A separate division for an individual entrepreneur: is it possible or not?

A separate division is a separate structure that is part of the company. This is a representative office or branch located in another municipality different from the location of the main organization. Only organizations can open a separate division, and this opportunity is not provided for individual entrepreneurs. But what should an entrepreneur do if he needs to operate in another region? In this case, they also carry out activities on behalf of their individual entrepreneur, but they should remember the need to register in another location if the activity is carried out on UTII or PSN.

What is a separate division

The main documents that must be followed when creating a branch are:

1. Article 55 of the Civil Code of the Russian Federation “Representative offices and branches of a legal entity.”
2. Law 14-FZ “On Limited Liability Companies”.

According to the Civil Code of the Russian Federation, a separate division is understood as a representative office of an organization or a branch. A representative office is a division located outside the location of the parent company that represents the interests of the company. A branch is a broader concept, since it has the right to carry out not only those actions that are performed by the representative office, but also others authorized by the parent company.

"Separate" status

Before answering the main question – can an individual entrepreneur have a separate division – let’s give a general definition of who an individual entrepreneur is.

According to the law, this is any individual who:

1. wants to conduct commercial activities;
2. must register itself with the tax office accordingly.

Let us say right away that a person registered as a businessman is not equated to a legal entity. This:

• different concepts;
• miscellaneous documentation;
• different business opportunities.

Let us define a separate division. It refers to a certain structure that is related to the main organization. In other words, these are branches, representative offices or other parts of the company that report directly to the head office. They cannot conduct completely independent activities, since all decisions are made by the general management. This follows from Article 55 of the Civil Code of the Russian Federation.

The Tax Code provides an additional definition of a separate division and also describes its main distinguishing features. Article 11 states that:

1. the structural unit must be located in a separate building; it cannot be located in the same place as the head office;
2. in the “isolation” there must be stationary workplaces, that is, established for a period of more than 1 month.

Even one employee who works in a remote office, but on a permanent basis, can be considered a separate unit. For example, an in-house correspondent for a publication who works in another country.

Can an individual entrepreneur open a separate division?

Important! As noted above, even if an individual entrepreneur decides to carry out his activities in another city, he cannot open a separate division (neither a representative office nor a branch).

Depending on the tax regime of the individual entrepreneur, the structure and nature of the activity will be determined. If an entrepreneur wants to operate under a patent, he will need to obtain this document for a new region. To do this, you will need to contact the tax authority and apply for registration in the new municipality and for a patent. After that, a fee will need to be paid for this patent.

If an entrepreneur applies UTII, then within 5 days from the date of commencement of activities in a new region, the entrepreneur must register with the local tax office as a UTII payer. To do this, you must submit a corresponding application. After registration, the entrepreneur will need to pay UTII tax in the given area and submit tax returns.

In addition to the above tax regimes, an entrepreneur can also work under the simplified tax system or OSNO. In this case, when carrying out activities in another city, the entrepreneur does not need to submit documents to the tax authority. And the tax will only need to be paid to the tax authority with which it was originally registered.

How to create a separate division of an LLC?

There may be many reasons why it is necessary to expand a business and open its structural divisions somewhere other than the actual location of production facilities and management staff.

But, as a rule, the main reason for such actions is the desire to expand your business and conquer a new market segment. But in Russia, desire alone is not enough to open a division of a company; it is necessary to observe the procedural aspect and comply with all the norms of the Law.

And further on how to create a separate division of an LLC and what is necessary for this.

According to the current Code (NC), a separate division is considered to be a division that is geographically separate from the main enterprise.

It must necessarily have certain workplaces equipped at the location of the unit, regardless of whether such a structural unit was indicated in the charter of the company itself.

The main thing is that jobs for citizens are created by such an office not for a month, but for a period of more than 30 days.

In accordance with regulatory documents, three types of such divisions can be opened in Russia.

Types of structural units of a separate nature:

• Branch. This division is located on a different territory than the LLC itself; it is entrusted with all the functions of fulfilling the tasks and responsibilities of the LLC, including the representative function. Although there are branches that perform not all the functions of the LLC, but a select part of it.
• Representation. Just like the branch, it is located outside the territory of the company itself. A distinctive feature of the representative office is that it additionally protects the LLC and represents its interests.
• Other divisions not related to branches and representative offices.

If we consider the question of how to create a separate division, then it should be said: the Tax Code and other regulatory legal acts regulate the procedure for opening branches and divisions; the procedure for opening other structural units is not fixed anywhere, which to some extent allows the LLC to act at its own discretion.

