to establish a branch (representative office) of a foreign legal entity in the Russian Federation shall be made in accordance with the constituent documents of the foreign legal entity and the legislation of the country of its registration. Remember that you can apply for accreditation within 12 months after the date of the decision on opening a branch (representative office) in the Russian Federation. If the documents are filed later, the agency will refuse to grant accreditation.
In addition, the following documents should be submitted for accreditation of a branch (representative office) of a foreign company:
- constituent documents of a foreign legal entity;
- extract from the register of foreign legal entities of the corresponding country of origin or another document of equal legal force confirming the legal status of a foreign legal entity;
- document issued by an authorised body of the country of origin of the foreign organisation confirming its registration as a taxpayer in that country with the taxpayer code (or analogue of the taxpayer code).
These documents must be issued (drawn up) not earlier than 12 months before the date of application for accreditation. With regard to constituent documents, the date of the constituent document is not the date of approval of this version by the foreign legal entity, but the date of certification of the constituent document translation into Russian in accordance with the requirements for the execution of accreditation documents (Letter of the Federal Tax Service of Russia No. GD-4-14/14339@, dated 14.08.2015).
Documents
shall be submitted to the authorised tax authority in Russian or in a foreign
language with a translation into Russian certified in accordance with the
procedure established by the legislation of the Russian Federation (notarised
or in a manner equivalent to notarisation). The said documents may be submitted
as copies also certified in accordance with the procedure established by the
legislation of the Russian Federation.
Documents issued or certified by the competent bodies of foreign states
shall be submitted with consular legalization of these documents or an
apostille affixed, unless otherwise established by an international treaty of
the Russian Federation. Documents
containing more than 1 sheet shall be bound and the sheets shall be numbered.
On the reverse side of the last sheet of each such document, a record must be
made of the number of sheets in the document. Erasures and corrections in the
text of submitted documents are not allowed.
Please note that incorrectly executed documents for accreditation of a representative office (branch) may be a ground for refusal in accreditation (without refund of state duty).
It is also necessary to prepare notarised copies of all documents collected and prepared for submission to the CCI of the Russian Federation.
STEP 3: COMPLETE APPLICATION FORM No. 15AFP.
The application form was approved by Order No. MMV-7-14/681@ of the Federal Tax Service dated 26.12.2014. In the application form, fill in all sections relating to the applicant.
Please note the following:
- The application must be completed in Russian and signed by an authorised representative of the foreign legal entity.
- According to the application form (the "Information about the applicant" sheet) this can be the head of the foreign legal entity, the head of the representative office (branch) of the foreign legal entity or another authorised person (a document certifying authority to sign shall be attached to the application).
- The number of employees of the representative office (branch) must be certified in the application. Read more about how to certify the number of employees.
- Fill in the application exactly according to the documents collected, including notarised translations of documents for the foreign legal entity.
How to complete the application form No. 15AFP?
- Enter number 1, if registering a branch, number 2, if registering a representative office section 1 (specify the name of the foreign legal entity - full and abbreviated (if any), TIN (assigned in the Russian Federation, if any))
- section 2 (indicate the numerical code of the country of registration of the foreign legal entity in accordance with the All-Russian Classifier of Foreign Legal Entities)
- section 3 (indicate the full address of the foreign legal entity)
- section 4 (indicate the legal form of the foreign legal entity - choose the variant by ticking the option number or another variant and the additional field "other"
- section 5 (name of the registration authority of the foreign legal entity)
- section 6 (registration number of the foreign legal entity)
- section 7 (taxpayer code or similar - if any)
- section 8 (peculiarities of the registration regime of the foreign legal entity - if any)
- section 9 (amount of the authorized capital of the foreign legal entity and currency code in compliance with the currency classifier)
- sections 10-12 (information on the servicing bank in the country of registration of the foreign legal entity)
- section 13, 14 (full and short (if any) name of the branch or representative office)
- section 15 - (location of the branch (full address))
- section 16 - (date of decision on establishment of the branch or representative office)
- section 17 (codes of economic activity of the branch or representative office in compliance with the All-Russian Classifier)
- section 18-26 (information on an individual - head of the branch or representative office; the location or residence in Russia should be indicated)
- section 27-29 (number of employees, data on the person approving the number of employees at the CCI RF, approval mark - the number is indicated by word, other data are indicated in accordance with the samples posted on the CCI of the RF website)
- section 30-37 (information on the applicant, also necessarily either place of residence or place of stay, signature of the applicant)
STEP 4. VERIFY TO THE CCI OF THE RUSSIAN FEDERATION INFORMATION ABOUT THE NUMBER OF FOREIGN EMPLOYEES IN A REPRESENTATIVE OFFICE (BRANCH) OF A FOREIGN LEGAL ENTITY.
