Every firm from abroad that is going to start commerce in Russia is obliged to register its local office here. According to current legislation, foreign firm in Russia can register a branch, a representative office, or LTD. After it is registered, a foreign business can legally sell their goods or services here, as well as trade without intermediaries. Each of the above structures has its pros, cons, and limitations. Therefore, depending on the goals set, one of these forms may be preferable.
Here we consider the first two (a branch and a representative office), since they are quite similar, and unlike LLC, they are structural units of a holding firm, and not separate bodies. And to legalize them in the Russian Federation, one must through the accreditation not through the registration as in case of LLC
So, here are the definitions of these two types of structures in the RF.
A branch is part of the holding firm, its structural unit, located in another jurisdiction and its main purpose is to perform commercial activities of a holding firm in its jurisdiction. To legalize a branch of a foreign legal entity, you must go through the standard accreditation at the State Registration Chamber. When your branch gets a certificate, it can officially work in Russia, while it is included in the State Register. A branch enters into contracts in the country on behalf of a parent company, and performs other representative functions, in addition, it can produce goods, trade, or provide services.
A representative office is very ways similar to a branch, a structural subdivision of a holding firm as well, and also registered to represent a holding firm in Russia. But, unlike a branch, it cannot directly trade, produce goods and provide services, its only goal is to represent foreign interests. Such form is often used by non-commercial entities, although there are no specific restrictions
Why choose a branch?
Now let’s look at why foreign businesses choose a branch rather than limited liability company? After all, accreditation goes longer than registration of an LLC. The main reason why foreigners open their branches is simplified accounting, namely, a simple procedure for withdrawing money abroad and receiving it from a holding firm, and a simplified currency control.
Accreditation step by step
As for the accreditation process in detail, generally it looks like this:
- Submit an official request to the CCI. This is required to approve all foreigner-employees.
- After you have received confirmation from the CCI, you must collect and submit all the documentation to the Interdistrict Inspectorate of the Federal Tax Service No. 47. Here is what they require:
- Completed application for registration;
- Constituent documents of a holding firm in its home jurisdiction (translated and notarized);
- Documentation confirming the registration of a holding company in its home jurisdiction (translated and notarized);
- Documentation confirming the taxpayer status of a holding company in its home jurisdiction (translated and notarized);
- A document that confirms the decision of a holding’s board of directors to register a branch in Russia (translated and notarized);
- Charter of a new branch;
- Acknowledgement of a state duty payment.
- After that, you receive a confirmation and your branch is entered into the Unified State Register of Russia. That’s all! Now you can legally develop your company in Russia.
Accreditation terms and cost
The entire process takes approximately 30 days (working days), including the process for checking foreigners-employees at the CCI and registering a new branch with the local tax office. In 2015, the RF adopted amendments to its laws, in particular, the term of accreditation is now unlimited, (previously a branch was accredited for 5 years, and a representative office – for 3 years).
The approximate accreditation cost is about 150 thousand rubles (a little more than $2,000 at the current exchange rate as of 19.02.2021). It includes the standard state fee – 120 thousand rubles, and payment for the CCI services – 18 thousand rubles. The rest is the cost of document localization, notarization, apostille.
Problems and failures
As you can see, everything is quite simple and fast, but you may still face some problems. Thus, for example, according to local requirements, the documentation must be drawn up according to certain rules, including translation, apostille, notarization, signatures, stamps, etc.
No matter the reason, if your application will be refused, the state fee will not be returned to you and you will have to go through the whole process once again, including paying additional 2,000$.
Although the procedure seems simple and straightforward, it has certain nuances that cannot be ignored. To keep things going quickly and smoothly, you need professional advice. Valen specialists are exactly what you need. We are ready to advise you on any issues in the registration process, we will help you with the choice of a legal address, with visas for foreigners, we will solve all issues with the CCI and local tax service, we will help with accounting and we will go through the whole process with you from start to finish.