Russian company types

Full details of legal business structures and their features are detailed within the Civil Code and corporation’s law of the Russia – Federal Law 14-FZ (Limited Liability Companies) and Federal Law 208-FZ (Joint-Stock Companies). The six main sorts of Russian company are:

Limited Liability Company (OOO)

This is the foremost common sort of business in Russia. An OOO can have a maximum of fifty shareholders who got to contribute a minimum of R10, 000 each (50% payable on registration). Shareholders are jointly responsible for company debts up to the registered capital amount.

The management structure consists of 1) general meeting (the highest body that meets a minimum of once a year) and 2) board of directors (oversees general business activities). In some cases, an executive committee can also be formed.

Any Russian or foreign individual (or company) is often a founder or shareholder of any number of Russian OOOs, although to be a member or director you'll need to have the required visa and/or residence permit to measure within the country if you're a foreigner. An OOO may be a Russian legal entity which will conduct any sort of activity not prohibited by the Russia. They’re going to need a license to conduct any licensed sort of activity.

Joint-Stock Company

This can be either open (OAO) or closed (ZAO). The ZAO may be a private Russian company and is extremely almost like the OOO. The OAO may be a public company. The most differences are that an OAO can have quite 50 shareholders, shares are freely transferable to the general public (rather than simply between shareholders) and therefore the minimum requested capital contribution is R100,000.

The management structure and shareholder liability of both sorts of a company are almost like the OOO.

Partnership

Partnerships are often more suitable for little businesses in Russia. There are two sorts of partnership in Russian business:

General partnership – where two or more individuals (or companies) have equal rights and liabilities supported a partnership agreement. Unlike with indebtedness and joint-stock companies, personal assets are often wont to cover debts with a general partnership. Management is shared between partners and therefore the business capital is detailed within the partnership agreement.

Limited partnership – where the partnership has two sorts of partners. General partners, who are fully responsible for debts and profits, make the most decisions and may cover costs with personal assets; and limited partners who are only liable up to their contribution to the business capital.

Sole ownership – this is often for people starting a Russian business on their own. Details are within the below section on freelancers and self-employed.

Branch – a subdivision of a far off company based in Russia and entitled to conduct business activity. Not considered a separate legal entity from the overseas company and treated as non-resident more details within the section on foreign companies registered in Russia below.

Registered Office – a subdivision of a far off company based in Russia to represent company interests in Russia, but not allowed to undertake a business activity. Not considered a separate legal entity from the overseas company and treated as non-resident more details within the section on foreign companies registered in Russia below.

The rules of doing business in Russia

According to one HR manager: “In Russia daily work conditions are often compared to a jungle where you don’t know what can fall on your head within the next minute.”

> Personal and company security may be a major issue in every city. Background checks of employees and subcontractors, whether local or foreigners living in Russia are critical.

> Reimbursement of business losses, legal remedies for fraud and recovery of damages of any kind are almost non-existent. It’s good to use Russian legal counsel for safeguarding your interests. Laws governing property are in their infancy.

> Business is hierarchical, so determine who’s who before a gathering and do business with the choice makers. Business cards are essential.

> Russians are addressed by their name and father’s name carried by all Russians rarely by the surname. For instance – Alezander Petrovich – which translates literally to Alexander son of Peter.

> Russians like direct talk. It’s good to underline the profitability factor at an early stage of the meeting, but remember they consider an excessive amount of compromise as a symbol of weakness. Often the ultimate deal isn't final and you'll strike a far better bargain by holding out a touch more. When a deal is struck, it's often sealed with a glass of vodka, better to not refuse.

> Punctuality isn't a robust point of the Russians, but they expect foreigners to be punctual.

> When handling bureaucrats patience may be a virtue. In government offices, small gifts and money can work wonders. it's important to understand how the official and ‘unofficial’ systems work.

> Corruption and petty theft is rampant and sometimes justified, even amongst company employees. it's good to take care.

> An expat must be flexible together with his Russian subordinates and colleagues. To urge the simplest, motivate them, allow them to feel secure and voice their feelings. Sell your ideas to your Russian colleagues, don’t force them.

Remember learning the way to unlock the human potential of Russian employees is critical for a far off firm to achieve success in Russia. Sometimes the corporate atmosphere, non-monetary benefits and a guarantee of a stable future are more important for a Russian than the salary.