The number of employees is always certified even if there are no foreign employees, except for the branches (representative offices) of credit institutions and airlines (the number is certified by the relevant authorised agencies). There is a fee for certifying such information. The certification procedure, terms, fee, payment procedure, and the documents required as well as samples of their completion are listed on the website of the Chamber of Commerce and Industry of the Russian Federation (CCI RF). Approximate cost of certification is 18,000-21,000 roubles. You need to pay the invoice first, then come for the examination of documents and certification of headcount with the following documents:
- a letter of request for certification of foreign employees of the branch (representative office), signed by the head of the foreign legal entity or branch, representative office. The letter must contain a mandate to process personal data on the conditions posted on the website of the Chamber of Commerce and Industry of the Russian Federation. The letter should be presented in 1 copy (the original) on the letterhead of the foreign legal person with a telephone, fax, address, e-mail (a reduced rate is applied in case of filling in the electronic form via the website of the RF CCI).
- a filled-in application form No 15AFP
- constituent documents of the foreign legal person (notarized copies)
- an extract from the register of foreign legal entities of the country of registration or other equivalent document confirming the legal status of the foreign legal person (notarized copies)
- documents of the foreign legal person (notarized copies), as well as documents of the foreign legal person's representative office.
Documents
certified in accordance with the established procedure by notarial offices of
the country of registration of a foreign legal entity must be legalised in
accordance with The Hague Convention of 1961 by apostille or must undergo
consular legalisation in a consular office of the Russian Federation, unless
otherwise provided for by international treaties of the Russian Federation.
Documents executed in a foreign language must have a notarial translation into
Russian.
Please note that if the number of foreign employees changes, it is necessary to undergo the procedure of changing the information about the branch (representative office) of a foreign legal entity (also certify the number of foreign employees in the CCI, then the documents are submitted to the accreditation body).
STEP 5. PAY THE STATE DUTY FOR ACCREDITATION OF A REPRESENTATIVE OFFICE (BRANCH)
State duty for accreditation of one representative office or a branch of a foreign company is 120,000 roubles. Details of duty payment can be found on the website of the Federal Tax Service.
STEP 6. APPLY FOR ACCREDITATION OF A BRANCH (REPRESENTATIVE OFFICE)
- The authorized body for accreditation of a branch (representative office) of a foreign company, with the exception of branches (representative offices) of foreign companies in the field of civil aviation, and credit organizations, is the Federal Tax Service. The functions of accreditation of branches (representative offices) of foreign companies are performed by the Interdistrict Inspectorate of the Federal Tax Service No.47 in Moscow.
- For credit organisations - by the Central Bank of the Russian Federation
- For airlines - by the Federal Aviation Agency.
These bodies send information to the Federal Tax Service. A special procedure has been established for the media. The Ministry of Foreign Affairs of the Russian Federation issues a permit to establish a foreign media outlet in the Russian Federation and accredit foreign correspondents.
Documents for accreditation of a branch (representative office) of a foreign company in Russia
For accreditation of a branch (representative office) of a foreign company, the following documents shall be submitted:
- application for accreditation under Form No. 15AFP
- constituent documents of the foreign legal entity, extract from the register of foreign legal entities of the respective country of origin or other document of equal legal force confirming the legal status of the foreign legal entity document issued by an authorised body of the country of origin of the foreign organisation confirming its registration as a taxpayer
- decision of a foreign legal entity on establishment of a foreign branch, representative office in the Russian Federation
- regulations on the foreign branch, representative office
- power of attorney granting the head of the foreign branch, representative office in the Russian Federation the necessary powers
- document on payment of the state duty (not mandatory, but recommended to submit, as the fact of payment is confirmed by information from the Government information system on state and municipal payments, however information on payment may not be available in this system)
- an inventory of the documents submitted (in duplicate)
Documents other than the application form and inventory must be submitted in the original or as a notarised copy.