Therefore, if it is necessary to open somewhere neither a branch nor a representative office, then legal entities use the opening procedure that is regulated specifically for the branch and representative office.

The procedure for opening and registering a structural unit

The procedure for opening a representative office or branch is enshrined in Federal Law No. 14. It states that in order to open a representative office of an LLC, it is necessary to make a decision on the need to implement such actions.

The decision to open can be made:

1. At the meeting of shareholders of LLC. If the decision is made by the meeting of shareholders, then it is necessary that at least 2/3 of all participants in the company support such a decision. By the way, such a norm can be changed and stated in the company’s Charter itself, but only upward;
2. At a meeting of the Board of Directors. It is noteworthy that if a decision is made in this way, there is no minimum threshold to either accept or reject the proposal. The norm for investment is independently established by the LLC and is prescribed in the constituent documents.

But deciding on the need to open a branch or representative office is not enough. Such a structural unit must operate on certain principles that do not differ from the operating principles of the LLC itself. That is why, along with the decision to open, the Regulations on the branch or representative office are also adopted.

Information that must be indicated in the Regulations on Representative Office:

• Where will the representative office be located?
• What functions will it have and what tasks will it face?
• What responsibilities and powers will the management apparatus of the structural unit have;
• What is the procedure for managing the assets of the branch;
• Other important rules.

Please note: a branch is never an independent legal entity, therefore it does not have its own constituent documents, such as the Charter, Order on Accounting Policies and others.

All these decisions must be recorded in a document such as a protocol on the creation of a separate unit.

Once the decision has been made, it must be properly registered. The good news is that since 2014, such changes should not be made to the Charter itself.

The only thing that will need to be done is to register an open branch or representative office in the Unified State Register of Legal Entities.

There are regulated deadlines within which such actions must be carried out - no later than three days after the decision is made.

Regarding what documents an LLC needs to open a separate division, the list is not long:

• Application of the established form for opening;
• A copy of the order on the creation of a separate unit
• An extract from the register stating that the LLC is registered as a legal entity. face.

The main thing to remember is that when registering this fact, it is imperative to obtain a receipt confirming acceptance of the application. If documents are sent by email, then the receipt will be sent in the same way. If the application is submitted in person, then a receipt itself is also obtained.

By the way, documents can be submitted not only through the Federal Tax Service, but also through the MFC - a multifunctional center.

After submitting the documents, the LLC must issue a document confirming registration within five working days.

The branch or representative office itself does not need to register for tax purposes, since the tax service will carry out such actions independently - based on making an entry in the register of legal entities.

But if neither a branch nor a representative office is created, then it is necessary to register at the place where such a structural unit is opened.

Another very important point: each head of a structural unit must, on behalf of the LLC, receive a power of attorney to carry out certain actions on behalf of the company. Without such a document, the branch manager is not able to perform his functions.

Answers to common questions

Question: How many separate divisions can one organization and individual entrepreneur have?

Answer: To date, the legislation has not established any prohibitions on how many branches one organization can open. Therefore, the company has the right to independently decide how many branches it will open in accordance with the provisions provided for in the constituent documents. Since an entrepreneur does not have the right to open separate divisions, he is not limited in how many places he will carry out his activities and call additional offices divisions.

A right that doesn't exist

Now let's get to the heart of the matter. According to the Tax and Civil Codes, divisions are created only by legal entities. That is, a businessman, being always an individual, does not have such a right.

Thus, the answer to the question - can an individual entrepreneur open a separate division - is definitely no. However, the law does not prohibit him from creating some kind of branches, representative offices and other structural divisions that are necessary to conduct business and maintain it. But legally they will not have the legal status of separate units.

General mode

An OSNO user must register only at his place of residence.

All documentation and reports are submitted to the tax office where the entrepreneur is registered. In the declaration

it is necessary to take into account the income and expenses of both the main enterprise and the open branch. The activities of the representative office and the main institution are kept in one accounting book. Tax on branch income is transferred to the place of residence of the founder.

The same manipulations are performed with unified agricultural taxation.

How to register an individual entrepreneur if you do not live at your place of registration

So, it is preferable to register an individual entrepreneur at the permanent residence address in the passport. But what about that large category of applicants who long ago left the city where they are still registered? They will not be able to open an individual entrepreneur at a location other than their place of registration, but this problem can be solved differently.

In this case, you just need to choose the method of transferring documents for registering an individual entrepreneur. After all, for this it is not at all necessary to personally come to the Federal Tax Service at your place of registration. What are the options?

