In 2021, separate divisions of many enterprises can experience the beauty of communicating with tax inspectors. The fact is that from 2021, all separate divisions (including branches and representative offices) that issue payments and rewards to individuals will be required to independently calculate and pay insurance premiums, as well as submit calculations for them to the Federal Tax Service. In addition, additional responsibilities have appeared for head offices that have separate divisions (including branches and representative offices). Let's figure out what exactly has changed and how it will affect organizations.
What is a separate division: introductory information
Any Russian organization has the right to open one or more separate divisions. They may be branches and representative offices of a legal entity. At the same time, separate divisions (that is, branches and representative offices) are not legal entities and are deprived of the legal capacity inherent in legal entities. This follows from Article 55 of the Civil Code of the Russian Federation.
It is also necessary to say about the Tax Code of the Russian Federation. It follows from Article 11 of the Tax Code of the Russian Federation that a separate division must be located at an address different from the address of the main organization and have stationary jobs, that is, jobs created for a period of more than one month.
Thus, we can say that a separate division of a legal entity is a branch, representative office or stationary workplace (Article 55 of the Civil Code of the Russian Federation and Article 11 of the Tax Code of the Russian Federation).
Below in the table we will explain some of the features of the types of separate divisions.
| Branch | Representation | Stationary workplace |
| The branch carries out all or part of the functions of the main organization. Performs representative functions. | The representative office represents and protects the interests of the main organization. | The employee carries out his labor activity at the workplace. |
| The branch can conduct commercial activities. | The representative office cannot conduct commercial activities. | Cannot conduct commercial activities. Only labor relations. |
| Information about the branch must be contained in the Unified State Register of Legal Entities. | Information about the representative office must be contained in the Unified State Register of Legal Entities | Information is not included in the Unified State Register of Legal Entities. |
Signs of a separate unit
OP meets two main characteristics:
- There are stationary workplaces on its territory. They will be used for at least one month.
- The structure is located at a territorial distance from the main office.
- The division must be created by the company itself.
IMPORTANT! A workplace, according to Article 209 of the Labor Code, is understood as a place where an employee comes to perform his official functions. The workplace must be controlled by the employer. Working from home does not meet these standards. An employee's apartment cannot be considered a workplace. The work of a cleaner hired to clean a client’s office does not fall under these criteria. Such a “division” was not opened by the head office. Premises for work were not rented or purchased. Therefore, in this situation there are no signs of a separate unit. The OP also does not include payment terminals and ATMs.
The characteristics under consideration are determined based on the following factors:
- conditions specified in the contract;
- relations between employees and the organization.
How is property tax paid for organizations if there are separate divisions ?
Territorial isolation means a situation in which the addresses of the head office and its divisions are different.
Registration of separate divisions with the Federal Tax Service
If a separate division is a branch or representative office and information about it is indicated in the charter and in the Unified State Register of Legal Entities, then at the location of this unit the organization will be registered with the Federal Tax Service automatically based on information from the Unified State Register of Legal Entities (clause 3 of Article 83 of the Tax Code of the Russian Federation).
If a separate division is not a branch or a representative office, but a workplace, then within a month from the date of its creation the organization itself must register with the Federal Tax Service at the location of such a division (clause 3, clause 2, article 23, clause 4 Article 83 of the Tax Code of the Russian Federation). To do this, you need to submit to the Federal Tax Service at the location of the organization itself a message about the creation of a separate division in form No. S-09-3-1. These rules have been in effect previously and will continue to apply in 2021. However, from 2021, organizations with separate divisions will have new responsibilities.
Closing a separate division
In order to close a unit, an appropriate decision must first be made
. Depending on which category a separate division belongs to, the decision to close is made differently.
If a separate division was registered with the Social Insurance Fund upon opening, then the fund must be notified of the closure of the division. To do this, an application is drawn up in the form presented in Appendix No. 2 to Order No. 217 of the Federal Social Insurance Fund of the Russian Federation dated April 22, 2019. A copy of the order on closing a separate division and a certificate on the bank’s form on closing a current account must be attached to the application.
After the unit is deregistered, all reports are submitted for it and the remaining taxes and contributions are paid
. The income tax return is completed for all periods before the end of the calendar year, including those when the division has already been closed. It must be submitted to the Federal Tax Service at the place of registration of the head enterprise.
