Accreditation of branches and representative offices
Options for a foreign company to enter the Russian market
There are three main options for a foreign company to enter the Russian market, and each of them has its own features.
The choice will be based upon a company’s features and objectives. As a rule, these features include the tax system, the financing and management procedures.
LLC is a legal entity capable of carrying out activities in accordance with its own Articles of Association, including the ones, which are not carried out by a foreign company. It is responsible independently for its obligations, while being managed by the founders, in this case – by the parent foreign company. The company has a separate balance sheet and maintains accounting reports independently.
In addition, the new legal entity will be able to apply the simplified tax system (USN). Small and medium-sized companies often switch to this system, since it is essentially a preferential tax regime.
Registration of an LLC is a relatively quick and low-cost process: the state duty is 4,000 rubles, and it takes 5 working days from the moment of submission of documents to receipt of the certificate.
Currently, LLC is the most popular legal form to set up a business: by the beginning of 2018, 3.5 million limited liability companies were created, of which 388 thousand were opened in 2017.
A branch and representative office of a foreign company are the establishments of the foreign company operating at its direction outside the location of the parent company and performing all or part of its functions. In their activities, these units are subordinate to the company that founded them, and the parent company is responsible for their obligations.
An important difference between a branch and a representative office is that the representative office can only engage in marketing and advertising, as well as representing the interests of the company, i.e. a representative office is vested with a minimum amount of powers and is not entitled to conduct entrepreneurial activities. Its task is to advertise and promote the goods (works, services) of a foreign company, spread information about it, search for potential partners, conclude contracts, resolve conflict situations, etc.
Along with this, the branch can carry out the same business activities as the parent foreign company. Moreover, branches can perform the same actions as Russian companies: they can open and close accounts with Russian and foreign banks, enter into transactions, sign contracts, register trademarks.
Branches and representative offices are managed by the appointed heads / directors of these establishments. The parent company, each branch individually or one of them can keep the accounting reports of one or several branches and submit documents to the tax service.
When a branch or representative office is opened, a foreign company will be considered a non-resident, and its taxation will be regulated by a bilateral agreement on avoidance of double taxation. If an office is rented by a branch / representative office in Russia, VAT is not included in the rent in accordance with the Tax Code of the Russian Federation. Material support for branches and representative offices is carried out at the expense of the property and assets of the parent company. The transfers of such property and assets between the parent company and branches / representative offices take place within the company itself, so such transfers are much simpler than, for example, in the case of the transfer of property of a foreign company to a subsidiary in the Russian Federation. This also applies to bank transfers. Thus, a foreign company will be able to transfer funds to cover expenses associated with activities in Russia more quickly.
To start working, branches and representative offices apply for an accreditation procedure that lasts 15-20 business days and requires payment of a state duty of 120,000 rubles.
Branches and representative offices are essentially a form of presence on the Russian market, popular with medium and large foreign businesses. Dealing with these branches and representative offices, Russian customers understand that they are contacting representatives of a well-known brand, whose reputation and reliability are well known.
Foreign companies also enter the Russian market through distributors. In the framework of such cooperation, foreign companies rely on their abilities to distribute and sell goods, and a client base is gained by foreign companies indirectly through distributors. The search for such distributors is usually conducted by small and medium-sized businesses at various thematic events (exhibitions, forums, etc.). As a result of such cooperation, supply contracts are concluded, and a foreign company sells its products to a distributor, who then sells them in Russia.
Working with distributors is the best option for those foreign companies that are just starting to explore the Russian market. Since in Russia they do not have full-time employees and a mechanism for marketing products, it is better to contact those who know the needs of customers and will be able to provide them with goods.
In the end, it should be said that the choice of the option for foreign business to enter the Russian market depends on the intended goals, the size of the business and the specifics of production. It is very important to decide on a suitable option, since the company's commercial success in the Russian market directly depends on this.
- 1We advise on all issues;
- 2We carry out a comprehensive verification of the documents available to the client;
- 3We prepare a list of documents for a request in the country of incorporation and a list of additional data to prepare projects;
- 4We prepare draft documents necessary to open a branch/representative office;
- 5We work with translators to verify and adjust translation of documents;
- 6We certify the number of foreign employees of the branch/representative office in the Chamber of Commerce and Industry of the Russian Federation;
- 7We open a branch/representative office and register a foreign legal entity with the Federal Tax Service;
- 8We make stamps.
