Posted on June 30, 2013 in Corporate Law
Standart LLC – Moscow Office
Closing an office of a foreign company is done through liquidation of its accreditation and its exclusion from a respective unified register (of branch or representative offices) of foreign companies accredited in Russia.
One should remember that non-Russian documents are only acceptable by the registrar if they have original consulate legalization marks or an apostile, unless there is an international treaty joined by the Russian Federation that releases from such procedures, and a notarized translation into Russian or a translation legalized by consulate abroad. For example, there is such an international treaty between the Russian Federation and Hungary, apostile is applicable subject to the Hague Convention between the Russian Federation and Finland, Great Britain, USA, India and China, consulate legalization is applicable between the Russian Federation and the United Arab Emirates.
This procedure is finalized by issuing a respective standard form notice about the exclusion of the representative or branch office from the respective register of foreign offices accredited in the Russian Federation.
Liquidation of accreditation however is not the only procedure needed for liquidation of a foreign office. The branch or representative office of a foreign company needs to be de-registered with tax inspection, as well as social and pension insurance funds.
There are statutory terms for each of the procedures needed to close a branch or representative office.
For example, within three days from the decision to stop the activity of the respective office a foreign company should inform the tax inspection of the place of the office registration. De-registration happens within 10 days from the receipt of such notice but not until an on-site tax investigation is over – when such investigation is carried out (para 5 s. 84 of the Russian Tax Code).
The absence of at least one of the documents provided for in the law gives the tax inspection authority to decline tax de-registration.
The tax de-registration procedure is finalized by issuing a standard form de-registration notice. The individual taxpayer number (INN) attributed to the company is invalidated.
Before tax de-registration the bank accounts of the branch or representative office in Russia should be closed. The tax authority and non-budgetary funds should be informed shortly upon such closing.
After the end of tax de-registration the branch or representative office should be de-registrated with medical, social and pension insurance funds.
In practice de-registration with tax authorities and pension fund may be complicated by the inspection’s or pension fund’s cameral investigation when the respective authority inquires tax returns and the proving documents for the past three years, demand settlement with those authorities and payments. As a rule the closing procedures begin when all employees including the chief accountant are dismissed, financial documents may be lost, computer accounting databases are missing or are not updated.
The law provides that the procedure of tax de-registration itself lasts 10 business days from the day of submission of a de-registration notice by the taxpayer. In our practice due to solving the accompanying issues (e.g., recovery of accounting, tax investigations and settlememt) it may last for up to 6 months.
The tax authority may de-register a branch or representative office of a foreign company if it has been inactive in Russia for 18 months and has no tax debts in a simplified procedure. In case of a simplified procedure of tax de-registration a de-registration notice is not issued and not handed over to the taxpayer.
If you need to register in Russia, nominate personnel to handle business here, enter into contracts and agreements under Russian law, interact with Russian tax authorities and public funds, and finally close and de-register a branch office or a subsidiary in Russia, enjoy comprehensive advice and support of Standart LLC, Moscow.
branch office, tax de-registration, accreditation, tax investigation, insurance funds, Russia