Our PR agency often cooperates with foreign companies that are only planning to enter the Russian market. For them, we develop a communication strategy, conduct an analysis of the information field and competitors, develop and implement PR-campaigns. Before commencement a marketing campaign, a foreign business owner needs to solve a number of important issues, one of which is what type of legal entity to choose for operating in Russia. Here are some details for each of four possible ways.
You can establish LLC (ООО) or JSC (АО). The first method is the most popular. LLC is distinguished by its independent liability for obligations, separate balance sheet and independent accounting. LLC can also apply the so-called simplified regime – it is a tax regime under which the tax burden on small and medium-sized businesses is significantly reduced.
Authorized capital of 10 thousand rubles, registered address, Director General and accountant - and your LLC is ready for operating! To establish a company in Russia it is not necessary to live here. Then you are the founder. But if you plan to manage the company as a director, remember that your stay in the Russian Federation should be legal: a residence permit / permission to stay plus a business visa. LLC can be established in 5 days. It will take the costs of translation, certification and forwarding of documents (10-15 thousand rubles). The state duty will amount to 4 thousand rubles. All foreign employees shall have a work permit. To speed up the registration, lawyers advise appointing a Russian citizen as the Director General, who can later be replaced by a foreigner.
Branch or representative office
These are separate divisions operating under the management of the parent company and performing part of its functions. They can independently conclude transactions, open and close bank accounts, sign contracts. If there is a bilateral agreement on avoiding double taxation between our countries, then Russian tax authorities will be guided thereby. Another advantage is the absence of VAT when renting an office and housing for employees (20%)!
To start operation, branches and representative offices undergo an accreditation procedure. State duty amounts to 120 thousand rubles.
Are you establishing a new company with participation of a Russian individual / legal entity in the authorized capital? A foreign investor buys a share in the authorized capital of a Russian company or becomes its new member by increasing the authorized capital.
Pros: Russian partner is familiar with the market, laws, nuances of the industry in Russia; a foreigner can, for example, engage in the import of equipment that has no analogues in the Russian Federation, and it will not be taxed.
If Russian and foreign founders establish a joint venture, then the registration procedure will be similar to the one for LLC. If a foreign investor acquires a stake in an existing company, registration will take 7 days. In case of increase in the authorized capital, the state duty will amount to 800 rubles, also the costs of translation, certification and forwarding of documents shall be incurred.
This is the best option for small businesses. Distributors receive products from foreign companies and sell them in Russia. There is no need to establish a separate legal entity. A supply contract is enough.
All these forms of doing business take place in world practice and are familiar to foreign investors. The choice of the way to operate in Russia depends mainly on the size of the company, objectives and product. And PR Formula is always ready to support you in the matters of promotion in the Russian market.