- receiving notices from funds (Social Insurance Fund, Pension Fund of the Russian Federation);
- preparing documents necessary to open a bank account;
- providing a legal address;
- personal accreditation of a foreign employee of a branch/representative office in the Chamber of Commerce and Industry of the Russian Federation;
- preparing an employment contract for the head of the branch/representative office.
- 1Notarized copy of the charter document of a foreign legal entity;
- 2Extract from the commercial register of the country of incorporation with the company registration number or a similar document (depends on the country of incorporation);
- 3An official document from the tax service of the country of incorporation with a tax payer number or a similar document (depends on the country of incorporation).
Additional information for the projects preparation:
- copy of the passport of the head of the branch/representative office (scanned copy of the passport), TIN of the head of the branch/representative office;
- bank details of the settlement account of the parent company in the country of incorporation of the parent company (name of the bank in Russian, bank SWIFT code, account number);
- e-mail address and telephone number of the representative office, full address of the branch/representative office;
- full name of the branch/representative office in Russian;
- activities of the branch/representative office (the main type of activity shall be indicated separately);
- contact details of the parent organization (phone number and email);
- number of foreign employees of the branch/representative office;
- name of the position of the branch manager (Head, Director, etc.);
- term of office of the head of the branch by proxy.
- 1Certificate of accreditation;
- 2Certificate of tax registration (if the company has not previously been registered with the tax service for any other reason);
- 3Information sheet;
- 4Resolution/protocol on opening a branch/representative office;
- 5Power of attorney for the head of the branch/representative office;
- 6Regulations for the branch/representative office;
- 7Seal of a branch/representative office.
Documents provided to the Client when ordering related services:
- lease/sublease agreement (upon purchase of a legal address);
- copy of ownership certificate (upon purchase of a legal address);
- notices from the Pension Fund of the Russian Federation, Social Insurance Fund (when ordering the service “Receipt from the funds”);
- banking service agreement and access to the Bank-client (when opening a settlement account);
- personal accreditation card of a foreign employee of a branch/representative office from the Chamber of Commerce and Industry of the Russian Federation (when ordering personal accreditation);
- an employment contract for the head of the branch/representative office (when ordering an employment contract for the head of the branch/representative office).
By choosing PRIORITET Law Firm, you can be sure that the accreditation procedure will be completed without any problems and on time. If you decide to order several services, we will offer you a flexible system of discounts. You can pay in any form convenient for you.
We express our gratitude to PRIORITET LLC for the comprehensive support of our company branch. With your help, the branch was accredited in the shortest possible time, it was registered in off-budget funds, a settlement account was opened, documents on personnel accounting were drawn up, and accounting support services are being provided at the moment. We were pleasantly surprised how quickly everything was organized, which allowed us to start working in Russia quite quickly. We would especially like to thank Elena Kuznetsova, Elena Kazanok, Yulia Vasilyeva, Elena Mikheeva, Evgeny Voronov for their well-coordinated and successful work. We hope that in the future we will also be able to rely on your outstanding specialists! We wish you success!
Head of Branch
of Company FORWARD 3D LIMITED A.A. Ivanov
Dear colleagues from PRIORITET
We would like to hereby thank you for your qualified and accurate preparation of the documents concerning the information about the Branch of the Limited Liability Company to the authorized federal executive body for making amendments to the state registry of accredited branches and representative offices of foreign legal entities. All prepared documents had met the requirements of legislation and were drafted time-consciously. We truly appreciate the consultations and recommendations of PRIORITET specialists provided at every stage of the procedure and being committed to fulfilling the task.
We believe in keeping our business and personal ties and are looking.
The representative office of Motor Sich JSC, Moscow expresses its deep appreciation and sincere gratitude to PRIORITET LLC for the quality workmanship and timely registration with the register of accredited branches and representative offices of foreign legal entities.
Compliance with all deadlines allowed us to carry out our activities without interruption.
We express confidence in maintaining the existing friendly relations and hope for further mutually beneficial and fruitful cooperation.
Director of the Representative Office P.I. Kononenko
Dear colleagues from PRIORITET,
We would like to thank you for your qualified and accurate preparation of the documents for accreditation of the Representative Office of GMCG MOSCOW LTD. All prepared documents had met the requirements of legislation and were drafted time-consciously; we were truly pleased to work with your lawyer Evgeny Voronov, and we appreciate his consultations and recommendations.
We believe in keeping our business ties and are looking forward to our continuing, mutually beneficial cooperation.
Head of Operations