What is considered a separate subdivision of a legal entity?

Pursuant to subpara. 14.1.30 of the TCU, the term "separate subdivisions" for tax purposes is used in the meaning defined by the Civil Code of Ukraine No. 435-IV dated January 16, 2003 (hereinafter - the CCU). For the purposes of Div. IV of the TCU, the term "subdivision" is used in the meaning defined by the Commercial Code of Ukraine dated January 16, 2003 No. 436-IV (the "CCU").

Pursuant to Article 95 of the CCU, a branch is a separate subdivision of a legal entity located outside its location and performing all or part of its functions (paragraph 1 of Article 95 of the CCU).

A representative office is a separate subdivision of a legal entity located outside its location and representing and protecting the interests of the legal entity (Article 95(2) of the Civil Code).

Branches and representative offices are not legal entities. They are endowed with the property of the legal entity that established them and act on the basis of a regulation approved by it or on another basis provided for by the legislation of a foreign state, according to which a legal entity was established, the separate subdivisions of which are such branches and representative offices (Article 95(3) of the Civil Code).

The heads of branches and representative offices are appointed by the legal entity and act on the basis of a power of attorney issued by it or on another basis provided for by the legislation of the foreign state under which the legal entity was established, and such branches and representative offices are separate subdivisions of the legal entity (Article 95(4) of the Civil Code).

Branches and representative offices of a legal entity, including a legal entity established in accordance with the laws of a foreign country, are subject to state registration in accordance with the procedure established by law. A branch and representative office of a legal entity are deemed to be established from the date of their state registration (Article 95(5) of the Civil Code).

For the purposes of Sec. IV of the TCU, the requirements of Article 64 of the Commercial Code should be taken into account, according to which an enterprise has the right to establish branches, representative offices, branches and other separate subdivisions, coordinating the issue of the location of such subdivisions of the enterprise with the relevant local authorities in accordance with the procedure established by law. Such separate subdivisions do not have the status of a legal entity and operate on the basis of a regulation on them approved by the enterprise. Enterprises may open accounts with banks through their separate subdivisions in accordance with the law (Article 64(4) of the Commercial Code).

Pursuant to Article 9 of the Law of Ukraine No. 755-IV "On State Registration of Legal Entities, Individual Entrepreneurs and Public Organizations" dated May 15, 2003 (Law No. 755), the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organizations (hereinafter - the USR) contains information about a legal entity, including information about the legal entity's separate divisions.

The information contained in the USR is used to identify a legal entity or its separate subdivision, a public organization that does not have the status of a legal entity, an individual entrepreneur, including when they conduct business activities and open accounts with banks and other financial institutions (clause 4 of Article 10 of Law No. 755).

Thus, a separate subdivision is a subdivision of a legal entity that is located outside its location, performs all or part of its functions, performs work or operations, provides services on behalf of a legal entity, or represents and protects the interests of a legal entity.

A separate subdivision is not a legal entity. Such a subdivision is endowed with the property of the legal entity that created it and operates on the basis of the regulations approved by it.

Companies may open accounts with banks through their separate subdivisions in accordance with the law.

Information on separate subdivisions of legal entities is contained in the Unified State Register.