Open a Business in Russia
Open a Business in RussiaUpdated on Thursday 14th May 2020
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Russia has one of the world’s largest economies and an important domestic market. The country’s economic potential attracts foreign investors who want to open a business here. Several special economic zones exist in the country and they encourage investments in fields like industrial production, technology, and development, logistics or tourism.
Although it may be seen as a country that presents certain challenges, Russia continues to implement policies that encourage foreign investments, particularly in business fields like innovation or technology.
Our lawyers in Russia can help you invest in the country and understand the legislation that governs business activities.
The company incorporation procedure in Russia
The time needed to incorporate a business in Russia is approximately 11 days if all the requested documents are submitted correctly. There are nine steps that must be accomplished before registration. An investor may choose to open a sole proprietorship, a partnership (limited or general) or a company (limited liability or a joint stock company). For a limited liability company and a joint-stock company, a minimum share capital is requested, which is 10,000 rubles for the first type of company and 100,000 rubles for the second.
Foreign companies can also open a branch or a representative office. Each company must be registered with the Russian authorities; branches and representative offices must also be registered with a tax inspectorate for foreign companies.
The government supports the new business through various incentives. In fact, there are special bodies that assure the connection between the government and the business market, such as Foreign Investment Advisory Council. A series of institutions were opened to help the new companies’ development: Investment Fund of Russia, Development Bank of Russia (Vnesheconombank) and Russian Agricultural Bank. Special Economic Zones were created to motivate the investors to start a business here.
If you want to open a company and you cannot be present in the country, our lawyers in Russia will help you with the entire registration procedure using a power of attorney.
The procedure of opening a business in Russia is also presented in the infographic below:
Company registration steps in Russia
Foreign investors who want to open companies in Russia must follow the next steps, no matter the type of company they have chosen:
- prepare the documents related to the incorporation of the company: the Memorandum and Articles of Association;
- sign a rental agreement for the purpose of having a registered address for the company;
- open a bank account in which the share capital will be deposited prior to starting the registration process;
- pay the company registration fee and obtaining the receipt which must be filed with the Trade Register;
- file all the documents with the Trade Registrar and obtain the Certificate of Incorporation of the company;
- register for taxation, VAT and for social insurance purposes with the tax authorities.
We can also assist in obtaining EORI numbers in Russia.
How long does it take to open a business in Russia?
The following processing time must be considered when opening a business in Russia:
- drafting the statutory documents – 1 day
- registration with the Trade Register - 2 to 5 days
- tax registration – 4 to 7 days
- obtaining a company seal - 2 to 5 days
The video below shows how foreign investors can start a business in Russia:
We can assist in obtaining VAT numbers in Russia.
Hiring employees in Russia
The working class from Russia is well known for being very well trained and educated. With two recently opened schools of business in St. Petersburg and Moscow, Russia is trying to facilitate the road to success to all its employees.
The Labor Law regulates all the issues related to the workforce in Russia. An employee may be hired through indefinite agreements, fixed term agreements, agreements with the director or by the agreements for combining jobs. The agreement must contain the following data:
- the title of the job together with a detailed description of the position,
- the place of employment (the address) and the department in which the employee will work,
- the payment method, which must include details about the salary, bonuses, overtime, etc.,
- work and holiday time – the schedule, resting times and the right for paid vacation,
- details regarding the social insurance (the employer must register with the authorities for this purpose).
Our lawyers can help you obtain work permits if you want to hire foreign employees in Russia.
Business sectors with investment potential in Russia
Russia is a country rich in natural resources. It successfully exploits large quantities of natural gas, coal, peat, forest resources, iron ore, diamond and silver reserves.
The country’s unique geographic position facilitates exports: Russia is a link between Europe and Asia and it is bounded by three oceans. It has electrified railroads and a vast network of pipelines and warehouse facilities.
The Russian technology sector is very developed, especially areas like chemistry, metallurgy, machinery, aerospace or nuclear physics. Russia is considered one of the world’s biggest consumer markets; this is especially due to the fact that is the largest country in the world.
The advantages of opening a company in Russia
The taxation system in Russia facilitates foreign investments, as these types of companies are treated much in the same way as local ones. Each company is liable to taxation and the corporate taxation is based on residency: resident Russian companies (those that are actually incorporated in the country or have their place of management here) are taxed on their worldwide income. Non-resident companies are only taxed on the income they produce from their business activities in Russia. The corporate tax rate is 20%.
Dividends paid to a foreign company are taxed at a 15% rate unless a double tax treaty applies. Other taxes for companies include social security, stamp duty, a property tax imposed on a local level, a land tax. The value added tax in Russia is 18% and a reduced rate of 10% or 0% apply in certain cases.
Many double tax treaties were signed with more than 70 countries allowing foreign investors to benefit from double taxation relief.
Foreign entrepreneurs who want to find out more details about setting up a company in Russia may contact our law firm in Russia.