Russia is known to be the largest trade partner of Europe. It is seen as one of the most promising destinations for doing business Russia and it definitely rewards companies with some great opportunities. In the first half of the year 2013, the imports to Russia saw a rise of 3.6%. Every year, new companies are seen entering the Russian markets with a hope to increase revenues and profits. Read on to get some vital information about establishing a business in this country.
Choosing the Corporate Form
In order to get a Russian company registration, the most popular choices of corporate form include a branch, subsidiary or a representative office. Here, it is quite difficult to change the form of your company so you must choose the right legal form in the initial stages itself to avoid problems in the future. The Russian legal services are strict and expensive and therefore, you must choose a form wherein you are assured of the smooth business transactions without any problems.
The Representative Office
Until 10 years ago, this was the most popular kind of office structure in this country since it was considered as a permanent establishment of a foreign company. These are usually not Russian companies and have no business activity as well. However, this strategy does not work long term in the local markets and therefore, it is slowly going out of style.
Branches are not a separate legal entity, have a lot of business activity and they can also import goods required to conduct business in Russian premises. Since representative offices and branches are part of a foreign company, they are subject to a specific currency control mechanism. All the payments for various goods and services that are operated in local businesses and exceed the amount of USD 5000, need detailed documentation that must be issued by the Russian company. This is why representative offices and branch offices are quite unpopular in today’s markets.
This is the most popular form of corporate company in Russia as it can operate as a Limited Liability Company (LLC) and Joint Stock Company (JSC). LLC is usually preferred choice for start-ups since the capital requirement is low (USD 350 or RUB 10,000) and it is easy to register as well. Also, the subsidiary is officially a company by the Russian legal services and therefore, it is not subject to currency control measures. The company can also import goods and participate in business activities.
All three are permanent offices in Russia and for doing business Russia, they are taxable, need social security fees, the financial accounts must be issued and must provide up to 15 different reports to the Russian authorities every quarter. You can pick the right form of company based on your products and services and your long-term strategies.
By xusenru from Pixabay