Accredited representative office of a foreign company
A representative office of a foreign organization is a separate subdivision of a foreign legal entity located outside the location of such legal entity, which represents the interests of such legal entity and protects them. The main legal act that regulates the activities of permanent representative offices in Russia is Federal Law No. 160-FZ “On Foreign Investment in Russia” dated 09.07.1999.
Head and employees:
- Only an individual can be the head of a representative office;
- The number of employees is usually about 5 persons, but more is allowed (foreign employees, including the head of the representative office, must obtain a work permit, with a few exceptions).
Authorized activities of the representative office:
A traditional representative office may not conduct commercial activity in Russia. Commercial activity covers any action directly or indirectly related to profit generation (negotiation of prices, terms and conditions of relations, discounts and surcharges).
The normal and permissible activity of the representative office is:
- Representing a foreign company in Russia (non-commercial meetings and communications);
- Support and preparatory activities (market research, prospects analysis, research and planning, organizational support, etc.).
Taxation (basic taxes)
Representative offices do not have profit taxation due to the absence of a taxable base.
At the same time, a representative office may be a payer of other taxes and duties, such as salary tax, real estate tax, land tax, vehicle tax and water use tax.
Reporting
A representative office has the right not to keep accounting (financial) records, and its tax records are kept in a simplified form (if the representative office meets 100% of non-commercial activity criteria). No mandatory audit is conducted.
Cross-border payments and foreign exchange control
Currency control follows the rules for branches (see above). The movement of funds from the foreign parent company to the representative office and back is not actually regulated (currency control exists, but its level is much lower than in the case of an OOO).