Subsidiary or Branch Registration in Russia: What to Choose in 2025?

Establishing a legal presence in Russia is a key step for any foreign company planning to operate on the local market. However, the first decision that foreign investors face is the form of that presence — a subsidiary or a branch. While both options allow a company to conduct business in Russia, they differ significantly in terms of legal status, liability, taxation, and administrative burden.

At Outsourcing Solutions, we regularly advise international clients on this matter. Below, we provide a practical comparison to help you choose the most appropriate format for your business goals in 2025.

Subsidiary: Separate Legal Entity

A subsidiary in Russia is typically registered as a Limited Liability Company (OOO). It is considered a Russian legal entity, even if it is fully owned by a foreign parent company.

Key Advantages:

Independent liability: the parent company is not liable for the subsidiary’s obligations.
Local credibility: a Russian legal entity is often preferred by banks, clients, and partners.
Full operational freedom: can engage in any lawful business activity unless restricted by its charter.

Considerations:

Requires full compliance with Russian corporate, tax, and accounting rules.
Subject to 20% VAT, 25% corporate income tax, and other standard local taxes.
Annual reporting and statutory audit (depending on revenue thresholds) are mandatory.

Branch: Extension of the Parent Company

A branch is a structural unit of a foreign legal entity, accredited to carry out commercial activities in Russia. It is not a separate legal person but acts on behalf of the parent company.

Key Advantages:

No separate capital required.
More flexibility in allocating funds between HQ and branch.
Recognized as a permanent establishment for tax purposes — avoids double accounting structures.

Considerations:

Parent company is fully liable for the branch’s operations and obligations in Russia.
The accreditation process is more complex and time-consuming than LLC registration.
Can face higher compliance scrutiny, especially in banking and financial monitoring.

Taxation: A Comparative View

So, What Should You Choose in 2025?

Choose a subsidiary (OOO) if you plan long-term operations, want local credibility, or prefer legal separation from your headquarters.

Choose a branch if you want closer control from HQ, streamlined funds flow, and already have similar operations in other countries.

Our Recommendation

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Each case must be evaluated individually — there’s no one-size-fits-all. At Outsourcing Solutions, we help our clients not only register the right structure but also manage it in full compliance with Russian regulations. Whether it’s a branch or a subsidiary, our legal and accounting teams are ready to support you at every step.

Ivan Masley, Head of Legal Services, Outsourcing Solutions

Need advice or assistance with registration in Russia? Contact us — we speak your language, understand your business needs, and ensure a smooth and compliant setup from day one.

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