SET UP OF BUSINESS IN RUSSIA
The start in a new market shall be carefully planned
If you have decided to establish a presence in Russia, legal, tax and accounting matters shall be properly arranged from the very beginning in order to save money and to avoid risks in the future. In addition to that, many other organizational matters shall be taken care of (the appropriate legal form chosen, management appointed, legal address leased, personnel employed, work permits for foreign employees obtained, bank accounts opened and so on). Please find below a list of the most important issues to be considered when setting up business in Russia.
Distributor vs own subdivision
In most cases, the first step in the Russian market is export via a Russian distributor. In this case all activities in Russia are arranged by the distributor. Setting up an own Russian subdivision expands opportunities, however, requires a well-designed business structure.
Planned activities and choice of the legal form
The choice of the legal form is directly linked to the planned activities. If your subdivision shall only establish contacts, make advertising and offer goods or services of the mother company without performing any commercial activities, a representative office would be an option. Should your subdivision need to be also commercially active, then a branch would be advisable. Both a representative office and a branch are not legal entities and act on behalf of the mother company – this means that all contracts are signed on behalf of the mother company and it is the mother company that takes all risks and liabilities. Should you like to secure the mother company from the risks related to making business in Russia, a separate subsidiary (limited liability company or a joint-stock company) should be the solution. Regardless of its legal form, your Russian subdivision shall be first registered in Russian authorities. Please find a detailed information on various legal forms here.
Management & Interim Manager
The position of a managing director or a head of a representative office or a branch (CEO) in Russia hardly differs from the same in Europe. It is therefore possible that a foreign citizen may also hold this position. However, unlike in Europe, a CEO may work in Russia only on the basis of a work permit and a work visa. However, a Russian interim manager must be hired when the subdivision is founded in order to issue an invitation for the work visa and work permit of the foreign CEO. We are available to provide you with reliable interim manager services.
Tax & Accounting
The questions of accounting and taxes shall be clarified before the establishment. In Russia it is compulsory to keep accounts and to submit regular reports and tax returns. Therefore, it is important to apply to a certified tax and accounting services provider and to take the first advice before the establishment. It is not necessary to set up your own bookkeeping department immediately after the establishment, since the amount of accounting at the very start is relatively moderate and an external tax and accounting services provider will save your money, time and effort.
Please contact us for further information on our accounting services and tax advice.
A Russian subdivision, whether a representative office, branch or a subsidiary needs a legal address that can be reached by authorities. Thus, when establishing a subdivision, a trustworthy and fully functional legal address should be obtained. This circumstance should also be considered while changing the legal addresses. We will be happy to provide you with a legal address necessary for establishment or assist you in finding a bigger office that meets all needs of your Russian subdivision.
Work Permits & Visas
Foreign employees (including CEOs) are generally allowed to work in Russia only having a work permit and a work visa, regardless of the fact if the subdivision is actually active at the beginning or not. The most common and easy-to-go work permit and visa is the work permit and visa of the so-called “highly qualified specialist (HQS)”, i.e. of a foreign employee with the monthly salary exceeding EUR 2,300 gross. HQS work permit and visa are provided for 3 years and allow multiple entries and long stay in the Russian Federation. The penalty for employment without a work permit could be up to EUR 13,000 in addition to the administrative suspension of subdivision’s activities and deportation of foreign employees.
A detailed description of the procedure for obtaining an HQS work permit and visa can be found here.
Opening bank accounts
Opening of bank accounts is a time-consuming procedure and often takes more time than the registration of the subdivision itself, depending of the requirements of every particular bank. The choice of a bank is one of the most important decisions when establishing a subdivision – it directly affects the costs and easiness of internal and cross-border banking operations, as well as the workload for management and accountants. We will be glad to advise you one of the most reliable and cooperative banks, open ruble and euro accounts as well as assist you in cooperation with the bank in the future.