Expand Business in Russia
Global Upside assist you to expand your business in Russia providing talent acquisition, human resources, accounting, payroll, tax, incorporation, and professional employer organization (PEO)/employer of record (EOR) services. Our comprehensive offerings create an end-to-end solution to help you establish your business and optimize your operations, all while maintaining compliance with Russian laws and regulations.
The hiring and incorporation processes in Russia are often complex, time-consuming, and involve numerous legal and compliance challenges. Global Upside simplifies this process and lifts the compliance burden for your business. Our teams have the experience and expertise required to help you establish a legal entity in Russia. We also offer PEO/EOR solutions to companies interested in hiring employees quickly, without setting up a legal entity in the country.
Russia is located in Eastern Europe and extends through Northern Asia. It is the largest country in the world, covering over 12% of the Earth’s occupied land area. Russia spans 11 time zones and shares borders with 16 sovereign nations. The population of Russia is 146.7 million, and due to its profitable legislature and revenue system, Russia has been an attractive location for foreign companies.
Increased political stability and higher domestic consumption beginning in the 21st century have led to economic growth in Russia. The conditions for opening a legal establishment as a foreign investor is almost the same as a local investor. Nevertheless, all legalities must be taken care of prior to setting up an establishment.
Here are some interesting facts about Russia:
- Ranks as the 11th largest economy in the world by nominal GDP
- Ranks as the 5th largest economy in Europe
- Has been termed by the media as an energy superpower
- World’s 3rd largest electricity producer
- World’s 4th largest nuclear energy producer
The government implemented a shelter-in-place and restricted non-essential services. Russian President Vladimir Putin declared a nationwide no-work order which was extended in hope of preventing further spread of the pandemic coronavirus. Putin added that during this time, all the employees will be paid their regular remuneration despite all sectors being non-functional. We, at Global Upside, continue to provide assistance to our clients on how to keep the business profitable and also retain the existing workforce.
A representative or branch office is not a legal entity, yet it is a legal part of the overseas legal body. Thus, it is the head office that bears all the responsibilities, obligations, and actions of this setup.
A sole trader is the easiest form of setup. There are no minimum requirements for the share capital and administration arrangement to function. Sole traders are not considered to be legal entities but can be registered for all taxation purposes. All profits and liabilities will be taken care of by the owner themselves.
A limited liability company is known for its incorporation needs. It is one of the most common forms of entity. The number of shareholders can range from 1 to 50 and the least amount of share capital required is ₽10,000. It is mandatory to pay half the amount during the incorporation and the remaining half can be paid within a span of one year.
Joint-stock companies have two options:
- Open joint-stock companies – permitted to transfer their stocks to the public. The minimum share capital is ₽100,000.
- Closed joint-stock companies – can only transfer their shares within the shareholders. The minimum share capital is ₽10,000.
The minimum time required for registering a firm in Russia is roughly two weeks.
Employees need to sign an employment contract with their employer within the first 3 days of joining the organization. If the employer does not provide an employment contract within the stipulated time frame, it can be deemed as a breach of legislation.
The employment bond needs to mention the below details:
- Job location
- Job description
- Date of joining and contract period
- Duty roster
- Holiday and leave entitlements
- Kind of work
The Russian Accounting Standards (RAS) are the standard criteria followed for accounting in Russia.
The income tax rate is 20%. 18% goes to the regional establishments and 2% goes to the Russian government.
The standard VAT rate is 20%. There is a reduced rate of 10% for certain products and services.
The General Data Protection Regulation (GDPR) came into effect in May 2018 and represents a broad revision of the regulations in Europe. It states that the employees have the right to information about the processing of their personal data.
Anti-Bribery & Anti-Corruption Law
The Articles of the Russian Criminal Code defines corruption as:
- Officials or management are offering a bribe (Article 291)
- Officials or management are receiving a bribe (Article 290)
- Misuse of official authority (Article 285)
- Illegal use of authority (Article 201)
- Saleable bribery (Article 204)
Bribery is a punishable offense and the following penalties are imposed on the legal entities for public bribery:
- A monetary fine of maximum ₽5 million, or the same amount that an official earns for a period of 5 years, or at least 100 times the amount on receiving a bribe
- A monetary fine of at least ₽4 million, or the amount similar to the income for a period of 4 years, or minimum 90 times the amount on giving a bribe
- Imprisonment for approximately 15 years for either giving or receiving bribes
For commercial bribery, the maximum penalty for the proposer and receiver of a bribe is:
- A fiscal fine of minimum ₽2.5 million, or the same amount that an official earns for a period of 2 and a half years, or at least 70 times of the amount of the bribe
- A fiscal fine of minimum ₽5 million or the same amount that an official earns for a period of 5 and a half years, or at least 90 times of the amount of the bribe
- Imprisonment for approximately 8 years for the proposer of a bribe and 12 years for the receiver of a bribe