A branch (”filial” in Russian) is a company’s separate subdivision located outside the company’s place of residence. A branch does not constitute a separate legal entity, but it may represent the company and carry on business on behalf of the company. As a rule, a branch has an individual balance sheet and bank account for transfers, payments and settlements with customers in its own name to its own bank account.
Accounting, tax compliance
The branch of a foreign legal entity must follow the Russian accounting regulations. Accounting books may be kept in the manner prescribed by the country of origin as long as accounting is done according to International Financial Reporting Standards (IFRS). However, tax assessment must conform to Russian regulations.
Accreditation is granted for unlimited period and the state duty for accreditation amounts to RUB 120,000 (approximately EUR 3,000). To set up a branch, foreign legal entities must comply with the established procedure for accreditation by submitting to the Federal Tax Service an application and the following documents:
- Constitutional documents of the foreign company (articles of association and/or bylaws, or other relevant documentation);
- Extract from the Trade Register of the country of incorporation or another document that indicates the legal status of the company;
- Certificate of tax registration of the foreign company issued by the tax authorities in the country of incorporation and specifying its taxpayer identification code;
- Resolution of the foreign company to create a branch in the Russian Federation;
- Regulations of the branch office;
- Power of attorney issued to the director of the branch office;
- Receipt for payment of the state fee;
- List of the submitted documents (2 copies).
The accreditation of a branch is carried out within 25 working days from the date of submission of the relevant documents together with an application for accreditation to the authorized federal executive body.
Hiring foreign nationals
Please note that if the branch of a foreign company decides to hire foreign nationals, it must obtain an authorization to hire foreign nationals. This authorization is already required upon appointment of the branch director, regardless of whether or not he/she is already in Russia, but it may not be obtained before accreditation of the branch. This means that at the stage of accreditation, a Russian individual is to fulfil the function of branch director.
To set up a branch, it is also necessary to have an address, which may be the address of the premises leased to house the branch.
Once accreditation is obtained, the branch must within thirty days be registered with tax authorities, the Pension Fund, Social Insurance Fund, and statistical authorities. Overall, it takes on average 1-1.5 months to open a branch in Russia.
Learn more about company set up, taxation and Russian labor laws from our publications, which you can read online for free:
Branch registration service
If you plan to set up a branch or a company and want to register a branch or a LLC (OOO) company in Russia, please, contact BRICS Consulting for full-service assistance with the set-up. We will be happy to answer your questions and advise on the optimal choice of organizational and legal form for your business.
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