How to submit the documents: directly to the Tax Inspectorate (in person or through a representative). If the documents are submitted through a representative, a power of attorney will be required on behalf of the legal entity by post with return receipt and list of enclosures.
STEP 7. OBTAIN DOCUMENTS ON ACCREDITATION OF A BRANCH (REPRESENTATIVE OFFICE)
The deadline for accreditation of a representative office (branch) of a foreign company is 15 working days after the date of filing the documents (the new deadline is valid from 08/24/2021).
Upon expiry of that term, if the tax body does not make a decision on refusal, the foreign legal entity receives the following set of documents:
-
certificate on making an entry into the state register of accredited branches, representative offices of foreign legal entities in form No 15SvFP
- information sheet on making an entry into the state register of accredited branches, representative offices of foreign legal entities in form No 15ZFP
Starting from 01/01/2015 accreditation has indefinite term, i.e. there is no need to prolong it, however, in case of changes in information submitted upon accreditation of a branch (representative office) an application on making alterations in the register of accredited branches, representative offices of foreign legal entities should be submitted.
Starting from 08/24/2021 in case this foreign legal entity fails to submit documents required for accreditation or the submitted documents are improperly prepared, an accreditation agency shall suspend accreditation (previously in such cases authorized bodies denied accreditation) and give time for elimination of defects (not more than 15 working days).
STEP 8. OBTAIN A CERTIFICATE OF TAX REGISTRATION OF A BRANCH (REPRESENTATIVE OFFICE) OF A FOREIGN COMPANY
Starting from 03/15/2019 branches (representative offices) of foreign companies are registered for tax accounting in an automated system from the date of accreditation. A branch (representative office) only needs to obtain a certificate of registration with the tax authority where it is located.
STEP 9. OBTAIN A NOTIFICATION OF REGISTRATION IN THE STATISTICAL REGISTER OF BRANCHES (REPRESENTATIVE OFFICES) OF FOREIGN COMPANIES AND STATISTICAL CODES IN ROSSTAT
To receive the notification about registration in the statistical register of branches (representative offices) of foreign legal entities, the following documents should be submitted: information sheet on registration in the state register of accredited branches, representative offices of foreign legal entities of an accredited, operating on the basis of a permit of a foreign legal entity. Certificate of tax registration documents should be submitted to the department of maintaining of the statistical register and all-Russian classifiers of the Rosstat. You also need to obtain a statistical code from Rosstat.
STEP 10. OBTAIN NOTIFICATIONS OF REGISTRATION WITH NON-BUDGETARY FUNDS
After your accreditation you must register with the Pension Fund of the Russian Federation (PFR) and the Social Insurance Fund (SIF). You must apply to these bodies for registration and submit the documents which confirm your branch status. As a result, you will receive notification of registration with the given registration number. This number will be noted in the accounts of the branch (representative office).
STEP 11. OPEN A BANK ACCOUNT AND ORDER A SEAL (IF REQUIRED)
Documents for a branch (representative office) of a foreign legal entity must be submitted to the bank to open a bank account.
STEP 12. OBTAIN PERSONAL ACCREDITATION CERTIFICATES FOR FOREIGN EMPLOYEES OF A BRANCH (REPRESENTATIVE OFFICE) OF A FOREIGN LEGAL ENTITY, OBTAIN VISAS FOR FOREIGNERS TO ENTER THE RUSSIAN FEDERATION
To work at a branch, representative office of a foreign legal entity, foreign nationals can be invited for accreditation up to the number of employees in the register of accredited representative offices (branches). Personal accreditation of foreign citizens who are employees of branches, representative offices of foreign commercial legal entities is also performed by the Chamber of Commerce and Industry of the Russian Federation. Branches (representative offices) of credit organisations are an exception; the relevant authorised body issues personal accreditation for a foreign body (Central Bank of the Russian Federation). A personal accreditation certificate is a document confirming the implementation of personal accreditation. The personal accreditation certificate is subject to compulsory return to the Chamber of Commerce and Industry of the Russian Federation in case of termination of the foreign employee's work in the representative office of the foreign legal entity, termination of the foreign legal entity's representation on the territory of the Russian Federation or replacement upon expiry of the certificate, change of address, telephone, fax, electronic mail of the representative office. Personal accreditation can be cancelled at the request of a branch (representative office) only upon expiry of a working visa or expiry of a valid visa for a foreign employee.
