As you know starting from January 1, 2005 Russian migration authorities do not issue Employment permits for Representative and Branch offices of foreign companies in Russia. The reasons why migration authorities do not issue Employment permits were not stated officially. Finally such reasons were stated in writing in the letter addressed to the Branch of one of the foreign companies in Russia.

Our Client, a Branch of a foreign company in Russia has received written refusal in issuance of Employment permit in Russia.

For understandable reasons we can?t name the Client and therefore can?t provide you with the copy of the written refusal. But we would like to give you the reasons of the migration authorities stated in this refusal and make our comments. We are confident that this information may be helpful in defending your interests with the migration authorities.

According to the Federal Migration Service?s (hereinafter referred to as FMS) position the only reason why our Client received refusal in obtaining Employment permit is the absence in the Russian legislation of the provision that would enable Representative and Branch offices of foreign companies obtain work invitations for their foreign employees.

As a reminder, in accordance with the existing order of employment of foreign citizens, the employer has to obtain Employment permit and personal work permits first and then should obtain work invitations for such foreign citizens to enter Russia.

As it is evident from the abovementioned letter, Federal Migration Service on one hand doesn?t deny the possibility of issuance of the necessary permits to foreign companies operating in Russia through their Representative and Branch offices. Such possibility is stipulated by the Federal law ?On legal status of foreign citizens in the Russian Federation? # 115-FZ, dated 25.07.2005. But on the other hand FMS insists that currently there are no legislative provisions that would allow foreign companies to apply for work invitations for their foreign employees to enter Russia.

Such position is based on the fact that such possibility is not stipulated by the Instruction on issuance of invitations to enter Russia of foreign citizens (Instruction of Ministry of Internal Affairs # 72, dated January 31, 2003). According to this Instruction the issuance of work invitations applied for by legal entity is done by territorial subdivisions of Ministry of Internal Affairs at the place of state registration of such legal entity. Considering the fact that Representative and Branch offices in accordance with the provisions of Russian legislation are not considered as legal entities and foreign legal entities de jure can?t have its place of registration in Russia, neither foreign legal entities nor Representative and Branch offices are able to apply to subdivisions of Ministry of Internal Affairs for issuance of work invitations.

As a result Federal Migration Service being confident that the last step ? obtaining of work invitations can?t be fulfilled by Representative and Branch offices of foreign companies decides to refuse in realization of first two steps ? obtaining of Employment and Work permits to Representative and Branch offices of foreign companies in Russia.

In our opinion the above described position of the Federal Migration Service can?t be treated as fully justified.

According to the Russian legislation foreign companies in order to operate in Russia in the form of Representative and Branch offices should be accredited with the relevant Russian authorities. For Representative offices such authorities may be: State Registration Chamber with the Ministry of Justice, Chamber of Trade and Commerce, different ministries of the Russian Federation. For Branch offices it is State Registration Chamber with the Ministry of Justice. State Registration Chamber with the Ministry of Justice according to its Bylaws is a legal entity that is responsible for accreditation of Representative and Branch offices of foreign companies.

Among other functions of the State Registration Chamber in accordance with the internal instructions there is a function to apply to the territorial subdivisions of the Ministry of Internal Affairs (State Registration Chamber being a legal entity is registered with this authority) on behalf of Representative and Branch offices that are accredited with the Chamber for obtaining of invitations and visas. The invitations that the Chamber applies for on behalf of Representative and Branch offices are called ?foreign employee? invitations, based on such invitations ?foreign employee? visas are then obtained. According to the Joint Order of Ministry of Internal Affairs, Ministry of Foreign Affairs and Federal Security Services that has enacted the List of purposes of the visit ?foreign employee? visa is a subtype of a ?work visa? that is issued to foreign employees of Representative and Branch offices of foreign companies operating in Russia. So it is evident that there is a mechanism that provides for Representative and Branch offices of foreign companies lawfully to apply for invitations and visas for its foreign employees.

Therefore we consider the position of Federal Migration Service as not fully reasonable. Moreover we do not understand why such position of Federal Migration service has appeared only starting from January 1, 2005, though the Instruction FMS is referring to existed earlier and authorities didn?t see any reasons to refuse foreign companies in issuance of Employment permits.

If our position will be rejected by the Federal Migration Service for any reason we would like to raise another very important issue. As we have already mentioned that the Instruction existed before January 1, 2005, what will be the position of migration authorities towards foreign legal entities that obtained Employment permits and have obtained invitations and relevant visas for their foreign employees? Will they be considered as obtained with the breach of Russian legislations and therefore cancelled? And if so what will happen to labor contracts that were signed by foreign companies with their foreign employees for work in Russia, what will happen to the expenses occurred with the labor activities of foreign employees in Russia, will they be recognized as justified expenses?

In any case with the appearance of such letter the silence of authorities that lasted from January 1, 2005 has ended, and the dialogue between foreign business and Russian authorities has started. We will use all our efforts to make sure that this dialogue will end with the result that will not prevent or make obstacles for foreign business to enter the Russian market. We will timely inform you on results achieved.

Questions regarding the above matters should be addressed to:

Timur Beslangurov, Managing Partner, at +7 (095) 933 7822
Oleg Tabounov, Head of Migration and HR Services Department, at +7 (095) 933 7822