Russia is a European country located in Eastern Europe and extends through Northern Asia. It is the largest country in the world, as Russia covers over 12% of the Earth’s occupied land area. An interesting fact is that it 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 extremely attractive location for foreign companies.
At Global Upside, we can help your business or organization hire employees in Russia, in addition to establishing a legal overseas office.
- Global Upside manages services such as talent acquisition, human resources, accounting and payroll globally. Our team provides an end-to-end service to keep all the business operations running smoothly.
- The hiring process in Russia can be complicated, not to mention the time-consuming and expensive process of starting a branch office. We help to lift that burden from your business.
- We not only hire employees on your behalf, but also take care of any legal formalities involved.
Since the start of 21st century, with better political stability and higher domestic consumption, the economic growth has seen a rise in Russia. The conditions for opening a legal establishment for a foreign investor is almost the same as a local investor. Nevertheless, all legalities will be taken care of, before 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.
- Is world’s 3rd largest electricity producer.
- Is world’s 5th largest renewable energy producer.
- Is world’s 4th largest nuclear energy producer.
Legal Entity Setup
The available legal forms of setting up establishments are:
Representative or Branch Office is not a legal entity, yet is a legal part of the overseas legal body. Thus, it is the head office who bears all the responsibilities – obligations and actions of this set up.
Sole Trader is the easiest form of setup and there is no minimum requirements for the share capital and administration arrangement to function. However, it is not considered as a legal entity but can be registered for all taxation purposes. All profits and liabilities will be taken care by the owner themselves.
Limited Liability Company is known for its incorporation needs, this is one of the most favored kind of entity set up. 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 has two options
- Open Joint stock companies – are permitted to transfer their stocks to the public and the minimum share capital is ₽100,000.
- Closed Joint stock companies – can only transfer their shares within the shareholders and 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 the contract with the organizations within the first 3 days of joining the work. However, if the employer does not provide an employment contract within the stipulated time frame, this calls for 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
As a common norm, all the employee payments are done in Rubles and same holds for foreign nationals who are employed in Russia. Remunerations need to be paid at least once every half-month.
The Russian Accounting Standards (RAS) are the standard criteria followed for accounting in Russia.
The income tax rate is 20% where 18% goes to the regional establishments and 2% goes to the Russian government.
The standard VAT rate is 20% and also a reduced rate of 10% on certain products.
Data Privacy/ GDPR
The GDPR, or General Data Protection Regulation, came into effect in May 2018 and represents a broad revision of the regulations of Europe. It states that the employees have the right to information of the processing of their personal data.
Anti-bribery & Anti-corruption Law
The group of crimes and the respective Articles of the Russian Criminal Code are mentioned below, as corruption, in Russia, has been defined as –
- Officials or management are offering a bribe (Art. 29 1).
- Officials or management are receiving a bribe (Art. 290).
- Misuse of official authority (Art. 285).
- Illegal use of authority (Art. 201).
- Saleable bribery (Art. 204).
Bribery is a punishable offence 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 of 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 on either giving or receiving bribes.
For commercial bribery, the maximum penalty for the proposer and receiver of a bribe –
- 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
- 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
- Imprisonment for approximately 8 years for the proposer of a bribe and 12 years for the receiver of a bribe.