ACCREDITATION OF BRANCHES AND REPRESENTATIVE OFFICES OF FOREIGN COMPANIES
In order to do business in Russia, foreign investors generally create Limited Liability Company (LLC), a branch or a representative office. The registration of a branch/representative office in Russia is related to the accreditation procedure, which is more complex and costly compared to registering LLC. Nevertheless, many companies choose this way of doing business, why?
What is a branch and representative office? What is the difference?
A representative office is a division of a foreign business entity created in order to represent and protect its interests. The representative office concludes deals on behalf of the foreign business entity, supervises their implementation, and ensures its interests are protected. Normally representative offices are created for non-profit activities.
Branches have all the functions of a representative office, but in addition can also conduct business (manufacture and sell goods, render services, etc).
However, neither branches nor representative offices are a business entity under Russian law.
What are the advantages of doing business through a branch/representative office?
The most significant advantage of doing business through a representative office is the reduction of currency control by the public authorities. For example, there is no need to obtain a currency transaction report when sending funds to the mother company.
What is the accreditation process?
The procedure for obtaining accreditation is as follows:
- Submission of documents to the Chamber of Commerce of the Russian Federation to certify the number of employees working at the branch/representative office of the foreign business entity;
- Submission of documents to the Federal Tax Service Inspectorate No. 47 in Moscow;
- Receipt of a certificate of registration in the State Register.
How long does accreditation take?
It takes a long time to prepare and completed the required documents in the proper manner. Registration itself takes about 45 days. It takes about 3-5 days for the Chamber of Commerce of the Russian Federation to certify the number of employees, and another 25 working days to register with the tax inspectorate.
What is the cost of accreditation?
State fee is applicable of RUB 120,000 (about EUR 1,700).
Certification of the number of employees in the Chamber of Commerce of the Russian Federation costs from RUB 5,000 to 15,000 (EUR 70 to 250), depending if there are any foreign employees hired by the branch/representative office.
Additional costs include notary services, translations and apostilles.
What documents are required to open a branch/representative office?
The approximate list of documents is as follows:
- Accreditation application;
- Company documents of the foreign business entity, with an apostille and notarized translation;
- Extract from the register of foreign business entities or equivalent legal document certifying the legal status of the foreign business entity, with an apostille and notarized translation;
- Document confirming the registration of the foreign business entity as a taxpayer in the country of origin, indicating the taxpayer code (or taxpayer code equivalent), with an apostille and notarized translation;
- Resolution to establish a branch or representative office in Russia, with an apostille and notarized translation;
- Regulation on foreign branch, representative office;
- Power of attorney to confer the necessary powers to the head of the foreign branch or representative office in the Russian Federation, with an apostille and notarized translation;
- Document confirming payment of state fees.
Denial of accreditation
Most often it is denied if:
- The required documents for accreditation are not presented, or they are submitted outside of the required timeframe, or they do not meet the requirements for their completion;
- Incorrect information is presented;
- The objectives of creating the branch or representative office are contrary to the Constitution and laws of the Russian Federation.
What difficulties can arise during the branch/representative office accreditation process?
Despite the fact that the accreditation procedure does not seem complicated, many difficulties can arise. There are many requirements for documents related to the contents, signature, seal, apostille, and translation. Failure to comply with these requirements will result in the denial of accreditation, in which case the state fee is not refundable.
VALEN provides a full range of services related to the accreditation of branches and representative offices of foreign companies. We provide support at all stages of the accreditation procedure:
- Consultation on all matters related to accreditation;
- Selection of legal address and preparation of documents to confirm it;
- Preparation of necessary applications;
- Submission and receipt of documents in the registering authority.