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:
- Article 55 of the Civil Code of the Russian Federation “Representative offices and branches of a legal entity.”
- 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.
What structural divisions can an organization have?
An organization can open branches and representative offices.
A branch is a separate division located outside the location of the organization and performing all or part of its functions, including the functions of a representative office.
A representative office is also recognized as a separate division of an organization located outside its location. Its functions are to represent the interests of the legal entity and protect them.
Both branches and representative offices are not legal entities. They are endowed with property by the organization that created them and act on the basis of the provisions approved by it.
Information about branches, as well as information about representative offices, is indicated in the Unified State Register of Legal Entities.
At the same time, the simplified tax system cannot be used only if the organization has a branch.
If an organization has a representative office, it can switch to the simplified tax system. Just as the opening of a representative office during the year by an organization that is already under this special tax regime will not affect the ability to continue to apply it (letter of the Ministry of Finance of Russia dated 06/05/2018 No. 03-11-06/2/38212).
In addition to branches and representative offices, an organization may open separate divisions. These are territorially separated areas where stationary workplaces are equipped. In this case, a workplace is considered stationary if it is created for a period of more than 1 month (Clause 2 of Article 11 of the Tax Code).
If an organization creates a separate division that is not a branch, that is, information about which is not included in the Unified State Register of Legal Entities, then such an organization has the right to continue to apply the simplified tax system subject to the conditions provided for in Chapter 26.2 of the Tax Code.
The Ministry of Finance also drew attention to this (letters of the Ministry of Finance of Russia dated December 19, 2019 No. 03-11-11/99464, dated April 22, 2019 No. 03-11-11/29010).
Previously on the topic:
Pros and cons of the simplified tax system in 2021
To switch to the simplified tax system after closing a branch, general rules apply
When can you apply the simplified tax system after closing a branch?
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.
| Taxation regime for individual entrepreneurs | Peculiarities of doing business in another municipality |
| PSN (patent) | Individual entrepreneurs need to obtain this document for the new region. For this purpose, you need to contact the tax authority in your new location and submit an application for registration and a patent. After this, a fee will need to be paid for this patent. |
| UTII | Within 5 days from the date of commencement of activities in the new region, the individual entrepreneur must register with the local tax office as a payer of UTII. To do this, you will need to submit a corresponding application. After registration, the individual entrepreneur will pay the UTII tax in the given area and submit a tax return. |
| simplified tax system | An individual entrepreneur does not need to submit documents to the tax authority for registration, and taxes will only need to be paid to the tax authority with which he was initially registered. |
| BASIC | An individual entrepreneur does not need to submit documents to the tax authority for registration, and taxes will only need to be paid to the tax authority with which he was initially registered. |
Can an individual entrepreneur create a separate division?
Let us remind you that taxpayers can be registered with several tax inspectorates at the same time. Organizations register at their location and the location of a separate unit, and individuals - at their place of residence. In addition, they are subject to registration at the location of real estate, vehicles and on other grounds established by the Tax Code of the Russian Federation (clause 1 of Article 83 of the Tax Code of the Russian Federation). The Federal Tax Service of Russia for Moscow also recalled this in Letter dated 03/05/2009 N 20-20/2/ [email protected]
However, it is not required to submit “simplified” tax declarations to each place of registration. Organizations that use the simplified tax system submit a declaration at their location (clause 1 of article 346.23 of the Tax Code of the Russian Federation, clause 1.2 of the Procedure for filling out the declaration). And individual entrepreneurs - “simplified” - at the place of residence, i.e. at the address at which they are registered in accordance with the established procedure <1> (clause 2 of article 11, clause 1 of article 346.23 of the Tax Code of the Russian Federation, clause 1.2 of the Procedure for filling out the declaration). This also applies to the case when they actually conduct business in another place, for example in another region (Letters of the Federal Tax Service of Russia for Moscow dated 06/02/2009 N 20-14/2/ [email protected] , dated 03/05/2009 N 20-14/2/019619, dated 02/05/2009 N 20-14/2/ [email protected] <2>).
———————————
<1> This procedure is defined in the Rules for registration and deregistration of citizens of the Russian Federation at the place of stay and place of residence within the Russian Federation, which are approved by Decree of the Government of the Russian Federation of July 17, 1995 N 713.
<2> Until January 1, 2013, the provision for the submission of a declaration by an individual entrepreneur at his place of residence was established by clause 2 of Art. 346.23 Tax Code of the Russian Federation. From January 1, 2013, this requirement is contained in paragraph 1 of Art. 346.23 Tax Code of the Russian Federation. Regarding the issue under consideration, the requirements of Art. 346.23 of the Tax Code of the Russian Federation have not changed. Therefore, the officials’ conclusions remain relevant today.
So, as a general rule, you must submit a declaration to the tax office that issued you a certificate of registration with the tax authority at your location (place of residence) (clause 3 of article 83, clause 2 of article 84 of the Tax Code of the Russian Federation). Tax Guide. Practical guide to simplified taxation system {ConsultantPlus}
- The residence of the individual entrepreneur is in one region, and the business is in another
A simplified entrepreneur must pay a “simplified” tax and submit a simplified taxation system declaration at his place of residence (registration). This procedure also applies in the case when an individual entrepreneur resides and is registered with the Federal Tax Service in one subject of the Russian Federation, and conducts business activities in another.
