Branch concept
The concept of a branch is defined in paragraph 1 of article 55 of the Civil code (CC RF).
A branch is a separate subdivision of a legal entity located outside its location and performing all or part of its functions, including the functions of representation.
In accordance with paragraph 3 of article 55 of the civil code branches are not legal entities. They do not have independent legal capacity and depend on the legal entity that created them. The legal capacity of a branch depends entirely on the legal capacity of the legal entity, its limits are determined in accordance with the law by the legal entity in the provision on the branch on the basis of which they operate.
In order to perform its functions, the branch shall be vested with the necessary property by the legal entity that created it. This property is assigned to the relevant branch, but is owned by a legal entity.
In accounting, the specified property is reflected simultaneously on a separate balance sheet of the branch or representative office, and on the balance sheet of the legal entity.
The difference of the branch of the mission is to circle the tasks. The branch performs the functions of a legal entity, which should be understood as the types of economic and other activities of a legal entity, which it is entitled to engage in in accordance with the law and the constituent documents of the legal entity. The mission of the mission is limited. They consist in the representation and protection of the interests of the legal entity, i.e. in the functions carried out within the framework of the powers based on the power of attorney. For example, a representative office of a credit institution, unlike a branch of a credit institution, is not entitled to carry out banking operations.
The procedure of opening of branch
New rules concerning accreditation of representative offices and branches of foreign companies in Russia (Law of the Russian Federation of 05.05.2014 N 106-FZ) came into force on January 1, 2015.
Since January 01, 2015 accreditation of branches of foreign companies is carried out in the FTS inspection of Moscow № 47. The branch is entered into the state register of accredited branches and representative offices indefinitely until the decision of the parent company to close it.
The state duty in the amount of 120 000 rubles is paid.
The list of required documents is as follows:
1. APPLICATION FOR ACCREDITATION OF BRANCH, FORM # 15АПФ (SIGNED BY THE HEAD OF THE PARENT COMPANY)
2. CHARTER OF A LEGAL ENTITY
3. THE EXTRACT FROM THE COMMERCIAL REGISTER
4. DOCUMENT CONFIRMING REGISTRATION OF LEGAL ENTITY WITH THE TAX AUTHORITIES IN THE COUNTRY OF ORIGIN
5. THE DECISION TO OPEN A BRANCH
6. THE POSITION OF THE BRANCH
7. GENERAL POWER OF ATTORNEY TO BRANCH MANAGER
8. POWER OF ATTORNEY
9. RECEIPT OF PAYMENT OF STATE DUTY IN THE AMOUNT OF 120,000 RUBLES.
Documents must be no older than 12 months.
Also, the branch should certify the number of foreign employees in the chamber of Commerce and industry of the Russian Federation Moscow (CCI RF) before submitting documents to the tax Inspectorate for extension in the register.
Registration takes 30 working days. After that, the branch receives a certificate of entry into the state register and tax registration.
Also the order of opening and activity of branches of foreign firms in Russia is established in the Federal law of the Russian Federation “on foreign investments in the Russian Federation” of 09.07.1999 N 160-FZ.
All documents listed in paragraphs 2 to 8 must be notarized and certified by the consular offices of the Russian Federation abroad, with a translation into Russian, the translator’s signature must be notarized. It is enough to provide notarized copies of these documents to the registration authority.
For a number of countries-parties to the Hague Convention of 1961, instead of consular legalization, an apostille is required, issued by the relevant foreign state institution (in Germany, these are mainly courts of first instance “Amtsgericht”) after notarization.
In addition, the branch is obliged to register in extra-budgetary funds, also to receive codes of statistics and to make a seal.
The branch may open a Bank account only after the above actions have been taken.
It should be noted that the requirements to the regulations on the branch of a foreign legal entity are established by article 22 of the Federal law of the Russian Federation “on foreign investments in the Russian Federation”, they include:
* Indication of the name of the branch and its head office;
* organizational and legal form of the parent organization;
* location of the branch in the Russian Federation and legal address of its head organization;
* objectives, opening and activities of the branch;
* branch management procedure.
The regulations on the branch of a foreign legal entity may include other information reflecting the peculiarities of the branch of a foreign legal entity in the territory of the Russian Federation and not contradicting the legislation of the Russian Federation.
Branch activities and branch management
The branch has the right, in addition to representative activities, to carry out other activities of a foreign company, including commercial ones.
In accordance with article 22 of the Federal law of the Russian Federation “on foreign investments in the Russian Federation”, a branch of a foreign legal entity has the right to carry out business activities in the territory of the Russian Federation from the date of its accreditation.
A branch of a foreign legal entity shall cease business activity in the territory of the Russian Federation from the date of its accreditation.
Management of the branch is carried out by the head of the branch. The head of the branch is appointed by the body of the legal entity authorized to do so in accordance with the constituent documents of the legal entity.
The authority of the head must be certified by a power of attorney issued by a legal entity; the authority may not be based only on the instructions contained in the constituent documents of the legal entity, the regulations on the branch or representative office, etc., or emerge from the situation in which the head of the branch operates.
It should also be taken into account that the head of the branch has the right to entrust the Commission of actions to which he is authorized by a power of attorney to another person in compliance with the rules provided for in article 187 of the civil code.
Since the branch acts on behalf of the legal entity that created it, i.e. does not act as an independent subject of civil turnover, the legal entity that created it is also responsible for its activities.
The branch may bring claims arising from its activities only on behalf of the legal entity. Third-party claims arising from the activities of the branch are not presented to the branch, but to the legal entity that created them.
Branch taxation
Since the branch is entitled to conduct commercial activities, the taxation of the branch is carried out as well as for a legal entity, i.e. the branch is obliged to pay all taxes established by Russian tax legislation on conducting economic activities in Russia. The branch is also obliged to pay income tax and contributions to state off-budget funds from the salaries of employees. Foreign employees of the branch pay income tax on their own.
It should also be noted that branches are not independent payers of taxes and (or) fees. At the same time, in accordance with the procedure provided for by the Tax code of the Russian Federation (article 19), the branches perform the duties of the organization that created them to pay taxes and fees at the location of these branches.
Entry, stay and employment of foreign employees of the branch
The entry into the Russian Federation of foreign employees of branches, accredited on the territory of the Russian Federation shall be the passport or an equivalent identity document in the presence of an entry visa issued by the Consular office of the Russian Federation, upon the invitation of the CCI of the Russian Federation.
Upon arrival in the Russian Federation, foreign employees of branches accredited in the territory of the Russian Federation, as well as their family members are required to report to the SRP about this within seven days (excluding holidays and weekends) in order to register their stay.
Foreign employees of the branches may work in the territory of the Russian Federation only if they obtain a relevant permit for the right to work of the Federal migration service of Russia.
from Andrey Nikishenko, 2018