Business Opportunities in Russia
Russia is the ninth largest country in the world, with a population of 145.8 billion (January 2022). The country registered a robust economic growth of 4.7% in 2021, giving new businesses an explorative, promising avenue for doing business in Russia.
With the country’s GDP accounting for 1.31% of the world economy, Russia offers ample business opportunities with favorable returns. The Russian population has good spending power and the potential to deliver a more receptive consumer base – whether you are a service or products-based company.
The country’s strategic geographic location paves the way for more accessible business and trade opportunities. If you decide to start a business in Russia, there is a lot to gain. Let’s look at how you can begin this process.
Benefits of Starting a Business in Russia
Russia offers excellent opportunities that enable you to do better business in the country. Five of the significant advantages of doing business in Russia are as follows.
Low Tax
The country offers one of the lowest tax rates on corporations on the continent. Foreign Direct Investment thus flows in by the bulk – all to save on taxes by doing business in the country. You will thus find more multinationals and get good opportunities to grow the network.
Expansion
Russia is a huge continent with 11 time zones. Starting a business in Russia empowers your expansion strategies without scattering your offices too much across the geography.
Ownership
Russia allows 100% company ownership by foreigners. This means the company becomes a Russian legal entity; you can ultimately own your company in the country while being a foreigner. This convenience is not available in most other countries.
Speed
Russia provides one of the fastest procedures to register an LLC or company with individual entrepreneurs, further enabling smooth business in the country.
Receptive Banking
The Russian banking sector has a reliable setup and is experienced in working with foreign companies and individuals, making things easier.
Requirements for Starting a Business in Russia
Russia is highly receptive to foreign businesses and foreign direct investments which has outstandingly contributed to the country’s economy. However, while all of that is true, specific nuances need to be addressed before your official company registration process in Russia can begin.
Preparation Required
You need to check your eligibility and legal status as an individual before you can begin entertaining the idea of starting a business in Russia. You also need to stay updated regarding the visa work and creating a business plan for the new location in order to prepare better for starting a business in Russia.
- Visa Process: To start a business in Russia, you need to apply for a Russian work visa that will help you start a company in the first place.
- Business Plan: Russia is a market oriented economy while also being the fifth-largest economy in Europe. You need to have a lucrative business plan in place to make it work in Russia.
Decisions Required
To apply for setting up a business in Russia, as a businessman, you need to make certain decisions that will influence your paperwork in the processes lined up further in the pipeline. Deciding the legal structure and correspoding tax regimes, staying updated with the latest compliances, for example, are the most important decisions to make.
- Legal Structure: Decide your company’s legal structure for the corresponding compliances.
- Compliance: Look up all the compliances that apply to the legal structure you choose for your company.
- Taxation: Look up the taxation regime that your business entity needs to follow. Normally, Russia charges a corporate tax of 20%. you must consult a professional to understand the tax implications of the legal structure you decide for your company.
Documents Required
The following documents are required to set up a business in Russia:
- LLC Registration Form, if you decide to incorporate as LLC
- Notarised Documents
- MoMs (Meeting of the Minutes) of the Board Meeting
- Rental Documents (Guarantee of Rent) or information on the leased premises
- Charter Documents of the LLC
- State Trade Register Statement (for foreign legal entities)
- Memorandum of Association (MoA)
- Invoice of the registration fee
- Articles of Association
- Foreigners Passport (for foreign shareholders)
Types of Business Structures in Russia
The procedure for incorporation of a company in Russia requires you to first decide the structure of your company from among the five listed below:
- Branch of the foreign company
- Limited liability company (LLC)
- Partnership
- Representative office
- Joint-stock company (public or private)
According to the Federal Tax Service of Russia, the most common structure for Russian business incorporation is the LLC format.
Branch of The Foreign Company
While an LLC would enjoy the status of a separate legal entity in Russia, a Branch office is only a subdivision of a foreign company operating in Russia. They are liable for currency control protocol and can engage in commercial activity in Russia. Branches must be registered with the following:
- State Committee for Taxes
- Pension
- Social Security
- Obligatory Medical Insurance
Branches can employ foreign nationals with work permits.
Limited Liability Company and Private Joint-Stock Company
LLCs are considered a legal entity in Russia and are permitted to do any nature of commercial activity as long as the legislation doesn’t prohibit it. A single founder can establish the company, and it can have a maximum of 50 shareholders. LLCs need to be registered with the following:
- Tax authorities
- State Committee for Taxes
- Pension
- Social Security
- Obligatory Medical Insurance
LLCs and PJSCs can employ foreign nationals with work permits.
Representative Office
Representative offices do not identify as separate legal entities in Russia. Furthermore, they are merely a subdivision of a foreign office representing the business interest of the country in Russia. Such companies aren’t permitted to engage in any form of commercial activity in the country.
They may only perform advertising and marketing operations in Russia. This body doesn’t need any authorized capital for incorporation. The company can employ foreign staff as long as they have a work permit for Russia.
Company Registration Process
As prescribed by the Federal Tax Service of Russia, you need to follow the steps below to set up an offshore company in Russia.
Pre-Registration
- Deciding the legal structure your company would have in Russia. Whether you wish to incorporate as an LLC, PJSC, a representative office, a partnership, or a Branch office
- Preparing the Foundation Documents is the next step, where according to the structure you choose, you need to acquire the documents about it
- Preparing the Registration Documents required for the process
Registration Process
- Sending the filed documents to the registered office: you need to register at different offices depending on the company structure selected
- Receiving the documents of incorporation of your company. Once everything has been verified, you will be issued the incorporation documents by the department filed to
Post-Registration
- Getting a company seal based on these documents
- Opening a bank account in the name of your company
- Opening up for business in Russia. You can officially start operating your business now.
How Much Does it Cost to Incorporate a Company in Russia?
The costs you will incur for setting a company in Russia will depend on the structure you choose for your company.
- For a limited liability company and private joint-stock company, the registration duty costs approximately €50
- Extra charges for the seal and registration with the State Committee for Statistics come up to around €80 for LLCs and PJSCs
- For Branch offices and Representative offices, the accreditation costs are around €1,500
- Furthermore, the LLC and PJSCs are required to have a minimum authorized capital of €120
- There is no requirement of authorized capital for Representative offices
- There is nothing stipulated in the Federal laws for an authorization capital for branch offices
Are Foreigners in Russia on Certain Passes Allowed to Start a Business in Russia?
Foreigners with a visitor visa, work visas, and work permits can start a business in Russia. However, foreign companies must apply for a suitable visa before registering in Russia.
Government Assistance for Foreign-Owned Businesses
The government of Russia encourages businesses from foreign countries and offers programs with several relaxations and benefits. The system-forming organizations initiative of the Russian government provides massive loan relaxations and production subsidies to eligible businesses as stipulated in the directive.
How Can Multiplier Help?
Establishing offices in a new country requires a lot of hassle with recruitment, compliances, taxes, regulatory and law-related nuances, payroll establishment, administrative functions, protocol, etc. Sparing extra workforce and bandwidth from within the company is detrimental to the move. Instead, Multiplier can help you look after the cumbersome part of the expansion while you focus on the strategic aspects of it.
Multiplier equips you with SaaS-based Professional Employer Organization (PEO) and Employer Of Record (EOR) platforms that assist you with creating compliant, reliable documents that align with your destination country. Additionally, Multiplier caters to payroll management, talent acquisition, and much more.
Therefore, to successfully start your business in Russia, it is best to partner with Multiplier and makes your journey of entering a new market secure, safe, and trouble-free.