Representative offices and Branches of foreign organizations in Belarus: how to operate in a new legal landscape
On November 19, 2024 the new edition of the Civil Code of the Republic of Belarus came into force.
The new edition has set the possibility to open branches of foreign organisations (which was not possible before and was anticipated by the foreign business) and set the deadline for terminating representative offices which are registered as a permanent establishments.
Until May 18, 2025, foreign companies carrying business activities in Belarus need to close representative offices and continue their business activities in one of the following options:
(i) Opening a branch of a foreign organization;
(ii) Opening a subsidiary company.
In addition, the alternative option is to purchase shares in acting legal entities.
❗️If the representative office does not carry out business activities, it may continue to operate.
Of course, new possibility entails new regulation, so the Resolution of the Council of Ministers dated November 16, 2024 No 846 was adopted following these changes and approving the Regulations on the procedure for opening and terminating activities of representative offices of foreign organizations and branches of foreign organisations in the territory of Belarus (hereinafter – Regulations).
In this material we will highlight the main points on how to determine which option of carrying out business in Belarus is more suitable for you and what is the new order for setting up a brunch or a representative office.
What to choose for doing business in Belarus?
| Form of presence | Advantages | Disadvantages |
|---|---|---|
| Branch of a foreign organization | • The company controls the activities of the branch and determines the limits of its powers; • All property, including money, belongs to the parent company: it can be transferred and seized by the decision of the parent company; • A manager who is a foreign citizen does not need to obtain a special work permit and a work visa. |
•Branches must be registered as a permanent establishment, so they are subject to a similar tax regime; • The parent company remains the beneficiary, including for the purposes of bank compliance; • The parent company bears all risks and responsibilities for the activities of the branch. |
| Representative office of foreign organisation | • Low tax burden; • The company controls the activities of the representative office and determines the limits of its powers; • All property, including money, belongs to the parent company: it can be transferred and seized by the decision of the parent company; • A manager who is a foreign citizen does not need to obtain a special work permit and a work visa. |
• Can only carry out “complementary” activities (for example, market research); • Can only have up to 5 foreign employees; • The parent company remains the beneficiary, including for the purposes of bank compliance; • The parent company bears all risks and responsibilities for the activities of the representative office. |
| Subsidiary company | • The subsidiary company is independently responsible for its debts and obligations, which can reduce the risks for the parent company (BUT! The parent company may be brought to subsidiary liability for the obligations of the subsidiary company); • When conducting KYC procedures the status of the subsidiary company will be a subject to verification; • Has the right to obtain licenses for licensed activities; • Has the right to use special legal regimes (HTP, FEZ, Technoparks, etc.). |
• Carries a full tax burden; • Money or property cannot be transferred free of charge to finance the company's activities; • If the manager (director) is a foreign citizen, the special permit for work is required; • There is a need to keep separate accounting and document management. |
What is the procedure to establish a Representative office or a Branch in Belarus?
The opening of a branch or representative office is carried out on the basis of their inclusion in the register of representative offices of foreign organizations and branches of foreign organizations.
Upon receiving the application for the establishing the registration body (region executive committees, Minsk city region committee, administration of the Great Stone Industrial Park) will request an information from the prosecutor's office, state security agencies to assess the possibility of such opening. The establishing may be rejected if it contradicts the interests of national security in any way.
Registration authorities will also ask for an approval to open a representative office or branch from interested authorities and will request information on the unfulfilled obligations of a foreign organization will also be requested from the customs authorities, the social fund, Belgosstrakh. If a foreign organization has outstanding custom duties, it will be refused to open a representative office or a branch.
The list of interested authorities will be determined by the registration bodies independently, depending on the types of economic activity and the purposes of opening a branch or representative office.
If all the interested authorities give their positive feedback, the registration authority proceed with the registration. The whole process takes around 1-2 months.
Author:
Violetta Liudchyk,
Associate, co-head of “Corporate law and M&A” at GRATA International, Belarus
