The essence of a branch of a legal entity
A separate division (branch) is a geographically separated part of an enterprise that has at least one permanent working area.
A division is considered legally valid only if it is established for a period of at least one month.
Criteria for the approval of a branch of the company
By virtue of the provisions of the Tax Code of the Russian Federation, a branch can be recognized as separate and registered with the tax authority if certain criteria are met, namely:
- The division is not located in the same place where the parent company is located.
- There is at least one working area in the unit, and it must be stationary.
- Created for a period of at least one month.
- The division is controlled by the parent organization, but not by any other company.
- At least one employee is registered and works in the division.
Provided that all the listed criteria of a separate organization are met, the division is registered for tax accounting (according to paragraph 1 of Article 83 of the Tax Code of the Russian Federation). For example, it is possible to designate some enterprises that own divisions that are in different subjects (territories/regions) of the Russian Federation or opposite parts of the city: retail chains or bank branches.
It is possible to note many types of separate divisions (for example, a branch, a representative office, or a simple division) and created for a variety of purposes (representing the interests of the company or performing only part of its functions). Due to this fact, the registration process of different types of divisions differs.
The Civil Code of the Russian Federation approves the legal registration of branches or representative offices exclusively, and according to the Tax Code of the Russian Federation, all separate divisions are subject to accounting.
Procedure for legal registration of a branch
To register a branch with the tax authority, you need to prepare and send there a package of documents with a message (application) corresponding to the sample S-09-3-1.
The application contains all the basic information about the company: its TIN or KPP; name; PSRN; number of branches being created; surname, first name and patronymic of the head of the company, his TIN and contact details (phone number and e-mail). They also indicate the tax code where the documents are submitted. All this is confirmed by the round seal of the company.
After the information about the department being created is indicated in the constituent documents of the enterprise, this information is entered into the Unified State Register of Legal Entities (USRLE). This procedure is prescribed in paragraph 3 of Article 55 of the Civil Code of the Russian Federation.
To register a separate division for tax registration, you should send the documents corresponding to the above list to the tax service:
- Resolution of the management body on the establishment of a separate division (copy).
- Approval of a separate division (copy).
- Amended constituent documents (copy).
- Certificate of state registration of the parent organization (copy).
- Orders on approval for the positions of the head and chief accountant of the department being created (copy).
- Payment order or bank statement on payment of the state fee for registration, approved by the seal and signature of the head of the bank (copy).
- Extract from the Unified State Register of Legal Entities for the main organization.
- Application for registration of changes corresponding to the forms.
A period of one month is allotted for processing the application and the registration process of the branch. The account begins on the day of the publication of the decision to open a separate division.
An essential requirement is that copies of all documents must be approved by a notary. If you plan to rent a separate area for the work of the department, then you also need to add a copy of the lease agreement to the materials.
During the registration process, the branch is not awarded a taxpayer identification number. Instead, the created unit is allocated an individual code of the reason for the statement (KPP). Throughout its regulatory framework, the branch will use the TIN of the parent company. It should be noted that a separate department is not an independent organization.
To date, it is possible to send documents electronically (using the website of the Federal Tax Service of Russia) in the form of scans. In this case, they are certified with an electronic digital signature (EDS).
Accounting statements in a branch
In most cases, the accounting of a separate division is carried out by the parent company. The tax regime, as well as the methods of tax and accounting for a separate division are the same as those of the parent company.
Accounting and tax accounting methods are fixed in the Accounting Policy of the organization.
There are two ways of accounting in a separate division: the first method is used if the branch does not maintain its own accounting records.
In this case, the department does not provide its own accounting department and settlement account. Therefore, all settlement operations with clients and employees, including regarding wages, are handled by the accounting department of the parent company. At the same time, the division can issue other types of documents, but they will be accepted for accounting in the general accounting department.
The second option provides for the division to have its own accounting statements.
This method implies the establishment of an accounting service and independent accounting in the department. At the same time, the division has a bank account, performs settlements with customers regardless of the accounting department of the parent organization. Information from the division’s balance sheet is entered into the general summary for the entire company. The division works and prepares reports in accordance with the norms of the accounting policy of the head office.
Responsibility for evasion from tax registration of a branch
If the organization did not register the branch with the tax authority in time.
This article dictates the imposition of a fine for conducting business by an organization or individual entrepreneur without registration with a tax authority on the grounds provided for by this Code. The amount of the deduction is 10% of the receipts that the company received during the period of work without registration.
Closure of a branch
Subparagraph 3.1 of paragraph 2 of Article 23 of the Tax Code of the Russian Federation states that companies are obliged to inform the tax inspectorate at their location of the existence of all branches of the enterprise in the Russian Federation through which the work of this company is terminated (which are closed by this company) no more than three days after the approval by the Russian organization of the regulations on stopping work through a branch or representative office (liquidation of a branch or representative office).
The termination of the work of a separate department occurs in three stages:
1. Conclusion on liquidation is being prepared. The Charter of the company determines the type of solution. For example, the charter may state that the decision to terminate the work of divisions is made by the director independently or at a meeting of LLC members.
2. An order is issued to close the branch.
The order establishes the person responsible for the liquidation of the department.
The duty of the person responsible for the closure is to notify the funds and make sure that the unit does not have salary arrears to employees.
3. The tax service is notified. The notice of termination of the department’s work is filled in on two pages and contains: on the first page – information about the organization, on the second page – data about the unit being liquidated.
In general, the procedure for the liquidation of a branch or representative office is like the procedure for creating these divisions.
Branches with an exhaustive list of documentation are removed from registration with the tax authorities:
- An order to terminate the work of a division (for example, minutes of a meeting of the board of directors), certified by a notary.
- Amendments to the company’s Charter and the Unified State Register of Legal Entities.
- An application of the appropriate form.
Since December 25, 2020, there have been some changes in the documents. By Order of the Federal Tax Service of the Russian Federation dated 04.09.2020 No. ED-7-14-632@ approved a new message form S-09-3-2 and now it is filled out on a separate form.