English version > News > Limited presence on the Russian Federation territory of a foreign organization: characteristics and taxation
12.07.2013
1. Foreign representative office in Russian Federation
2. Foreign subsidiary company in Russian Federation
3. Limited presence on the Russian Federation territory of a foreign organization
4. Forms of presence of foreign companies in Russia: a general overview/comparison
Limited presence on the Russian Federation territory of a foreign organization: characteristics and taxation
The form of the limited presence of foreign legal entity without a permanent representative office in the Russian Federation may be contracting with a Russian organization of brokering and promoting products and services of foreign companies in the Russian Federation. In this form of conducting foreign trade taxation of foreign companies is limited to the need to pay income tax on income derived from sources in Russia. The advantage of this form to the previously discussed is the lack of need for registration or accreditation of the foreign company and the occurrence of an opportunity to enter into contracts on behalf of a foreign company. In this case, the export-import operations in all customs fees on Russian territory will be paid by the intermediary.
Limited presence abroad without permanent representative office
This form is intended to avoid a taxable presence abroad. If a company does not create a permanent establishment, then it does not create a taxable presence in the foreign jurisdiction. Permanent representative office - the subject of direct and indirect taxes in the foreign country.
The definition of a permanent establishment fall:
- Warehouses, showrooms, customer service representative, collecting market information, advertising and marketing offices;
- Certain types of activity for a short time;
- The use of an independent agent (distributor that does not have ownership of the products of the exporter).
To develop this form of foreign trade in the particular jurisdiction may be using the relevant sections of the international tax treaties with regard to activities that lead to the creation of a permanent establishment.
Value added tax (VAT)
The place of the mediation services provided by the Russian organization of a foreign organization under the agency contract is determined by the place of business organization that provides such services. Thus, the place of supply of these services is recognized territory of the Russian Federation and, accordingly, these services are taxable value added tax in the territory of the Russian Federation.
About this Letter of Ministry of Finance 02.12.2011 N 03-07-08/339.
According to the claims. 1 tbsp. 146 of the Tax Code of the Russian Federation (hereinafter - the Code) subject to tax to value added tax transactions are recognized in sales of goods (works, services) on the territory of the Russian Federation.
Procedure for determining the place of supply of works (services) for the application of the VAT rules set art. 148 of the Code.
So, on the basis of paragraphs. 5 § 1 of Art. 148 of the Code of the place of supply of intermediary services provided by the Russian organization of a foreign organization under the agency contract is determined by the place of business organization that provides such services.
Thus, the place of supply of these services is recognized territory of the Russian Federation and, accordingly, these services are taxable value added tax in the territory of the Russian Federation.
Paragraph 1 of Art. 156 of the Code provides that in the exercise of business activities on behalf of another person on the basis of the agency contract tax base value added is defined as the amount of income received by the taxpayer in the form of compensation for the performance of this contract. Thus on the basis of Art. 164 of the Code such transactions are taxable value-added tax at the rate of 18 percent.
Therefore, the obligation to pay tax on foreign organization will not be assigned.
Income tax
Features of the taxation of foreign organizations that do not operate through a permanent establishment in the Russian Federation and receiving income from sources in the Russian Federation established by Article 309 of the Tax Code. Taxable income defined by paragraph 1 of this Article.
Paragraph 2 of Article 309 provides that income derived by a foreign organization from the sale of goods, other property, except as indicated in paragraphs 5 and 6 of paragraph 1 of this Article, as well as property rights, implementation of works and services in the territory of the Russian Federation does not lead to the formation Permanent Mission of the Russian Federation in accordance with Article 306 of the Tax Code, withholding tax payments are not refundable.
Reinsurance premiums and bonuses paid by the foreign partner is not recognized as income from sources in the Russian Federation.
Personal income tax (PIT)
If the foreign company has no presence in Russia, but has recruited a tax resident of the Russian Federation, the tax resident is obliged to pay to the federal budget tax income individuals through the production and submission of the declaration (Form 3-PIT). If the foreign company will reduce salaries tax resident of the Russian Federation to the local tax, it must confirm the status of a tax resident of the Russian Federation. The powers of the confirmation of the tax status of an individual assigned by the Ministry of Finance of the Russian Federation to the Federal Tax Service.
Теги: Income tax, Personal Income Tax, VAT
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