New responsibilities of parent organizations from 2017
From 2021, parent organizations are required to notify the Federal Tax Service at their location that their separate divisions (including branches and representative offices) in 2021 (subclause 7, clause 3.4, article 23 of the Tax Code of the Russian Federation):
- received the right to accrue payments and rewards to individuals;
- lost the authority to accrue payments and rewards to individuals.
The Tax Code of the Russian Federation allows one month for notification to the tax authority to the parent organizations from the date of vesting (or deprivation) of the “separateness” with the specified powers or their loss.
Please note: the new obligation to send these messages has been introduced only in relation to those separate divisions to which the corresponding powers have been transferred or taken away from them after January 1, 2021. There is no need to transmit messages to the Federal Tax Service regarding separate divisions (branches, representative offices) that accrued payments and rewards before 2017. This is provided for in paragraph 2 of Article 5 of the Federal Law of July 3, 2016 No. 243-FZ.
How parent organizations can fulfill their new responsibility
After January 1, 2021, the parent organization has the right to transmit to the Federal Tax Service a message about vesting a separate division (including a branch or representative office) with the authority to calculate payments and remunerations in favor of individuals (or about depriving such authorities) (clause 7 of Article 23 of the Tax Code of the Russian Federation):
- by mail;
- in electronic form via telecommunication channels;
- through the taxpayer’s personal account.
The Federal Tax Service is obliged to approve the procedure for transmitting such messages to the Federal Tax Service in electronic form and the forms of “paper” messages. This is provided for in paragraphs 3 and 4 of paragraph 7 of Article 23 of the Tax Code of the Russian Federation.
A separate division is vested with the authority to accrue payments and rewards to individuals from the date of issuance of the relevant order or instruction of the parent organization.
The form of notification of a Russian organization - payer of insurance premiums about vesting a separate division (including a branch, representative office) with powers (about deprivation of powers) to accrue payments and rewards in favor of individuals was approved by Order of the Federal Tax Service of January 10, 2021 No. ММВ-7-14/4 .
Changes for separate divisions since 2017
When transferring the rules on insurance premiums from Federal Law No. 212-FZ of July 24, 2009 to the Tax Code of the Russian Federation, legislators decided that separate divisions will deal with insurance premiums much more often in 2017.
From January 1, 2021, Federal Law No. 212-FZ dated July 24, 2009 “On insurance premiums” loses force. According to Part 11 of Article 15 of this law, until 2021, only those separate divisions that simultaneously:
- had bank accounts opened for themselves;
- had their own balance sheet, separate from the main office;
- accrued various payments and rewards to individuals.
Thus, until 2021, the three specified conditions had to be simultaneously met. But since 2021 the situation has changed. For a separate unit to have the obligation to submit reports to the Federal Tax Service and pay insurance premiums, legislators left only one criterion - the accrual of remuneration to individuals. This follows from the new provisions of paragraphs 7 and 11 of Article 431 of the Tax Code of the Russian Federation. Also see “Insurance premiums from 2017: overview of changes.”
Thus, the obligation to pay insurance premiums and submit calculations for insurance premiums by separate divisions in 2017 arises regardless of the presence of:
- separate balance;
- an open bank account.
It is possible that some accountants will have a logical question: “can the parent organization in 2021 independently submit reports and pay insurance premiums for its separate divisions that pay payments and rewards to individuals”? In our opinion, it will be impossible to do this in 2021. The fact is that the provisions of the Tax Code of the Russian Federation in force since 2021 do not provide that the parent organization has the right to “assume” the responsibility for paying insurance premiums and submitting settlements for its “separate entity”, which accrues payments and rewards to individuals.
From 2021, separate divisions that calculate payments and rewards to individuals must submit calculations of insurance premiums to the Federal Tax Service at their location using a new form approved by Order of the Federal Tax Service of Russia dated October 10, 2016 No. ММВ-7-11/551. RSV-1 will not be submitted to the UPFR from 2021.
We also believe it would be advisable to consider one more situation. Let’s assume that until 2021, a separate division of the organization did not have a separate current account and balance sheet, but accrued payments and rewards to individuals. Until 2021, such a unit, by virtue of the law, did not have to independently pay insurance premiums and submit RSV-1 calculations to the Pension Fund of the Russian Federation. The parent company did this for him (Part 11, Article 15 of Federal Law No. 212-FZ of July 24, 2009). However, by virtue of paragraph 11 of Article 430 of the Tax Code of the Russian Federation, starting from 2021, such a division is obliged to independently transfer insurance premiums and submit reports on insurance premiums to the Federal Tax Service. If the parent organization does not want the separate division to do this, then it will be necessary to issue an order “On depriving the separate division of the authority to accrue payments and remunerations in favor of individuals.” And report this to the Federal Tax Service within one month (Part 7, Clause 3.4, Article 23 of the Tax Code of the Russian Federation as amended, effective from 2021).