Etiquette and social custom

Hospitality may be a Russian virtue and reception you see a different side of the Russians you recognize at work. It’s an honor to be invited to a Russian home and there are certain rules to recollect once you visit a Russian home for the primary time:

> Bring a present when invited. Wine, cake, chocolates, and flowers are appreciated. Flowers should tend in odd numbers and avoid yellow roses, which are a symbol of separation.

> Don’t greet or kiss across the edge of the doorstep it's considered to bring bad luck. Remove your gloves before shaking hands. you would possibly be expected to require off your shoes before entering the house.

> Both the guest and host are expected to decorate well.

> Traditionally a guest is going to be directed to a table laden with food and drinks immediately upon arrival, though the influences of ‘European’ behavior are getting increasingly evident. At the table, you're expected to participate actively in the conversation.

> Be prepared to simply accept all food and alcohol, Russians enjoy their drinks, if you would like to say no do so very tactfully.

> Russians have a very unique sort of toasting. Participate and learn it, as you shall be expected to offer toasts when entertaining.

> Often the host will mention his travels, prized possessions or achievements. They could even bring out family albums. Make certain to point out your appreciation. More often it’s how of opening up to a guest. Russians can take criticism and are great satirists.

> Dinners continue late into the night and there's often a lot of drinking and loud talking. Don’t expect an excessive amount of formalities. Remember the simplest of the home is on the table, provides it due respect.

Russian entrepreneurs and self-employed sole traders in Russia

Individuals working freelance or self-employed can set themselves up as sole ownership. This is often common for those with small businesses in Russia. There’s no minimum capital share requirement during this sort of Russian business and therefore the sole trader takes all the choices and is liberal to use profits as they want once income tax payments are made. Like partnerships, personal assets are often wont to cover debts.

Individuals also can set themselves up as private entrepreneurs (self-employed persons) which suggest that they don’t need to form a legal entity as a sole proprietor. The method for setting yourself up as a freelance is that the same as for beginning a Russian business aside from not having to draw up founding documents. You still get to register with the FTS and can receive a state registration and tax certificate.

Foreign companies registered for work Russia

Companies registered outside Russia can found out a subdivision inside the country either as a branch (if eager to engage in commercial activities) or as a representative office (if eager to represent company interests).

These subdivisions aren't considered as separate legal entities from the overseas company although they still got to be registered for tax purposes with the FTS. There’s no requirement to make assets for representative offices. With branches, there's a requirement although the quantity isn't stipulated in Federal Law. There are not any shares. The foreign company in both cases should appoint an executive body for the aim of managing the subdivision.

Business in Russia: visas

You will get to have a residence permit and therefore the required visa (if applicable) to become self-employed, start a Russian business or hold an edge during a company (e.g. partner, director, board member) where you're involved in regular decision-making. Those with temporary also as permanent residence permits can apply to start a Russian business. Non-residents are often shareholders of Russian companies.

If you would like to start up a business in Russia and you don’t have residency, you'll apply for a Russian Work Visa to return and work as self-employed if you'll obtain a call for participation from the Russian General Directorate of Migratory Affairs (GUVM). If you're looking to start a business in Russia which may generate revenue and make jobs, you'll apply for a Russian Business Visa.

Foreign investors have equal status with locals aside from certain restrictions that apply to bank and insurance sectors, some land purchase restrictions and a few investments in economic entities of strategic importance. See more here.

See our guide to Russia visas and residence permits and Russian work visas and permits for more information on visa requirements.

Taxes and accounting for Russian businesses

The reporting year for tax purposes in Russia is 1 January to 31 December. New Russian businesses that are established before 1 October in any year are required to submit an income tax return for that year. Businesses that start then date submit their first return the subsequent year.

All Russian businesses are required to stay properly recorded accounts for tax and auditing purposes. Indebtedness Companies and Joint-Stock Companies got to file reports to the tax authorities quarterly and VAT reports monthly. Subdivisions of foreign companies have treated equivalent to Russian legal entities in terms of tax and accounting compliance.

The corporation tax in Russia is 20% and VAT is eighteen. There’s no threshold for VAT (20).

See our guide to Taxes in Russia for more information.

Employing foreign staff in Russia

To employ foreign staff in Russia, you'll get to obtain an employment permit from the GUVM who issues consistent with quotas. Once this has been secured, employees will be got to obtain a piece permit and visa from the GUVM.