Want to register and start your business or buy an already existing business in Russia as a foreigner, and do not know the steps to take? This article will cover the three (3) legal ways and how to register a business in Russia as a foreign national.
How to register a business in Russia: The whole process of registering and starting a business in Russia isn’t remarkably different for foreigners when compared to that of Russian citizens.
The Russian government made the process of registering and starting a business in Russia very simple. Presently, it only takes a period of not less 3 than days.
3 legal ways for a foreigner to register and start a business in Russia
- By Registration of Individual Business (Individual Enterprise)
- By Founding and Establishing a Limited Liability Company (LLC)
- By Acquiring a Stake in an Already Established Company
By Registration of Individual Business (Individual Enterprise)
The cheapest and easiest way is by registering a business as an individual entrepreneur (Individual Enterprise). To register an Individual business (Individual Enterprise) you’ll need to submit the following documents as listed below;
- A translated and notarized copy of your nation passport
- A document specifying your place of residence which could either be your TRP or RP (Temporary residence Permit or Residence Permit)
- A specified receipt to prove the payment of the state fee of $14 USD which amounts to 1,025.5 rubles based on the current exchange rate at the time of writing this article.
Three days after submitting an application with the public services center, you will receive an excerpt from the Unified State Register of Individual Entrepreneurs and will be able to work in Russia.
“This particular form of business gives foreign nationals legal rights and responsibilities but means that he or she will be held responsible for the business’s duties with his or her property,” Tarasov says. “Yet this legal status means a lesser level of administrative duty if compared to other legal entities. On a positive note, it also frees a person from an obligation to maintain accounting records and gives an opportunity to use the earned money as one pleases, without paying an additional tax on revenues.”
Meanwhile, the need to sell your individual enterprise may arise in the near future. Although, selling such a business is very possible (but only as property held by a foreign citizen) and it will be easy to liquidate it legally, but getting rid of the debts will not be easy. After the liquidation, the debt repayment will remain the owner’s responsibility.
By Founding and Establishing a Limited Liability Company (LLC)
Setting up a limited liability company LLC will take a little more time and resources as follows,
- Application should be submitted to the relevant tax office
- Requires a legal address (Your Personal home address is acceptable)
- A charter
- A minimum starting capital $172 USD ( 12,599 Rubles)
- Needs to specify a general director for the business (This could be a foreign citizen)
- Readiness to regularly work out and present monthly accounting reports.
- The need to set up a bank account for the Enterprise
- Produce a seal (Stamp) for the business enterprise
To register a limited liability company in Russia for Foreigners
- copy of a translated and notarized national passport
- If the foreign national does not speak Russian then he/she would need the services of a Russian to any language translator. e.g. Russian to English, Russian to German translator which will accompany him or her to the Federal Tax Service office.
- Receipt to prove the payment of registration fee of ($69 USD) 5,054.25Rubles according to the current exchange rate as at the time of writing.
- The validity of the applicants signature will be notarized and the application thereafter will be summited to the registrar
Registering a business as a limited liability company LLC means that all revenues are subject to a 13% tax if a foreigner received the status of a Russian tax resident. 15% – if a person doesn’t have a taxpayer status.
“As compared to individual entrepreneurship, a LLC will not hold its owner responsible for its rights and obligations, of course, if they were not responsible for making it bankrupt,” says Tarasov. “So in this legal entity, the founder will be able to simply sell his share.”
By Acquiring a Stake in an Already Existing Company
If a foreign national decides to buy a share in an existing business, then they will need to register the deal with a notary and provide all necessary documents to the relevant organization, according to Arakelyan.
Prior to making such a decision, one should think about checking the firm’s accounting records and examine the charter that specifies the rights and obligations of the company’s owner, Tarasov recommends. “Only after this check one can decide to buy this company or not,” he says.
Things to keep your mind on
Setting up a business from scratch is not that hard and anyone has a right to do it, but if one needs to mark their presence on a particular territory it might be a good idea to buy a stake in an existing firm – believes Sergei Voronin, lawyer and managing partner at the “Pravovoye resheniye” company.
“Regarding the second option (buying a stake), one should decide the scale of the potential involvement in a working business and take into account the sector in which the company operates,” the expert points out. “If the decision has already been made then one can consider two ways of contributing to the business: Firstly, it might be a financial contribution and, secondly, it can be an intellectual property or material investment.”
According to Voronin, it is common for foreign companies to be registered in Russia as branches of foreign corporations or small private businesses. “If a company is set up by a foreign entrepreneur it is usually either an individual entrepreneurship or a joint company with other stakeholders (LLC). If we talk about a Russian branch of an international company, it is usually an LLC,” he explains.
“First and foremost, one should examine if there are any limitations for foreigners doing business in an area you are interested in. Then, it would be useful to explore if there are any limitations or conditions in your homeland on doing business in Russia (for instance, related to cooperations with business in Crimea),” Voronin warns.
Unfortunately, there will always be risks connected to finding a right partner in Russia or doing business in the country. Any of the above options do not ensure that problems will not occur, lawyers note.
What is important is to learn and study Russian laws and constantly follow any updates, says Voronin. “If a foreigner doesn’t fully speak Russian then it would be a good idea to hire a translator or a representative in Russia that will take care of the company’s activities, especially if a foreign owner cannot stay there permanently,” he recommends.
It’s also important to note that there are many specialized firms that offer guidance and help in registering a company. So, if you don’t want to spend too much time unraveling red tape, it might be a good option to hire a lawyer to take care of the paperwork.