Documents required for personal accreditation of foreign workers:
- letter of request for personal accreditation of a foreign worker signed by the head of a foreign legal entity or branch, representative office. The letter shall contain a mandate to process personal data under the terms and conditions posted on the website of the Chamber of Commerce and Industry of the Russian Federation. The letter shall be submitted in 1 copy (the original) on the letterhead of the foreign legal entity with indication of telephone, fax, address, e-mail. To accelerate the process of obtaining a personal accreditation certificate, documents must be submitted electronically in the form of a certificate of making an appropriate entry in the State Register of Accredited Branches (Representative Offices) of Foreign Legal Entities (the original plus a copy or a notarised copy).
- certificate of Record in the State Register of Accredited Branches and Representative Offices of Foreign Legal Entities (original + copy or a notarized copy)
- power of attorney authorizing the head of the foreign branch (representative office) in the Russian Federation with necessary powers (legalized copy with an appropriate notarized translation, a general power of attorney signed by the signatory),
- curriculum vitae of the accredited foreign legal entity
A reduced fee applies when submitting the certificate electronically. The
electronic application number must be mentioned on the application form for
personal accreditation. It is required also 2 colour photos on light background
of 3x4 cm (official form) in compliance with CCI requirements for photos, copy
of passport page(s) with establishing data, original of accreditation card
issued by SRC at the Ministry of Justice of Russia (if any).
The personal accreditation procedure can take up to 6 calendar months. A temporary personal accreditation certificate may be issued for the period of personal accreditation procedure.
The cost of personal accreditation for an employee is 6,000 to 7,200 roubles per employee.
In accordance with the Russian law, the branch office (representative office) of a foreign company must submit the documents for migration registration within 7 working days from the date of arrival of the foreign national to Russia. If you leave Moscow with subsequent migration registration in another city (subject of the Russian Federation) and on your return you must get migration registration at the place to stay no later than 7 working days from the date of arrival at the place to stay. Responsibility for the timely submission of documents for multiple work visa and their receipt is borne directly by the foreign national who is granted a multiple work visa and the branch (representative office) of the foreign legal entity as the receiving party.
The accreditation procedure for a representative office is by no means the easiest and quite lengthy, and the percentage of refusals by the authorised bodies in accreditation is quite high, with the state duty not refundable to the applicant, so it is better to weigh all the risks and apply for this service to the professionals.
The Dvitex Law Firm offers services for accreditation of a branch, representative office of a foreign company in Russia on a turnkey basis with payment for services only after successful accreditation of the branch (representative office).
As a result of services provided, the Dvitex Law Firm provides the client with the following package of documents:
- Accreditation certificate and making an entry in the State Register
- Certificate of tax registration of the foreign organization
-Information sheet on making an entry on accreditation in the state register
- Documents on the registration in a state register, statistical codes
- Documents on the registration of a foreign Representative Office/Branch in the Pension Fund
- Documents on registration of a foreign Representative Office/Branch in the Social Insurance Fund
- If necessary, our company will assist in obtaining a seal, opening a bank account, personal accreditation of employees and registration of foreigners in Russia. We also provide you with comprehensive legal support for your business in Russia.
We offer a successful accreditation of your representative office (branch) with a guarantee of results:
-
No upfront costs, financial guarantees and responsibility of our company
- Comprehensive services "turnkey"
- Lower prices than our competitors
- Accreditation discounts when ordering legal services
- Personal lawyer rather than manager for interaction during the work process
To view prices and other terms of accreditation of a branch (representative office) of a foreign company you may click here.
