How to establish a foreign branch in Russia?

Expanding a foreign business into Russia involves creating an official presence, often through branch accreditation. This legal process allows companies from abroad to conduct operations under Russian law, simplifying communication with domestic clients and business partners.

Step-by-step instruction to accrediting a foreign branch in Russia.

To conduct lawful business operations within Russia, foreign companies must secure branch accreditation. This process is overseen by the Federal Tax Service No. 47, located in Moscow. The FTS is responsible for managing the State Register of Accredited Branches and Representative Offices and processes applications from businesses irrespective of the branch’s geographical location within the country

Before applying the following information is essential:

• Manager identification:
• Russian nationals can use their original passport;
• Non-Russian manager must submit a notarized translation of the passport.
• Activity scope compliance: activities must align with the parent company's existing business profile. Choose OKVED codes that reflect these operations accurately;
• Verification of legal address;
• Documents from the parent company abroad: all documents must be up-to-date, not older than 12 months at the time of submission.

After preparing documents, the required fees must be paid:

• Accreditation fee: 4 000 RUB for EAEU-based companies, 120 000 RUB for companies from other countries;
• Chamber of Commerce and Industry Fee: this fee is required for confirming the number of foreign employees and starts at 20 000 RUB (not applicable for EAEU-based companies).

FYI: confirming the employee count is necessary, even if no foreign employees will work at the branch.

Applications are reviewed within 15 business days. The tax authority may temporarily suspend the process if any errors are found, allowing corrections within the same review period.

Once approved, the tax authority issues a set of documents confirming branch accreditation:

• Certificate of accreditation, verifying registration in the Accredited Branches and Representative Offices Register;
• Tax registration certificate;
•  An informational sheet confirming entry into the Register.

FYI: since 2015, accreditation has been indefinite, which simplifies ongoing operations.

After accreditation, a branch must complete further steps:

• Statistical codes from Rosstat: codes are necessary for official reporting;
• Registration with the Russian Social Insurance Fund (SFR): provide accreditation documentation to obtain a registration number, essential for hiring employees and meeting social security requirements.

Comprehensive list of required documents for accreditation.

Foreign companies must provide the following documents to complete branch accreditation:

• Founding documents (charter or articles of incorporation);
• Extract from the commercial register or equivalent documentation detailing company information;
• Tax authority certificate.

All foreign-issued documents must be authenticated (either via apostille or consular certification) and include a notarized Russian translation.

Additional documents required include:

• Completed application form (Form 15AFP);
• A formal resolution to establish the branch (dated within the last year);
• The branch charter;
• Power of attorney for the branch manager and any representative submitting the application;
• Proof of payment for all fees;
• An inventory of submitted documents (in duplicate).

Although not mandatory for immediate submission, address-related documentation must be available upon request. This includes:

• A guarantee letter from the owner;
• Ownership certificates or EGRN extracts;
• Lease agreements or sublease contracts;
• An acceptance act for the premises;
• A copy of the lease agreement (if a sublease agreement is in place);
• If the lease is signed by a third party under power of attorney, a copy or original of the power of attorney is required.

FYI: to avoid rejection, ensure the address is valid and listed in the Federal Information Address System (FIAS). If deemed invalid, the tax authority may freeze the branch’s activities.

Considerations: is branch accreditation or local company registration more advantageous?

In deciding between branch accreditation and establishing a local company, consider these factors:

• Purpose of the operation: branches and companies can conduct commercial activities, but representative offices are limited to non-commercial operations, such as market research;
• Taxation requirements: branches and representative offices fall under the general tax system (20% VAT), while a Russian company can select the simplified tax regime (either 6% on revenue or 15% on income minus expenses);
• Liability: the parent company bears full liability for the branch’s obligations, whereas a company is an independent legal entity responsible for its own liabilities;
• Funding flexibility: the parent company can freely transfer funds to a branch or representative office. However, subsidiaries may require additional documentation, such as loan agreements or documents to increase authorized capital, to secure extra funding.