1. Register an individual entrepreneur online. A package of documents for registering an individual entrepreneur must be certified with an electronic signature and sent through the Federal Tax Service website. In this case, the applicant saves 800 rubles, because the state fee is not charged for such a filing.
2. Entrust the submission of documents for individual entrepreneur registration to your representative. If you have a trusted person at your place of registration (friend, relative, lawyer), then you can issue a notarized power of attorney for registration actions. This method is quite expensive, because in addition to the power of attorney, the notary must certify the P21001 form and a copy of the applicant’s passport.
3. Send documents by mail . In this case, the application for registration of an individual entrepreneur and a copy of the passport must also be certified by a notary. The letter itself must be registered with a list of attachments. And given the speed of the Russian Post, this option for submitting documents will take the longest.
4. Contact a notary. Some notary offices not only certify the P21001 form and a copy of the applicant’s passport, but can also send a package of documents to the Federal Tax Service remotely. In this case, the notary uses his electronic signature. The cost of notary services is partially offset by savings on state fees, which in this case are not charged.

There is no need to come to the tax office at your place of registration to pick up documents on individual entrepreneur registration. From 2021, the Unified State Register of Entrepreneurs (USRIP) entry sheet is sent to the applicant electronically, regardless of how the application was submitted. But if you want to receive paper documents confirming the registration of an individual entrepreneur, you will have to personally appear at the registration authority or entrust this to a representative.

How to exclude signs of a branch so as not to lose the right to “simplified”

To save tax on a simplified taxation system, companies often use so-called internal offshores - special zones in which residence gives the right to enjoy significant tax benefits. In particular, the Tax Code allows local authorities to reduce the tax rate for “simplified” residents with the object “income minus expenses” from 15 to 5 percent (Clause 2 of Article 346.20 of the Tax Code of the Russian Federation).

Most regions have taken advantage of this right in one form or another and introduced relaxations depending on the categories of taxpayers and types of activities. And some have reduced the rate to 5 percent for all “simplified” people. For example, the Lipetsk region (Article 2 of the Law of the Lipetsk Region dated December 24, 2008 No. 233-OZ “On establishing the tax rate for organizations and individual entrepreneurs using a simplified taxation system”).

However, with formal registration in a region where rates are reduced to 5 percent, the company actually operates in another location. This often conflicts with paragraph 3 of Article 346.12 of the Tax Code of the Russian Federation, which calls the presence of branches and representative offices of a taxpayer as an obstacle to the application of a special regime. However, in practice, many companies manage to prove that a separate division operating in another region is neither a branch nor a representative office (see box at the end of the article). And retain the right to a preferential “simplified” tax.

A simple separate division does not deprive the right to “simplified”

If an organization has employees in other regions who are there on a permanent basis or even have jobs, this is not enough to recognize the taxpayer as having lost the right to apply the special regime. Thus, an organization can actually conduct activities on the territory of other entities without forming branches and representative offices there, without formalizing them in its constituent documents and without registering them.

The fact is that the concept of a “separate division” of an organization, given in Article 11 of the Tax Code of the Russian Federation, is broader and includes any types of divisions of organizations, including branches and representative offices. A separate unit is not any structural unit of an organization if it is geographically remote from it. Moreover, stationary workplaces must be equipped at its location (Article 11 of the Tax Code of the Russian Federation). Moreover, it does not matter at all whether its creation is reflected in the constituent or other organizational and administrative documents of the organization and what powers it is endowed with. The Ministry of Finance of Russia adheres to the same opinion (letter dated December 10, 2010 No. 03-11-06/2/186).

To exclude a dispute, it is reasonable to exclude formal signs of the existence of a branch or representative office

First of all, you need to make sure that there is no documentary evidence of the company’s existence of branches and representative offices. To do this, in any documents that describe the activities of the company, it is necessary to directly indicate that the structural unit is not a branch or representative office, but performs some auxiliary functions. For example, such a clarification can be included in the lease agreement for an office or warehouse in the region where the activity is actually carried out.

At the same time, we note that the Federal Arbitration Court of the Moscow District, in its resolution dated July 3, 2007 No. KA-A41/5937-07-P, indicated that in order to recognize a separate division as a branch or representative office, one-time compliance with all the conditions listed in Article 55 of the Civil Code of the Russian Federation is mandatory. The absence of at least one of them means that a structural unit of a legal entity cannot be recognized as a branch. Other courts, when considering the issue of the presence of branches and representative offices, also evaluate these signs (resolutions of the Federal Arbitration Court of the North-Western dated April 11, 2011 No. A05-9537/2010, the North Caucasian Court of Arbitration dated August 11, 2010 No. A32-4638/2010, the Far Eastern Court dated 19.02 .09 No. F03-206/2009 districts).

