Despite the misconception of many people, it is not only citizens of the Russian Federation who may engage in entrepreneurial activity as an individual entrepreneur. Foreign nationals have the right to register as an IE on the territory of the Russian Federation on an equal basis with Russian citizens. The right of a foreign citizen to carry out entrepreneurial activities is stipulated by
Subparagraph f, par. 1 of article 22.1 of the Federal law from 08.08.2001 N 129-ФЗ “About the State registration of legal persons and individual entrepreneurs”.
Among the documents that a foreigner will have to provide when applying to the tax authorities is a document confirming the right of an individual to temporarily or permanently reside in the Russian Federation, i.e. a temporary residence permit (TRP) or a permanent residence permit (PRP). It should be borne in mind that a visa does not belong to the above mentioned documents and only allows one to stay temporarily, not to reside in Russia. Therefore, a foreigner who has decided to open a business in Russia in the form of an individual entrepreneur must first go through the procedure of obtaining a residence permit or a residence permit.
Otherwise, the process of obtaining the status of an individual entrepreneur by a foreigner is not very different from that for Russian citizens.
What documents are required for the registration of an individual entrepreneur to a foreign citizen:
- A signed application for state registration of a PE as an individual entrepreneur in form P21001;
- A copy of the applicant’s identity document and a notarised translation of the document;
- Copy of the birth certificate or other document confirming the date of birth, if such information is not contained in the identity document. A notarised translation of this document must also be enclosed;
- A copy of temporary residence permit or permanent residence permit;
- Copy of the document on registration on the territory of the Russian Federation;
- Receipt of payment of State duty for registration of IE in the amount of 800 roubles.
When submitting the application, the applicant must provide the originals of all the above documents so that the receiving tax officer can verify the accuracy of the information provided in the copies.
For some types of activities, a certificate of no criminal record from the foreigner’s country of origin or from a Russian authorised body may be required. In order not to leave Russia, a certificate from the country of citizenship can be requested from the consular mission. The certificate must also be translated into Russian and certified by a notary. The absence of criminal record must be confirmed in the medical and educational spheres, when working with children and in other types of activities. The full list is established by the Government of the Russian Federation.
Ways in which a foreigner can apply to register as a sole proprietorship.
- With the use of EDS on the FTS website;
- By personal visit to the Tax Inspectorate;
- Through the Multifunctional centre (MFC);
- Through a notary. No state duty is charged in this case, but fees are payable to the notary. The notary will send the documents to the tax office electronically.
The deadline for state registration of the IE is 3 working days.
According to the results of the application, the tax authority makes a positive decision on the registration of the IE or a decision to refuse the registration with the indication of the reason for the refusal. For example, there may be an error in filling in the application form, absence of the necessary document, or improperly executed documents.
The registration documents will be sent to the e-mail indicated in the application. If it is necessary to receive a paper version of the documents, a note to this effect must be made in the application.
Taxation of a foreign PE
A foreigner may use the general taxation system as well as the simplified taxation system on an equal footing with nationals. However, it must be borne in mind that if a foreigner stays in the RF for less than 183 days in the last 12 months, he is recognised as a non-resident of the RF and must pay personal income tax at the tax rate of 30% and not 13%.