Letter of the Ministry of Finance dated July 27, 2018 N 03-11-11/53003
As for personal income tax, which an entrepreneur calculates and pays to the budget from the salaries of his employees as a tax agent, a similar rule applies. That is, the agency tax is in any case paid at the place of residence (registration) of the individual entrepreneur, regardless of the region in which his employees work. Article: News from 09/07/2018 (“General Ledger”, 2022, N 18) {ConsultantPlus}
- Unlike an organization, an individual entrepreneur, when expanding his business, does not have the right to create separate divisions, including branches or representative offices. However, this does not mean that a businessman cannot work simultaneously in several regions, cities or other municipalities. Our article will discuss how a merchant should act when carrying out activities in a place other than the place of registration, in what order he should pay taxes and fees and submit reports.
In accordance with the current legislation, in order to carry out the activities of an individual as an individual entrepreneur, it is necessary to register at the place of registration of the individual (previously this was called registration) (clause 3 of Article 83 of the Tax Code of the Russian Federation). Moreover, whether an individual entrepreneur must register with the tax authorities if he conducts business in another region depends on what taxation system he plans to apply in the new region. As you know, a businessman has the right to combine different taxation regimes. It should be noted that the combination of simplified and general tax regimes is not provided for by Russian legislation (Letters of the Ministry of Finance of Russia dated 03/18/2013 N 03-11-12/33, dated 08/01/2011 N 03-11-10/48, dated 04/21/2011 N 03-11-06/2/63).
Let's consider how various options for combining taxation systems when conducting business in a region other than registration affect the need to register with the tax authority, pay taxes and submit reports.
Individual entrepreneurs apply simplified taxation in all regions where they operate
If an individual entrepreneur applies a simplified taxation system in the region of residence and, when expanding his business in another region, decides to remain on the same taxation system, then the legislation does not oblige him to register for taxation at the new place of business (Letter of the Ministry of Finance of Russia dated January 24, 2011 N 03 -11-11/13). It should also be noted that when applying the simplified tax system <1> it is necessary to submit the declaration at the place of registration of the individual entrepreneur, as a general rule, before April 30 of the year following the expired tax period (clause 2, clause 1, article 346.23 of the Tax Code of the Russian Federation). At the same time, it is necessary to reflect income and expenses in one book of income and expenses for the taxpayer as a whole, regardless of how many regions the entrepreneur operates in...
The entrepreneur at the place of registration applies the simplified tax system or the OSN, and in another region - UTII
A businessman who has expressed a desire to switch to paying a single tax on imputed income for activities carried out in another region must submit to the tax authorities of this region an application for registration in form N UTII-2 <3> within five days from the date of commencement of registration such activity. However, there is an exception to this rule. An entrepreneur must register as a UTII payer with the tax office at his place of residence if he is engaged in the following activities:
— delivery or peddling trade;
— placement of advertising on vehicles;
— provision of motor transport services for the transportation of passengers and goods.
<3> The form was approved by Order of the Federal Tax Service of Russia dated December 11, 2012 N ММВ-7-6/ [email protected] “On approval of forms and formats for submitting applications for registration and deregistration with tax authorities of organizations and individual entrepreneurs as single taxpayers tax on imputed income for certain types of activities, as well as the procedure for filling out these forms.”
Please note that the obligation of an individual entrepreneur applying imputation to register does not depend on whether the entrepreneur is registered with this tax office on other grounds or not ( Letter of the Ministry of Finance of Russia dated September 27, 2010 N 03-02-08/58).
Submission of UTII reporting is carried out quarterly to the Federal Tax Service where the entrepreneur is registered as a UTII payer. The same applies to the payment of a single tax; an entrepreneur must pay it at the place of conduct of the “imputed” activity, that is, according to the details of the tax office of the region in which he is registered as a UTII payer. At the same time, it is necessary to ensure separate tax accounting of income under different tax regimes...
Table. Registration and payment of tax when carrying out activities in different regions
| Tax regime in two regions | Registration in a new region | Paying tax | Submitting reports |
| simplified tax system and simplified tax system | Not required | At the place of residence | The declaration according to the simplified tax system is submitted locally |
| STS (OSN) and UTII | In every region where UTII is applied, except for peddling and delivery trade, advertising on vehicles, provision of motor transport services for the transportation of passengers and goods | At the place of registration of the payer of UTII, simplified tax system or OSN - at the place of residence | At the place of registration of the payer of UTII, simplified tax system or OSN - at the place of residence |
Article: Where to pay taxes if an individual entrepreneur has started operations in a new region? (Shushakova E.) (“Entrepreneur’s Arsenal”, 2015, N {ConsultantPlus}
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.
Can an individual entrepreneur have a separate division?
An individual entrepreneur is a citizen who has registered with the tax authority for the purpose of carrying out commercial activities and receiving regular income, without creating a legal entity.
The concept of “separate division” is reflected in paragraph. 17, 19 paragraph 2 art. 11 of the Tax Code of the Russian Federation, as well as in Art. 55 of the Civil Code of the Russian Federation and contains a number of distinctive features, namely:
- is a division of the organization;
- is located on a territory separate from the legal entity;
- has permanently equipped workplaces created for a period of more than 1 month.
Based on the above provisions, it is incorrect to classify the commercial activities of a citizen, carried out by him in various places, as a separate division of an individual entrepreneur.
An individual has the right to register as an individual entrepreneur (Part 1 of Article 83 of the Tax Code of the Russian Federation):
- at your residence address (registration);
- finding real estate or transport belonging to him;
- another location, which may include the place of actual activity of the entrepreneur.
In addition to registering as an individual entrepreneur with the Federal Tax Service, a person is required to register with the Pension Fund and the Social Insurance Fund. In this regard, reporting and transfer of taxes and mandatory contributions will be carried out according to the details of these authorities.
