Taxes for a branch of a foreign company in Russia

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On the territory of the Russian Federation there are not only Russian, but also foreign organizations. And they, like Russian organizations, register with the tax authorities and pay taxes and fees for their foreign employees.

A branch of a foreign company in Russia pays taxes in accordance with the norms of Russian legislation, taking into account the provisions of international agreements. The occurrence of tax liabilities for a branch of a foreign company depends on: its tax status in the Russian Federation; from the moment of its formation in Russia.

From the point of view of the tax code, a branch opened by a foreign company in the territory of our country qualifies for tax purposes as a permanent establishment (hereinafter referred to as the PP). And when calculating and paying income tax, the PP should be guided by both Russian tax rules and international laws containing provisions relating to taxation issues.

The tax obligations of the PP are the submission of tax returns and reports, as well as the payment of income tax.

Income tax is subject to accrual based on income received by a foreign company minus expenses incurred. All expenses must be documented and made for the implementation of activities aimed at generating income.

The work of a PP is associated with the performance of the duty of a tax agent, if the PP pays income to its employees and other hired persons, the representative office must be guided by Russian tax legislation, which provides for the payment of personal income tax and insurance premiums.

If there is an obligation to pay taxes, it is necessary to submit an income tax return; property declarations (in the presence of real estate, transport, land); payroll reports; VAT declarations; information on the average number of employees for the previous year and all necessary reports.

Thus, the taxation of a foreign establishment in Russia depends on whether it is recognized as a permanent establishment for tax purposes.

If a branch of a foreign company in Russia meets the criteria of a permanent establishment, the principles for calculating its tax liabilities are similar to those used by Russian companies, taking into account the provisions of international treaties.