Resident: if you plan imports and sales you should think of a resident company. The decision here is pretty straightforward - over 90% of registered Russian business legal entities are OOO-type companies (limited liability societies). Ca. 5% are companies that issue and may trade their equity in a form of stock.

Non-resident: if you plan only marketing and promo activity for your head company you may consider setting up a Representative Office.

Non-resident: company branches present sort of hybrid solution.

Some of our clients choose to act as "IP" ('individual entrepreneur' or 'sole proprietor'). This form may be the lighest one in terms of tax reporting and taxation. A foreigner needs to obtain temporary (or permanent) residence permit in order to register him/herself as IP. Please, refer to our section on immigration services for information on how to obtain Russian residence.

Words like "Russia/Russian" or even 'Rus'+some other letters or words may not be freely used in the name of the company. They are subject to specific statutory approval. You may be rejected company registration on this (among other multiple reasons) ground. You need to obtain a specific statutory approval and pay a fee in order to use it. General recommendation is to avoid such words in your company name altogether. Words or abbreviations, which may be regarded as misleading shouldn't be used to avoid rejection of business registration.

The activity codes describing your company focus areas are mainly for Russian state statistical purposes. Some types of activity require specific licensing before you can start business.

A very common misconception is 'a foreigner can't own equity in Russian Company. There are specific limitations for some industries and types of business, however, they have nothing to do with 99% of regular business activity. Much of Russian economy is owned by off-shore entities. Foreign nationals do not need specific permissions to own a business in Russia. Work permits or visas are not required to own equity. Companies may be owned by foreign individuals or companies or both.

There’s minimum founding capital amount requirement of approx. 215 EUR / US$290. The seed investment may (currently, 2014) be made after 4 (four) months after business registration. The terms of investing the capital keep changing, but remain relatively liberal.

Russia offers several taxation regimes. Choosing suitable one depends on a kind of your business. Startups often go ahead on either «Common Taxation Regime» or «Simplified taxation Regime». «Common» means that VAT, profit tax and some other taxes are applicable. Your business expenses need to be carefully documented and accounted for. «Simplified» means single tax (no VAT or Profit tax) plus income and social taxes of your employees. Not all companies are eligible for «Simplified Regime», also the regime doesn’t suit all businesses.

There is a wide-spread erroneous idea that 'a foreigner can’t be a Director of Russian company without a work permit'. This is not accurate. A foreigner may register a company in his name, occupy director’s position and open bank accounts. However, in order to operate a company beyond this point, a work permit is needed. The problem may be solved by delegating powers (PoA) (*) without needing to obtain a work permit.

(*) PoA needs to be issued outside of Russian Federation.

Company Charter may tailor Director’s (or BoD’s) election period, terms of appointment by shareholders, and specific powers, and other key bylaws of a company. We recommend to spend some time discussing the charter. Don’t go ahead with a 'generic one’. A Company may be managed by a Director, by an Attorney (based on PoA), or by Managing Company. There are pros, cons and myths for every option.

'Bush telegraph' says 'one can’t open a company in Russia without renting office space first'. That’s inaccurate.

Address issues start and end in 2 (two) points:

  • reliable connection between owner of the premises and respective statutory/tax/immigration body or a bank;
  • reliable mail delivery service from the post office your company registered address is assigned to.

If these two points are taken care of - your 'address matter’ is sorted out.

For many starting busiensses banks present communication challenge. Russian banks are highly regulated institutions which makes each of them invent its 'proprietary' set of compliance criteria. The 'Know Your Client' preliminary client evaluation processes are intransparent and arbitrary.

Foreign currency operations are regulated by specific laws aimed at counter-action to financing of illigal activities (money laundering, terrorism etc). Coupled with high basic levels of incompetence, bureaucracy and poor motivation of bank workers, these laws make currency control departments the most frustrating places in every bank.

Opening bank account and further interactions with a bank are often a major waste of time.

Another consideration is bank reliability. Of Russia’s 900+ banks only few have enough liquidity for banking per se, some banks get chronically involved in questionable activity and end up with their licenses revoked. Businesses are in the end of the queue for compensations in this case.

Some banks routinely fink to the tax authority/state financial intelligence about their clients' operations.

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