Foreign companies are free to operate in Russia and compete with local businesses.
If you are planning to work in Russia, you will first need to decide upon your legal form.
This page sheds light on similarities and differences between foreign representative offices, branches and subsidiaries.
Your choice of legal form will determine:
Business unit of a foreign legal person located away from its principal place of business and representing its interests.
The representative office is controlled by the parent.
Subdivision of a foreign company which performs all functions, including revenue generation from commercial activity.
The branch is controlled by the foreign enterprise.
Independent legal entity which owns separate assets and is liable for its debts to the full extent of its property. Its operations are designed to generate profit.
The subsidiary is controlled by its shareholders.
The business activities of representative offices and branches are not subject to exchange controls. Withdrawals follow a simplified procedure.
In the course of everyday business activity, exchange controls apply to remittances to and from the subsidiary.
| Corporate income tax | VAT | Property tax | |
|---|---|---|---|
| Representative office/branch | 20 % | 20 % | 2,2 % |
| Subsidiary | 6—20 % | 0—20 % | 2,2 % |
applies in the case of vehicle ownership and is computed according to the guidelines established by Article 359 of the Russian Tax Code.
| Employee status | Pension fund (PF) | Social Insurance Fund (FSS) | Compulsory medical insurance fund (FOMS) | |
|---|---|---|---|---|
| Sickness/motherhood | Injury | |||
| Foreign employee temporarily staying in the Russian Federation | 22 % | 1,8 % | 0,2 % | 0 % |
| Foreign employee staying on a HQS visa* | — | — | 0,2 % | — |
| Temporarily resident foreign employee | 22 % | 2,9 % | 0,2 % | 5,1 % |
| Temporarily resident HQS* | 22 % | 2,9 % | 0,2 % | — |
| Permanently resident foreign citizen | 22 % | 2,9 % | 0,2 % | 0 % |
| Permanently resident HQS* | 22 % | 2,9 % | 0,2 % | — |
| Employee who is a Russian national | 22 % | 2,9 % | 0,2 % | 5,1 % |
| Employee’s tax status | Personal income tax (NDFL) |
|---|---|
| Resident* | 13 % |
| Non-resident** | 30 % |
* Tax resident – stays in Russia for over 183 calendar days in 12 consecutive months ** Non-resident – stays in Russia for less than 183 calendar days in 12 consecutive months
Russian people have long been famous for their genuinely creative thinking, which often strikes conservative Europeans. For example, in this video posted on YouTube, Russian plumbers decided to check the heat resistance of water pipes by rather extreme methods.
What do Vostochny Spaceport in Russia, The Shard skyscraper in London, The Jin Mao Tower in Beijing and Munich International Airport all have in common?
Wolfgang Gruschwitz, an architect from Munich, has been creating conceptual retail design for many iconic European brands for about 15 years. His company works on projects for Mango, Massimo Dutti, Zara, Reiss, Uniqlo, H&M and others in Russia and abroad.
It started snowing in Moscow. We are walking carefully towards ‘Smolensky Passage’. The doors of the shopping mall are welcoming us with the glamour of its luxurious boutiques. Overcoming the temptation, we head further to the Business Centre.
| Representative office / branch | Subsidiary | |
|---|---|---|
| Annual report on the activity of foreign companies | ||
| Balance sheet | ||
| Income statement | ||
| Statement of changes in equity | for large corporations | |
| Cash flow statement | for large corporations | |
| Report on proper use of funds received | for large corporations | |
| Footnotes to the financial reports | ||
| Сorporate income tax return (foreign companies) | ||
| Сorporate income tax return | ||
| VAT return | ||
| Property tax declaration | ||
| Report on average staff employed | ||
| 2-NDFL personal income tax report | ||
| Pension fund report (RSB-1) | ||
| Social insurance fund report (4-FSS) | ||
| Total: | 8 reports | 10 (13) reports |
|
Accreditation of a representative office or branch on Russian territory:
|
from 130,000 roubles |
| Registering employees with the Chamber of Commerce and Industry (up to 4 people) | 15,000 roubles / person |
| Registering employees with the Chamber of Commerce and Industry (from 5 people) | 10,000 roubles / person |
Time to completion: up to 30 working days
| Registering foreign legal persons in Russia (1 step) | from 35,000 roubles |
| Registering foreign legal persons in Russia (2 steps) | from 65,000 roubles |
| Registering foreign legal persons in Russia (3 steps) | from 95,000 roubles |
Time to completion: 5-30 working days
