Russia

Company Formation in Russia

Russia is a good destination to set-up your company to cater to the large EU Market. YourGlobalPro can assist in Russia for Company Formation, Secretarial Compliance, Tax Registration, VAT Reclaim, Document Retrieval, Trademark Registration and Citizenship Services.

About the Country

The Russian Federation (Russia) is a country in Eurasia and is considered the largest country in the world in terms of surface area, covering Eastern Europe and northern Asia. It is bordered by Norway, Finland, Estonia, Latvia, Lithuania, Poland, Georgia, Azerbaijan, Kazakhstan, China, Mongolia and North Korea. The below content will explain you in detail about the requirements for the company formation in Russia, know more about the process of trademark registration in Russia and understand the Russia Legal and Compliance requirements.

Russia

Doing Business Introduction

Russia has an upper-middle income mixed economy. In 2015, the country’s economy ranked 6th in the world in term of purchasing power parity. Russia’s energy exports have triggered a fast growth in living standards, providing a stronger middle class and increasing real disposable income. Russia has an abundance of oil, natural gas and precious metals.  Other significant industries in Russia include agriculture, defense, aerospace, automotive, retail, telecommunications, and transportation.

YourGlobalPro professionals can assist its client with any type of company formation in Russia, trademark registration in Russia and other recurring services for your business in Russia.

Incorporation - Types of Business Entities

Before starting the business, the first decisions to make is to determine what form of business entity to establish. There are several types of entities that can be incorporated in Russia are as mentioned below:

  • Limited Liability Company
  • Joint Stock Company
  • Branch Office
  • Representative Office

Time Frame for Incorporation of Company in Russia varies from depending on the type of entity selected and each business type has its own advantages and disadvantages. YourGlobalPro professionals estimates the time required for Russia Company formation process to be completed is 11-15 working days.

Benefits of Registration of a Company

Below are the advantages of company formation in Russia:

  • The country’s growing middle class population has provided a wide range of business opportunities for investors.
  • Russia has a rich human capital by having the 8th largest workforce in the world.
  • Ease in access and transportation since the country is accessible through land, water and air.
  • Russia is abundant in natural resources such that oil and gas play a significant role in its economy.
  • Cost of living outside major cities of Moscow and St. Petersburg is relatively low as compared to other western countries.
  • The country has strong emerging industries such as information technology (IT) and communications, providing opportunities for investors in the field.

Tax Registration and Filing

Russian domestic corporations are taxed on their worldwide income, including income earned by their foreign branches.

Corporate Tax payable to Federal Government 2%
Corporate Tax payable to Regional Government 13.5%-18%
Dividends Dividends received by Russian tax residents: 13%
Dividends received by foreign legal entity: 15%
Dividends received by Russian tax resident holding
50% of shares of issuing company: 0%
Interest on state and municipal securities 15%
Other Interest 20%
Royalties 20%
Fiscal Year 1 January to 31 December
Advance Tax Payments Can be paid or pay tax by the 28th day of each month based on actual profits earned in the preceding month.
Foreign Legal Entities To make Quarterly Tax Payments
Final Tax Return Due on 28 March

Double Tax Treaty

Double Tax Agreements (DTA) regulates the tax treatment of income or capital gains in situations where the same taxpayer is taxed twice in two countries for the same subject. Russia has double tax treaty agreements with about 50 countries.

Trademark registration

Russia is a member of the Madrid Agreement and Madrid Protocol, an international treaty that permits any trademark owner registration in any member countries through a single application. Trademark registration in Russia is done through the Patent Office (RPO) through a local agent. The application process includes a formal examination, an examination of distinctiveness and a search for prior trademarks. A certificate of registration shall remain in force for 10 years and can be renewed for another 10 years.  It takes approximately 10-12 months from first filing to registration

YourGlobalPro professionals are fully equipped to assist you with the trade mark registration process for your business in Russia. For assistance or advice in the matter of the trade mark registration or intellectual property – please feel free to write or contact us.

Secretarial Compliance

Below are some of the important points in relation to Company Secretarial Compliance in Russia:

  • LLC and JSC have three tier management composed of the general meeting, board of directors and executive body.
  • General meeting, as the top management body, should meet at least once a year. The Board of Directors provides general supervision of the company’s business activities.  The executive body acts in accordance with the Charter document.
  • For branch and representative offices of foreign companies, an executive body must be appointed by the foreign home office or parent. The executive body will act in accordance with the Power of Attorney issued by the foreign legal entity.
  • LLC and JSC must be registered with the Tax authorities and State Committee Statistics as well as with the Pension fund, Medical Security Fund and Social Security Fund.
  • Branches and foreign representative offices must be approved by and registered with the State Registration Chamber. These entities must also register with tax authorities, State of Committee for Statistics, Pension Fund, Obligatory Medical Insurance Fund and Social Security Fund.

