Company Formation in Russia
Corporate entities in Russia have different taxation schemes. The lowest income tax rate is 6%.
Company Formation in Russia
Standard corporation tax – 20%
Notably, Russia does have numerous forms of incentives such as;
• Regional tax reductions for the investment projects;
• Tax reductions for the software and the technology companies;
• The Skolkovo Innovation Center company enjoys a ten-year tax holiday;
• Specific medical and educational services do enjoy 0% profit tax rate;
• Qualifying R&D expenditure does enjoy 150% profit tax deductions.
VAT: Nalog Na dobavlennyu stoemost (NDS) – 20%
Company Formation in Russia: Limited Liability Company (LLC) or Joint Stock Company (JSC)
• Any commercial activity that is legalized by the Russia law may be exercised by both the LLC and JSC but the licenses need to be obtained depending on the type of the business they are involved in.
• There is a limitation for the number of the participants or the shareholders in the LLC and should really not exceed 50 whereas the JSC does not really limit the number of participants.
• Shareholders – at least one.
• Foreign companies, foreign individuals are in liberty to be the founders of the LLC and the JSC.
• The companies have a responsibility to hold annual general meetings on annual basis under the view of general director.
• Registration is also mandatory in tax authority, the state committee for statistics, the pension fund, social insurance fund for both the LLC and the JSC.
• Rights and obligations of the shareholders are obtained from the divided capital that is actually grouped in form of shares according to the shareholding structure.
• The tax authorities will always collect quarterly reports. It must, therefore, be submitted to the authorities.
• A unit of the foreign company consists of a representative office and a branch of the foreign entity. They are actually treated as one entity, therefore, a representative office is not entitled to rights to engage in the commercial activities in Russia since it’s a division of a foreign entity whereas a branch has such rights despite being a foreign entity still.
• Registration is mandatory for both the branches and the representative offices. They must register with the Tax authorities, the state statistics committee, the insurance, pension and the social insurance fund.
• Formation of branches follows a legislation rule that needs some certain amount of capital to be ingested though it’s not specified whereas the representative offices do not require certain minimum amount you put in place before they are established.
• Appointment of the executive authority as a foreign entity must be done for both representative office and the branch
• Taxation does vary between the Russian legal entity and the branch
• It’s mandatory for the representative office to report the activities together with the income earned to the relevant authorities.
Company Formation in Russia – Steps
• Drafting and signing foundation documents after which the trade register fills it.
• Share capital should be deposited in a bank in Russia, from the bank you obtain the deposit bank statement.
• The registration fee must be paid. The receipt is submitted together with other documents to business registry. ed
• When the company has been registered, you will be required to register with another authority called federal tax authority.
• You will then be required to register with the authorities of the state such as the pension funds, social insurance and the compulsory medical funds.
• Afterwards you can open bank account for company in Russia or outside.
Company Formation in Russia – Required Documents
The documents below must be filed to the relevant authorities;
• Original or notarized copies of the passports and IDs.
• Articles of association.
• Company’s director appointment decisions and his/her personal information.
• The company’s legal address confirmation.
• Share capital deposit bank statement obtained from the bank in Russia.
• For the companies who appoint someone to follow the process, notarized power of attorney is required .
Russian lawyers can be of great importance to foreign investors since they can really help in the preparation of the documents that are essential for the establishment of the company in Russia.
All the Russian companies need to appoint at least one Russian resident (or to get work-permit) as a member of the board of directors whether an individual or a corporate body.
For the foreign investors seeking to appoint the resident director, nominee service can be provided.
A local address is mandatory and should appear in the business registry records for all Russian companies. We can help those seeking the local address with virtual office service.
Offshore company registration in Russia was initiated since 2018. Here are some economic zones such as the Russian island (Primorsky kray) and Oktyabrsky (Kaliningradskaya oblast) island have their specific taxation systems. The residents establishing the offshore companies in Russia will enjoy the importing and the exportation of goods free of duties. Rates established for the corporate profit tax
• 0% will be applicable for the income that is received in form of dividends by the international holding company
• 5% will be applicable for the income received in form of dividends on the shares of international holding companies by the foreign entities.
To find out more on company formation in Russia, fees and time-frames, please contact our specialists.