You should not include unnecessary information in the constituent documents.

Since a company using a preferential region to optimize taxes does not seek to create branches or representative offices, it is unlikely that it will deliberately include information about their presence in the charter. And the absence of such information in the constituent documents is a good argument in court (resolution of the Federal Arbitration Court of the North-Western District dated 04/11/11 No. A05-9537/2010).

At the same time, the tax authorities themselves do not have the right to apply to the arbitration court with a demand to oblige the legal entity to make changes to the constituent documents. Since this is not provided for either by the Federal Law of 08.08.01 No. 129-FZ “On State Registration of Legal Entities and Individual Entrepreneurs”, nor by the norms of the Tax Code, nor by other legislative and regulatory acts (resolution of the Federal Arbitration Court of the North Caucasus District dated 16.09. 09 No. A53-22572/2008).

It is interesting that some courts come to the conclusion that even if the constituent documents contain a mention of branches, this does not automatically deprive the company of the right to a special regime (Resolution of the Federal Arbitration Court of the North-Western District dated July 14, 2009 No. A56-40765/2008). The logic of the judges is that, within the meaning of Article 55 of the Civil Code of the Russian Federation, the branch specified in the constituent documents cannot be considered actually created if the company has not approved the regulations on the branch, has not appointed its director, has not transferred any property for operation, has not equipped workplaces and has not established tax accounting at the location of the branch. Indeed, from the provisions of subclause 1 of clause 3 of Article 346.12 of the Tax Code of the Russian Federation, it follows that only those organizations that have actually functioning branches or representative offices are deprived of the right to “simplified taxation”.

The Federal Arbitration Court of the North Caucasus District came to similar conclusions in its ruling dated August 19, 2009 No. A32-9663/2008-70/25. The judges noted that the registered separate unit is actually a place where one security guard performs security functions. The tax authority did not provide evidence of the activities of the representative office in the case file - the presence of premises for the representative office, concluded agreements to support activities with energy supply and water supply organizations, the staffing structure of the representative office, etc.

The property of the division must be listed on the balance sheet of the parent organization.

One of the characteristics that the Civil Code attributes to branches is the property that the parent company transferred to conduct any activity (clause 3 of Article 55 of the Civil Code of the Russian Federation). In this regard, it is advisable to put any property that is used by a separate division on the balance sheet of the parent organization. The judges also agree that the endowment of a branch with property indicates that the organization has not just a structural unit, but a branch (resolution of the Federal Arbitration Court of the North-Western District dated July 14, 2009 No. A56-40765/2008).

Moreover, when arbitration courts decide the issue of qualification of a structural unit, the decisive factor is the presence or absence of the signs of a branch recorded in Article 55 of the Civil Code of the Russian Federation. For example, the judges in the decision of the Federal Arbitration Court of the North-Western District dated 04/11/11 No. A05-9537/2010 came to an unexpected and very pleasant conclusion for companies. The organization operated through a division, which in a number of not only internal, but also quite official company documents was called a branch. His details were reflected in some contracts that were signed by the official as the head of this branch. All workers lived in the city where it was located, and jobs were created for them. The unit also had its own seal with the inscription “Branch”.

Despite this, the court considered that the branch did not actually exist. After all, a number of significant actions have not been taken: the regulations on the branch have not been approved, it is not endowed with property, there is no official order on the appointment of the head of the branch, and the constituent documents do not contain information about the created branches. Therefore, such a separate division is not a branch and its presence in itself does not prevent the application of the simplified taxation system.

Division management and accounting must be carried out directly by the head office.

Such a measure will protect the company from claims in the creation of a branch, as it will emphasize that the main structure is the parent company. It is she who carries out the management function, and the separate division works only on the basis of orders from the general director. For example, in the resolution of the Federal Arbitration Court of the Ural District dated March 23, 2010 No. Ф09-1712/10-С2, the judges came to the conclusion that since there is no evidence that the division independently submitted tax reports and information to social funds and had current accounts, it cannot be considered a branch.

Also, taking the side of the companies, the courts note that a separate division cannot be considered a branch or representative office if the head of the division does not have a power of attorney confirming his authority (resolution of the Ural Federal Arbitration Court dated March 23, 2010 No. F09-1712/10-S2, North Western from 14.07.09 No. A56-40765/2008, Moscow from 18.06.09 No. KA-A40/5444-09, Far Eastern from 19.02.09 No. F03-206/2009 districts).

