According to Russian legislation there are two ways to doing business in Russia:
set up a subsidiary in any legal form provided by Russian law, or establish a branch or representative office of foreign parent company.
To set up a subsidiary means the way to create a separate legal entity, which is fully subject to Russian legislation. Consequently, such entity should be registered for business and tax purposes with local tax authorities (please, see section
Starting business).
This means that such entity will be resident of the Russian Federation and will be subject to taxation here.
A branch, representative office, etc. of foreign legal entity does not have separate status of legal entity in Russia, and should be registered (accredited) by the State registration Chamber in Moscow.
The activities of branch or representative office due to tax treaties may constitute a permanent establishment.
Hence incomes derived by permanent establishment from their activities will be subject to Russian taxes.
For taxation purposes a branch or representative office must be registered with local tax inspectorate.