For foreign separate divisions, insurance premiums are paid and reports are submitted by the head office. This approach has been used before and will be used in 2021. The changes discussed in this article apply exclusively to separate divisions of Russian companies.
How tax authorities and funds organize accounting for separate divisions
Since 2021, Article 84 of the Tax Code of the Russian Federation, dedicated to the rules for tax registration, has been supplemented with clause 3.1. It stipulates that tax inspectorates at the location of the “isolations” are required to keep records of data on their powers to make payments to individuals. This is based on messages from payers mentioned above.
Also in 2021, a package of amendments to the Tax Code was adopted (https://asozd2.duma.gov.ru/main.nsf/(SpravkaNew)?OpenAgent&RN=11078-7&02), obliging tax authorities to report electronically to the Pension Fund of the Russian Federation, the Social Insurance Fund and FFOMS information on tax registration of companies at the location of their separate divisions in 2021, which make payments and other remuneration to individuals (new sub-clause 15, clause 1, article 32 of the Tax Code of the Russian Federation). Starting from 2021, tax authorities are required to inform the above funds within three days:
- on the vesting of “single-parties” (including branches and representative offices) with the powers to calculate payments and remunerations, as well as on the deprivation of such powers;
- on a change of location to a “separate” location (exception: branches and representative offices);
- on the closure of such separate divisions.
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How to open a separate division
To open an OP, you will need to create internal documentation. It includes an order to create an OP, signed by members of the board of directors or representatives of the auctioneers’ meeting. The order contains information:
- name of the OP;
- the primary document on the basis of which the division is created (for example, minutes of a meeting of the board of directors);
- location of the OP;
- head of a separate structure;
- registration period.
The order must bear the signature of the head of the central office. Then the Regulations on the OP are created. It contains the following data:
- powers of the unit;
- functions;
- activity;
- composition of the management staff;
- other work-related issues.
Only after creating all internal orders can you begin registration and other legal formalities.
Is it necessary to register a separate division?
The tax authority must be notified of the formation of an OP. But registration with the Pension Fund and insurance companies is not always necessary. This is a mandatory measure only if the following circumstances exist:
- Availability of a dedicated balance.
- Open current account.
- Payroll.
If all of the listed signs are absent, then it is not necessary to register a separate division.
Creation of an OP from a tax point of view
The creation of an OP entails certain tax consequences:
- tax registration;
- the need to pay fees;
- accrual of fees at the location of the OP.
Article 23 2 of the Tax Code states that the owner of a unit is obliged to notify the tax authorities of its formation. Otherwise, a decision will be made on sanctions in the form of tax or administrative liability. The fines range from 10 thousand rubles to 30 minimum wages.
IMPORTANT! The law states that if a taxpayer has already been registered, there is no need to register additionally due to the opening of an OP. This rule is established by paragraph 39 of the resolution of the Plenum of February 28, 2001. It assumes cases when an OP is opened on the territory of the municipality where the head office is located.
Deadlines
To register, you must submit an application in form C-09-3-1. It is provided, in accordance with Articles 23 and 83 of the Tax Code, within the following terms:
- Within 30 days from the date of reorganization or liquidation.
- Within 30 days from the date of creation of the unit.
You need to go to the tax authority at the location of the OP.
Do I need to go to the tax office if a separate division does not operate?
Tax legislation has adopted a rule that can be read in two ways. If we take it literally, then there is no need to submit applications to the tax office until the division begins to operate. However, such a decision may be fraught with consequences for the company.
The law states that the application must be submitted within 30 days of opening. If the OP begins its activities after 2 months and is registered exactly after this period, the established time for filing the application will be missed.
IMPORTANT! It is necessary to report not only about the opening, but also about the closing of an OP. The application for liquidation is drawn up in form N S-09-3-2.
Summary. The opening of a subdivision is taken into account by the tax office and other authorities. The new structure must be registered within the established time frame, otherwise you will have to pay a fine. There are clear signs of EP, on the basis of which the education receives the appropriate legal status. If all the signs are not present, then the formed structure cannot be considered a separate unit.
