Accreditation of a branch or a representative office in Russia can be a viable alternative to setting up a Russian subsidiary when a foreign company intends to limit its Russian activities to promotion and sales or preparatory and auxiliary activities.
All foreign companies intending to set up a branch or a representative office in Russia are obliged to obtain accreditation for the representative office or branch. The only accrediting authority, i.e. tax office # 47, is located in Moscow. Notwithstanding where in Russia the representative office or branch is located, said authority handles the accreditation. In case a foreign company plans to conduct business activities in several regions, a branch or representative office shall be established and accredited separately for each of them.
The accreditation process can often turn out to be a time-consuming and challenging task despite that Russian law does not regulate representative offices or branches in much detail. Most complications are related to the fact that the documents required for accreditation are usually issued outside of Russia and verified by foreign notaries. This means that the documents are often different from corresponding documents in Russia and executed in a manner that does not necessarily correspond to the way in which a corresponding document would be executed in Russia. Taking into consideration the accrediting authority pays significant attention to detail and even minor discrepancies can lead to rejection of the application means that the application and its appendices must be prepared and executed carefully. In case of a rejection, submitted documents are not returned, which consequently means that they need to be re-executed and translated.
The accreditation fees charged by the tax office and the chamber of commerce currently constitute in total RUR 135 000 (~ EUR 1985; USD 2335). In addition to accreditation, a branch and a representative office shall be registered with the Pension Fund, the Mandatory Health Insurance Fund, the Fund of Social Insurance and the Federal Service of Statistics. As a branch and a representative office are not separate legal entities, repatriation of profit is somewhat simpler compared to subsidiaries.
Should your company plan to establish a branch or representative office in Russia we at MK-Law would be happy to assist you.