Accounting Services

Accounting practices in the Russia are set by International Financial Reporting Standards (IFRS). Companies shall file accounting reports with the tax authority on a quarterly basis.

YourGlobalPro professionals assist you with the entire bookkeeping and accounting services to your Russia Business Set up as per your business needs including implementation of financial accounting software, accounting records preparation and time to time preparation of budgets, forecasts.

Auditing service

The Russian Laws require the following entities to have their financial audited by a licensed auditor: a) listed companies, b) financial institutions, c) enterprises with annual revenue exceeding 400 million rubles in the preceding financial year, d) enterprises with total assets exceeding 60 million rubles in the preceding financial year, e) companies with traded securities, f) entity that provides financial accounting report to the public.

YourGlobalPro professionals provide you auditing services for your business as required by your business in Russia.

Banking

Opening an account in a bank is quite easy in Russia. The documentation requirement differs from Bank to Bank and need to be complied for the Bank account opening.

The major banks in Russia are Sberbank, VTB Bank, Gazprombank, Alfa Bank, Promsvyaz Bank and Otkritie Financial Corporation. All banks are stable, reliable and offer the same level of services.

YourGlobalPro professionals facilitates all the paper work in relation to banking need and can assist you in opening bank account for your business plan in Russia.

Legal and Compliance

In Russia, the responsibility of legal compliance is not a one-time affair, but a continuous process. Below is the various Russia legal and compliance requirement to be followed by incorporated entities:

  • Limited liability companies (LLC) and joint stock companies (JSC) can be formed with 1 shareholder and 1 director. Shareholders can be of any nationality however the director is required to be a Russian resident. If one of the shareholders is another corporate entity, the LLC must have 2 shareholders.
  • The minimum required capital for LLCs. At least 50% of the authorized capital must be paid up prior to the registration of the company.
  • Non-listed JSC are required to have a minimum capital of 10,000 rubles. These entities can only issue shares to the company’s founders or to another designated group of people. Listed JSCs are required to have a minimum capital of 100,000 rubles. For JSC, 50% of the authorized capital shall be paid-up within 3 months upon registration.
  • Under Federal Law, Branches are required to form assets, however there is no amount indicated.
  • Representative offices of foreign companies are not allowed to carry out business activities. They may only perform activities such as market research or promotions of their foreign counterpart.

YourGlobalPro will assist you with Russia Legal and compliance requirements.

HR and Employment Law and Immigration / VISA

Below are some of the important points in relation to HR and employment law in Russia:

  • Maximum length of fixed term contracts is 60 months.
  • Employers must pay a premium of 50% of hourly pay for overtime work
  • Maximum working days are 6 days per week.
  • Paid annual leave regardless of tenure is 22 days.
  • The maximum length of probationary period is 6 months.
  • Maternity leave is mandated by law for female employees. Minimum length of maternity is 140 days.  Employees on maternity leave are entitled to 100% wages.
  • Effective from 1 January 2015, foreign nationals who apply for a work permit, patent, temporary residence permit or permanent residence permit are required to present a certificate confirming their knowledge of Russian language, history and basics of Russian law.
  • In general, any foreign citizen who works in the Russian Federation must hold a work permit or patent, and the employer or purchaser of work (services) of such foreign citizen must hold a valid employer permit to engage such an individual.
  • Russia has a simplified work permit application with citizens and South Korea.
  • Citizens of Armenia, Belarus, Kazakhstan and Kyrgyzstan are not required to obtain work permit.
  • A special immigration regime is provided for highly qualified foreign nationals who are employed by Russian companies or Russian branches, and representative offices of foreign companies. A simplified quota free and one step application procedure is provided for their work visa processing.

Country Statistics

Capital Moscow
Largest city Moscow
Total Area 17,075,200 Sq. Km.
Population 144,463,451
Density 8.4 / Sq. Km.
Currency Russian Ruble
Government Federal Semi-Presidential Constitutional Republic
Official Language Russian
Religion Russian Orthodox: 30.1%
Atheist: 13%
Islam: 6.5%
Unaffiliated Christian: 4.1%
Other Orthodox: 1.5%
Slavic Native Faith: 1.2%
Tibetan Buddhism: 0.5%
Undecided and Others: 30.5%
Government Office Hours Mon-Fri (09:00-17:00 Hrs)
Business Office Hours Mon-Fri (09:00-18:00 Hrs)
Banks Hours Mon-Fri (08:30 to 19:30 Hrs) Sat (1000-1400

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