Opening a business in Russia

May 1
18:58

2020

Marcus Hudson

Marcus Hudson

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For Let’s Russia, that is our membership consulting services. Once you figure out what it is you can do remotely, you can incorporate an LLC in Russia and your customers or foreign companies pays the Russian company for those services.

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Who can found out a Business in Russia?

 

Any foreigner or foreign company can start a business in Russia; generally there are not any restrictions. However,Opening a business in Russia Articles there are restrictions on foreigners operating businesses in some sectors:

 

-Credit organizations

-Strategic sectors - there's a special law "On Foreign Investments in -Companies of Strategic Importance for National Defense and Security of the Russian Federation" No. 57-FZ), which extensively lists sectors that are considered restricted for foreign investors (the law lists over 40 sectors)

-Insurance companies

-Air transport

-Gas supply

 

Types of Business Structure

There are four ways for foreign individuals and entities to line up a business in Russia:

 

-Limited liability companies

-Joint-stock companies (two types: closed and open)

-Branch or representative offices of foreign companies (the former are often engaged in commercial activities, while the latter cannot)

-Individual entrepreneurs (a foreign citizen can register with this status as long as they need a short lived or permanent residence permit)

 

The Legal Process

Below is information about the legal process and procedures for fixing business in Russia.

 

Authorities involved

-Notary (certifies the appliance for registration)

-Tax authority (where the appliance and other documentation are submitted for registration of a company)

-Statistics committee (this committee assigns codes based upon its determination of the company's activities)

-Social funds (pension and social insurance)

-Federal service on financial markets (in the case of a company because it registers the issuance of shares)

-State registration chamber for registration of branches and representative offices

 

Required documents

For indebtedness companies and joint-stock companies:

 

-Resolution of the founders to include

-Charter of the corporate to be founded

-Application for state registration

-Extract from the trade register or certificate of incorporation and charter (by-laws, articles of association) of the founding company (in case the founder may be a legal entity)

-Copy of the passport (in case the founder may be a natural person)

 

For representative offices or branches:

 

-Extract from the trade register or certificate of incorporation and charter of the foreign company

-Resolution on the opening of the representative office or branch in Russia

-Regulations on the representative office or branch

-Recommendation letter from the bank servicing the foreign company (letter on good standing)

-Recommendation letters to Russian partners

-Power of attorney for the top of the representative or branch office

 

Common problems

The founders must personally submit the documents for registration of a company entity, in cases where the founder may be a legal entity, the CEO of the founding company shall submit the documentation (there is that the possibility to submit the documentation by post; however, the standard seven-day time interval could take multiple months or maybe be entirely lost within the process).

 

If the corporate wants to initially appoint a foreigner as a general director of an area entity (corporate, branch, or representative office), it's going to not do so due to working papers issues (so a transitional, temporary Russian citizen stand-in must be used at the time of founding because the procedure for applying for a piece permit for a foreigner can take from one to four months).

 

Taxation of Russian Companies

There are two systems: the normal and therefore the simplified system of taxation. The simplified system can only be employed by companies with but 60 million RUR in turnover and company entities where foreigners own less than 25 percent of the corporate.

 

Traditional system

-Profit tax of 20 percent

-VAT of 18 percent

-Property tax - this varies by region of registration of the entity but is usually approximately 2.2 percent

 

Simplified system

-No VAT

-Two sorts of unified taxation - six percent on all revenues or 15 percent on revenues less recognizable expenses