Ways of working for foreign business in Russia

Foreigners and foreign companies can conduct business
in Russia in several ways:

• registration of a legal entity (separate company);

• buying a stake in a business or participating as a
co-founder;

• opening of a branch or representative office;

• registration as an individual entrepreneur;

• cooperation with distributors.

Each of
these options has its own characteristics: a different set of documents and
requirements for founders, types of taxation, as well as the availability of
necessary permits. Let’s take a closer look at every opportunity for foreigners
to open their own business in Russia.

1) Registration of your own company

Russian legislation allows foreign citizens to
register several forms of business: joint stock company (JSC), limited
liability company (LLC).

To register
an LLC or JSC, the founder does not have to be in Russia. He may not be present
at the registration in person – the necessary documents can be sent by mail.

Another important
point is whether the founder of the LLC or JSC is going to be the head of the
company. If, after opening a business in Russia, the owner wants to hold the
post of director, you will need to get a work permit.

The liability of the LLC and JSC participants is
limited by the size of their share.

Representatives
of small and medium-sized businesses in the Russian Federation can use the
simplified taxation system, for this, an individual must be a participant in an
LLC or the participation share of a foreign company should not be more than 25%

What is necessary to open a business in Russia in the
form of LLC and JSC:

• legal address;

• authorized capital of at least 10 thousand rubles;

• availability of a director and an accountant;

All foreign
documents must be legalized by apostille, then they must be translated into
Russian and the translation certified by a notary.

Within
three days after submitting the documents, it will be possible to obtain a
certificate of registration of the company.

2) Buying a share in the business

Foreign
citizens can open a business in Russia through the acquisition of a share of
the authorized capital. There is a way to do without buying: you need to
register a new member of the company, who will increase the authorized capital
with his own investments. In this case, registration of changes takes about 7
days. In addition to business investments, you will need to pay a state fee, as
well as legal verification of documents and their translations.

A joint
venture in Russia can also use a simplified taxation system. But this is
possible only if the share of a foreign company is no more than 25%.

What is needed to register a joint business of various
forms of entrepreneurship:

• a statement including the name and legal status of
the company;

• documents of the founders and management staff;

• indication of the size and form of the authorized
capital;

• current legal address of the company;

• indication of the taxation system.

3) Opening of a branch or representative office

Representative
offices and branches are another option for starting a business in Russia. How
do these forms of activity differ? The representative office is engaged only in
advertising and marketing, it has the right to conclude contracts, look for
partners and interact with dissatisfied customers, etc. They have limited
powers – they cannot engage in entrepreneurial and economic activities.

A branch is
a full–fledged enterprise that engages in the same activities as the parent
company. Both representative offices and branches of foreign companies are
considered non-residents, so the taxation system is regulated bilaterally
according to the conditions adopted between the two countries.

What you
need to register a branch or representative office of a foreign company in
Russia:

• prepare
the necessary documents, translate them into Russian and legally certify;

• pass the
accreditation procedure (it takes about 30 days);

•
coordinate the number of foreign employees with the Chamber of Commerce and
Industry;

• pay a
state duty in the amount of 120 thousand rubles. This type of entrepreneurship
is relevant only for large or medium-sized businesses. Any monetary or property
transactions, including bank transfers, between branches and the main company
are carried out directly, which greatly simplifies the distribution of funds
within one enterprise.

An
important point is that to open a branch or representative office, you need to
register a legal address. All foreign citizens, including managers, must obtain
a work permit in Russia.

The whole
process of starting a business in Russia through the registration of a
representative office or branch will take a total of about 1-1.5 months.

4) Registration as an individual entrepreneur

To register
as an individual entrepreneur, a foreigner must obtain a temporary residence
permit or a residence permit.

To register
an individual entrepreneur by foreigners, you need to provide:

•
application for registration;

• receipt
of payment of the registration fee;

• a
photocopy of a document with registration in the Russian Federation or a
residence permit, a temporary residence permit;

• All
documents submitted in a foreign language must be translated into Russian, and
the translation is notarized.

An
individual entrepreneur is responsible for the company’s debts with his own
property, and also has restrictions on the types of activities.

5) Work through distributors.

Distribution
is one of the ways of doing business in Russia by foreign companies. It is
suitable for small and medium-sized enterprises. If a foreign company does not
have offices, employees, sales channels for its products on the territory of
the Russian Federation, then contracts should be concluded with distributors.
They will receive the goods from a foreign company and will be engaged in its
implementation.

What are
the advantages of starting a business in Russia in this form? The main
advantage is the minimum requirements and risks. There is no need to be on the
territory of the country, obtain permits, register an enterprise and contribute
the authorized capital. A well-written contract between the manufacturer and
the distributor is enough. At the same time, a foreign company does not risk
its property.

The
disadvantage of cooperation with distribution companies is the lack of an
opportunity to influence the promotion of goods, as well as independently
appoint managers, expand the market. In addition, the intermediary can
terminate the contract at any time, and you will have to look for a new
representative.