We are thinking about opening a branch in another region. Please explain the status of this separate unit?
A separate subdivision of an organization may be a branch or representative office (a branch or representative office is separate subdivisions, but not every separate subdivision is a branch or representative office) located outside the location of the organization itself and carrying out its activities using stationary workplaces for a period of more than a month. According to Russian law, such a unit must be registered with the tax authority separately from the parent organization.
The main characteristics of the status of separate units include the following:
Branch.
The branch has all the characteristics of a representative office, however, in addition to representative functions, it can carry out any types of activities stipulated by the charter of the parent organization. For example, branches can enter into contracts, receive income, have their own bank accounts and keep accounting records. However, the parent organization is legally liable to third parties.
Representation.
The representative office carries out only a limited range of activities, such as negotiating, preparing contracts, providing advice to clients and others. It is not entitled to independently engage in commercial activities and earn profit. Responsibility also lies with the parent company.
Registration and taxes.
Any separate unit is obliged to register with the tax inspectorate at its actual location. This is due to the need to take into account taxes paid by the branch or representative office, since the tax regime is established individually for each region.
For registration, a notification is submitted to the territorial branch of the Federal Tax Service of Russia. The notice period is ten calendar days from the start of the activities of the separate unit.
Thus, the opening of a branch implies additional tax and reporting obligations, but allows you to expand the geography of your business and increase the efficiency of operations in the new region.