Confirmation of the reality of activities in the preferential region will increase the security of the scheme

During an audit, tax authorities may claim that registration in a region with reduced rates has the sole purpose of tax benefit. After all, the company does not carry out activities at the place of registration; accordingly, this is just a cover. Therefore, it is necessary that there be activity in the region of the official location of the organization (part of the cargo is transported, meetings are held, etc.). The preferential region was also mentioned in documents, including marketing ones, as the actual address or postal address.

There is little arbitration practice on this matter. However, there are examples where the court decided the case in favor of the tax authorities precisely because there was no activity in the region of registration at all or its share was significantly less than in a separate division (resolution of the Federal Arbitration Court of the Moscow District dated June 30, 2006 No. A40 -1711/05-75-136 and dated 06/30/05 No. KA-A40/3222-05).

Registration at the location of the manager.

The best option is when the general director or founder of the organization is a resident of the desired region. Or at least he has a temporary registration there. This will help avoid claims of fictitious registration and will make registration in a preferential region more than logical and justified. And all documents, or at least the main ones, are signed by him or other persons on behalf of the organization who permanently or primarily reside in the territory of a subject with preferential taxation. Then the inspectors should not have a question as to why the company registered there, if neither the manager nor other employees even visit the place of registration of the parent organization.

Hiring employees in a preferential region.

It is advisable to hire employees who are related to the activities of a separate unit in a preferential region. And in employment contracts, indicate the possibility of temporary or periodic performance of functions in other regions if the need arises. If employees are actually registered or registered in the place of real activity, then this may be evidence that they are employees of a separate division. This is the opinion of the courts (resolution of the Federal Arbitration Court of the North-Western District dated March 16, 2011 No. A56-93666/2009).

The main documents are prepared by the parent company in the region of registration.

Any contracts concluded by an organization must be related to the “head” region. This will eliminate the sign of independence of the structural unit. And it will be quite difficult for inspectors to prove that the division performed any functions of the parent organization. Therefore, as a precautionary measure, contracts can indicate the legal address as the place of its preparation. And, if possible, details of a current account maintained at a local bank.

Also, having an actually functioning office or some other rented property will help confirm that the company actually operates at the place of registration.

A separate division does not perform the functions of the main company.

To prevent inspectors from recognizing a division as a branch, it is necessary to completely separate its functions from the responsibilities of the parent organization. Since one of the signs of a branch is complete or partial duplication of the actions of the main office (clause 2 of article 55 of the Civil Code of the Russian Federation).

This separation of functionality can help in court. Thus, during the inspection, the inspection considered that the taxpayer unlawfully applied the special regime, since he had a separate unit - a recreation center. However, the court recognized the position of the tax authorities as unfounded (resolution of the Federal Arbitration Court of the North Caucasus District dated August 11, 2010 No. A32-4638/2010), since the founders did not endow the recreation center with functions and powers similar to those of the parent organization.

How does the branch and representative office see civil legislation?

The concepts of branch and representative office are not in the Tax Code. Therefore, they are taken from civil legislation. Article 55 of the Civil Code of the Russian Federation establishes several mandatory characteristic features.

First, the division must be separate and located outside the location of the parent organization. Secondly, the representative office must represent and protect the interests of the legal entity (Clause 1, Article 55 of the Civil Code of the Russian Federation). And the branch must perform part or all of the company’s functions, including the functions of a representative office (clause 2 of article 55 of the Civil Code of the Russian Federation).

Thirdly, both the representative office and the branch are not legal entities. They are endowed with the property of the company that created them and act on the basis of the provisions approved by it. The heads of such divisions are appointed by the parent organization and act on the basis of its power of attorney (Clause 3 of Article 55 of the Civil Code of the Russian Federation).

Single tax system (UTII)

An entrepreneur whose conduct of business uses the simplified tax system, in addition to his place of residence, must register with the tax service as a user of UTII in another city within a week from the start of the branch’s operation.

An entrepreneur whose conduct of business uses the simplified tax system, in addition to his place of residence, must register with the tax service as a user of UTII in another city.

The single tax is paid in the city where the individual entrepreneur is registered as a user of the UTII system. If the founder receives profit from other areas of activity, he must pay simplified tax at his place of residence.

The declaration according to imputation is submitted in the city where the branch is located, and according to the simplified tax system - at the place of residence.

One of the main conditions for business success is the correct choice of taxation system. It is she who predetermines the number and size of taxes on production and will help save the entrepreneur’s income.