Changes in registration of Representative and Branch offices

New Rules on Registration of Branch and Representative offices

On May 5, 2014, the Federal Law N 106-FZ "On Amendments to Certain Legislative Acts of the Russian Federation." was enacted. The amendments made by this document concerning the accreditation of branches and representative offices of foreign legal entities on the territory of the Russian Federation.

According to the law, these functions are transferred to the Russian tax authorities, in Moscow it is Tax Inspectorate N 47. Simultaneously, the Chamber of Commerce of the Russian Federation will conduct the personal accreditation of foreign nationals - employees of branches and representative offices of foreign legal entities.

The number of foreign employees of the representative offices or branch must be approved by the Russian Chamber of Commerce prior to applying for registration

Adding to the proces the Chamber of Commerce makes the process still complext as the companies have to apply to several authorities to register a branch or a representative office.

Important change is also the fact that both branches and representative offices will have the right to employ highly qualified specialists in a simplified manner.

The changes also simplified obtaining of information from the registry - it will be open and accessible on the Internet. This innovation is very convenient, because at the moment all the information from the register available upon written request within a few days, and this service is paid. Availability of information will significantly simplify the operation of companies, and provide transparency of information on counterparties.

Similar to Russian legal entity registration rules,  registration of Branch and RepOffices with non-budgetary funds is done automatically by the authorities within three days of the date of submission of such records in the registry.

Another highly valued change is that the new rules do not provide the renewal (prolongation) of accreditation procedures for the new term, as it was before. Period of accreditation will now be unlimited, which should help to facilitate the activities of branches and representative offices of foreign companies in the Russian Federation.

The accreditation of branches and representative offices may be terminated only by a decision of a foreign legal entity or by a decision of the federal authority, if in the past 12 months, agency or branch:

- Does not submit tax returns;

- Is not at reception address and with him can not be made at the place of connection of its activities;

- Does not perform the operation for at least one reporting period;

- Activities of a branch or representative is contrary to Russian law and poses a threat to the sovereignty or political system.

These provisions are similar to those that apply to the termination of the Russian legal entities.

Branches and Representative offices, which were opened before January 1, 2015 and whose term of validity expires before April 1, 2015, are required to submit their own data to the tax authorities up to 1 April 2015 otherwise accreditation of Branches and Representative offices, which do not fulfill these instructions, cease and these offices and branches will be automatically excluded from the registry.

Unfortunately, currently the tax authorities have not yet issued clear instructions on the documentation and procedures. This is why the document list used in practice remains that used previously. The charges payable to the authorities are still not clear. 

In overall companies must be prepared to refusals in registration due to unset procedures.