Concept of representation
The concept of representation is defined in paragraph 1 of article 55 of the Civil code (CC RF). A representative office is a separate division of a legal entity located outside its location, which represents the interests of the legal entity and protects them.
In accordance with paragraph 3 of article 55 of the civil code, representative offices 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 representative office depends entirely on the legal capacity of the legal entity, its limits are determined by law by the legal entity itself in the provision on representation on the basis of which they act.
In order to perform its functions, the representative office is vested with the necessary property by the legal entity that created it. This property is assigned to the relevant representative office, but is owned by a legal entity. In accounting, this property is reflected, as a rule, on the balance sheet of the legal entity.
Procedure for opening representative offices of foreign companies in Russia
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 representative offices of foreign companies is carried out in the FTS inspection of Moscow № 47. The representative office is entered in 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.
List of documents required for accreditation of representative office:
1. APPLICATION FOR ACCREDITATION OF REPRESENTATIVE OFFICE, FORM NO. 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 REPRESENTATIVE OFFICES
6. THE REPRESENTATION
7. GENERAL POWER OF ATTORNEY TO HEAD OF REPRESENTATIVE OFFICE
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.
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.
Also the order of opening and activity of representations 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.
It should be noted that the requirements to the regulations on the representation 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 representative office and its parent organization;
* organizational and legal form of the parent organization;
* the location of the representative office in the Russian Federation and the legal address of its parent organization;
* objectives of the establishment, opening and activities of the representative office;
* procedures for managing a representative office.
The provision on the representation of a foreign legal entity may include other information reflecting the peculiarities of the foreign legal entity’s representation in the territory of the Russian Federation and not contradicting the legislation of the Russian Federation.
The representative office must also certify the number of foreign employees in the chamber of Commerce and industry of the Russian Federation Moscow before submitting documents to the tax office for renewal in the register.
Registration takes 30 working days. After that, the representative office or branch receives a certificate of entry into the state register and tax registration.
In addition, the mission is obliged to register in extra-budgetary funds, as well as to obtain codes of statistics and to make a seal.
The representative office has the right to open a Bank account only after carrying out the above actions.
The chamber of Commerce and industry of the Russian Federation in Moscow (CCI RF) also provides personal accreditation for a maximum of five foreign employees and their families, as well as provides visa support for the entry of managers and employees of foreign companies.
Activities of the mission and its management
As a rule, the representative office carries out a non – profit, aimed at representing the interests of the foreign company in Russia, i.e. auxiliary and preparatory-promotion of its products, marketing research of the market, service provision of clients of the foreign company, preparation and support of contracts.
Management of the representative office is carried out by the head of the representative office. The head of the representative office is appointed by the body of the legal entity authorized to do so in accordance with the constituent documents of the legal entity.
The powers of the head must be certified by a power of attorney issued by a legal entity; the powers may not be based only on the instructions contained in the constituent documents of the legal entity, the provision on representation, etc., or emerge from the situation in which the head of the representative office operates.
It should also be taken into account that the head of the representative office 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 representative office acts on behalf of the legal entity that created it, i.e. it does not act as an independent subject of civil turnover, the legal entity that created it is also responsible for its activities.
A representative office may bring claims arising from its activities only on behalf of a legal entity. Third-party claims arising from the activities of the representative office are not presented to the representative office, but to the legal entity that created them.
Taxation of representative office
Since the representative office, as a rule, does not conduct commercial activities in Russia, it is exempt from income tax, VAT, property tax (if the representation is not assigned to the property), etc.the representative Office, however, is obliged to pay from the salary of employees income tax and contributions to the state extra-budgetary funds. Foreign employees of the representative office submit a tax return at the end of the calendar year and pay income tax on their own.
It should also be noted that the representative offices are not independent payers of taxes and (or) fees. At the same time, in the manner provided for by the Tax code of the Russian Federation (article 19), the representative offices perform the duties of the organization that created them to pay taxes and fees at the location of these representative offices.
Entry, stay and employment of foreign employees of representative offices
The entry into the Russian Federation of foreign employees of representative offices 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 representative offices accredited in the Russian Federation, as well as their family members, are required to inform about this within seven days (excluding holidays and weekends) in order to register their stay.
Foreign employees of representative offices are entitled to carry out their work on the territory of the Russian Federation on the basis of personal accreditation issued by the RF CCI.
from Andrey Nikishenko, 2018