Hello. Today we will talk about the most common forms of foreign investors legal presence in Russia. Foreign investors may perform a business activity in the Russian Federation through a representative office or a branch of a foreign company, or by establishing a Russian legal entity. An individual foreign investor may perform business activity having become an individual entrepreneur. Let's start with considering representative offices and branches of foreign companies. A legal status of a foreign companies or a representative office or branch is determined by the Civil Code of the Russian Federation, the tax code for the Russian Federation, and the federal law on the foreign investments in the Russian Federation number 160 as they offer 9th of July 1999 and some regulations. The provisions of the civil code or the Russian Federation apply to foreign nationals and individuals. It means, branches and representative offices of foreign companies have national regime. So, they have the same legal status as representative offices and branches of Russian legal entities have. Under Russian civil law, both a branch and a representative office of a company are not considered to be a legal entity, but rather a subdivision of a parent company. In this situation, a subdivision of a foreign parent company. They are established by the decision of such a foreign parent company. The federal law on foreign investments in the Russian Federation determines some requirements to such foreign parent companies. First, their purpose of creation and business shall be commercial. Second, they should take responsibility for the obligations accepted in the connection with the business activity on the territory of the Russian Federation. The second requirement is critically important. Under Russian civil law, a branch and a representative office are not able to take responsibility for their obligations since they're not considered to be legal entities. Their parent foreign company takes responsibility for their obligations. What is the difference between a branch and a representative office under the Russian civil law? A representative office is established to promote the business of its parent foreign company in the territory of the Russian Federation. Representative offices are forbidden to engage in any commercial activity, and thus, they are not subject to profit tax. In contrast, a branch may perform any functions its foreign parent company engages according to its corporate documents, and as it's provided by the special documents according to which the branch was established. This broad range of permitted activities is the primary advantage to open branch in the Russian Federation, and how to establish a representative office or a branch in the Russian Federation. Both representative offices and branches are subject to mandatory accreditation. The accreditation is carried out by the Inter-district Tax Inspectorate number 47 of the Federal Tax Services of the Russian Federation that is located in Moscow. However, certain industries have special accreditation bodies. For example, the Central Bank of the Russian Federation is responsible for accreditation of representative offices of foreign banks, and the Ministry of Transport of the Russian Federation is responsible for accreditation of representative offices of foreign companies. Foreign parent company may apply for accreditation within 12 months after the decision about establishing a representative office or a branch in the territory of the Russian Federation is made. There is a list of documents to be submitted in support of such an application that are determined by the accreditation bodies according to the industry. In addition, it's necessary to pay an accreditation fee of 120,000 rubles for each branch or representative office established. Accreditation body gives an answer within 25 days. A branch or a representative office is considered established on the date it's accredited. So, accreditation provides an official status for branches and representative offices, and allows branches to engaged in business activity in the territory of the Russian Federation. The accreditation term is not limited, but it may be terminated by the decision of an accreditation body in case of law violation. For example, a representative office that engaged in commercial activity violates the law and in according accreditation terms. So, this fact is a ground for the termination of its accreditation upon the decision of the accreditation body. Also, the parent foreign company may decide to close a representative office or branch in the Russian Federation. This fact leads to termination of the accreditation of a branch or a representative office.
