Choosing a Legal Structure for Your Business in Russia

If you are toying with the idea of setting up a business in Russia, one of the foremost decisions that you must make as an investor is choosing the right legal structure for your business. Every legal structure is unique in terms of business transactions, business requirements and the respective taxes. Read on to find out more about the various forms and arrangements of doing business in Russia.

Any foreign legal entity can establish its presence in the country through one of the following means.

Direct Sales

Direct selling involves the importing of goods to Russia without any corporate representations within the country. This usually implies best for business to business transactions and it is the responsibility of the customer to pay the applied taxes before clearing the good from the customs. The investor however is required to pay the VAT and import duty charges which depend on the kind of goods imported and the country from which they come. It is best to hire Russia law firm to help you handle the process smoothly.

 

Distributorship

Foreign legal entities may also sign a vertical agreement with a Russian firm for selling its products to the Russian audience. Such agreements must comply with the antitrust regulations and the success of such a relationship vastly depends on choosing the most suitable distribution partner.

 

Representative Offices and Branch Offices (ROs and BOs)

Though physically, a representative or branch office of a foreign company may be present in Russia, it is still considered a foreign legal entity. Both representative offices and branch offices are in charge for carrying out pre-determined functions of the head office and the head office takes complete responsibility of all their actions. The company registration Russia for ROs and BOs are done through the accreditation process by the Federal Tax Service. Once accredited, the tax registration is done by the local tax authorities followed by registration with the Social Statistics Service and Social Security funds. Most foreign firms hire Russia law firm to complete the process successfully.

 

Subsidiaries

The most common business structures practised in Russia are LLC (Limited Liability Corporation) and JSC (Joint stock Companies). The provisions of law concerning both types of establishments are much similar. Foreign companies that operate as a wholly-owned business often opt for LLC. In an LLC structure, the shares owned by the participants are not considered as securities while this is not the case in a JSC. JSC firms can be public or non-public.

The key to operating successfully in Russia is to thoroughly understand the business environment of the country and position oneself suitably. Seeking expert legal help to understand the process of company registration Russia and to gather other relevant information regarding business structures is best recommended.

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