Starting a Company
in Russia
Ulf Schneider
Managing Partner
RUSSIA CONSULTING Group
Gothenburg, 4th April 2013
Seminar: How to do business with Russia
Content
 Why to start business in Russia
 Representative Office / Brach / Subsidiary
 How to register an OOO / LLC
 Typical issues during Start-Up
2
Why to start business in Russia
3
Why to register your company in Russia
4
 Status symbols are important: RepOffice/OOO
 Show commitment to the market
 No DDP deliveries without Russian entity
 Tax reasons incl. low tax rates
 20% CIP
 13% PIT
No good reason to do business in Russia
 Inexpensive labor force
 I can delegate everything
 We have problems on our home market,
Russia should save us
5
Obstacles when starting in Russia
6
 Is everybody and everything corrupt? NO !
 Can you cope with the Russian bureaucracy? YES !
 Russia is not a part time job FULL ENGAGEMENT !
 You need a million in order to start business ?
or
You start a business in order to make a million ?
7
Export
Representative
Office
Regarded as prestigious in
Soviet times
Branch
Subsidiary / OOO
Today a sign for active
market presence
Transformation
Liquidation of
Rep-Office and
foundation of
subsidiary
8
Subsidiary /
OOO
Rep-Office
Liquidation of
branch and
foundation of
subsidiary
Branch
Transformation possible
(however, new
accreditation required)
Comparison
9
Subsidiary
Branch Office

Active commercial activity

Active commercial activity

Legally independant

Legally not independant

VAT, CIT/Profit Tax, Property Tax

VAT, CIT/Profit Tax, Property Tax

Entitled to deduct input-VAT

Entitled to deduct input-VAT

Liability-protection;

Liability of Swedish-Company
Limitation to Russian entity

Capital infusion is rather difficult

Capital infusion is rather easy

Profit repatriation subject to Dividend

Profit transfer to Sweden very easy

Currency Control with Russian
Withholding Tax

Currency Control with Swedish-entity
clients and distributors
Joint Venture




10
JV generally have major business risks
Less control / not transparent
Different understanding of business culture
If JV, then JV entity should not be in Russia
General saying:
“First the Western partner brings the money and the Russians the experience”
“Later the Russians have the money and the partner a new experience”
Register an OOO / LLC
 One or several shareholders
 No double 100% structures
 Minimum charter capital 10.000 Rubles (2.000 SEK)
 Serious Legal Address required
 General Director (can be outsourced)
 Reporting and accounting from day one, quarterly 10-15
reports
11
Register an OOO / LLC
 Opening a bank account can be so difficult
 How to limit the rights of the General Director?
 Who should become Chief Accountant – Friend of the GD?
 How to structure the reporting to the HQ
 Corporate reporting vs. Russian reporting
 Cash (invoice) vs. accrual (acceptance protocol)
 “Prepayment” vs. real prepayment
12
Relation with public authorities
 Losses in several quarters can lead to an
„invitation“ by the loss commission of the
tax authorities
 Now more civilized procedures
 Relations with public authorities should be
handled like with other business partners
13
Grey Import - A no-go
14
 Illegal important structures –
also financially a bumerang
Import company
(Grey accounting)
Invoicing
Invoicing
(with all official documents)
Swedish AB
Delivery
Sweden
Subsidiary-OOO
Russia
(no deduction of input-VAT)
Payback – Obnalichka - Обналичка
 Illegal structures with payback
 Check for unserious consulting invoices
Bank payment
Invoicing
„Consulting“ OOO
Subsidiary-OOO
15
Conclusion
16
 Russia grants great opportunities
 Obstacles await you everywhere, however,
Russia is much improving
 Stick to your principles, take your time, insist
on your rights and …..
 ….. never do dirty deals !
Clients and Memberships
17
Our office
18
Thank you for your Attention!
 Accounting Outsourcing
 Tax Consulting
 IT Services / ERP
 Interim Management
 Office Sublease
 Recruiting
Ulf Schneider
Managing Partner
+7 / 495 / 956 55 57
SchneiderU@russia-consulting.eu
 Outstaffing
 Visa and Work Permit
19
Our Offices
Moscow
Ulf Schneider,
Lars Flottrong, Mike Allen
ul. Bakhrushina 32/1
115054 Moscow, Russia
T +7 / 495 / 956 55 57
info@russia-consulting.eu
St. Petersburg
Andreas Bitzi
Finlyandskiy pr. 4a
194044 St. Petersburg, Russia
T +7 / 812 / 458 58 00
info@russia-consulting.eu
Hamburg
Ulf Schneider
Alstertor 15
20095 Hamburg, Germany
T +49 / (0)40 / 226 33 760
info@germany-consulting.de
Warsaw
Piotr Linke
Al. Jerozolimskie 81
02-001 Warsaw, Poland
T +48 / 22 / 695 03 10
info@poland-consulting.com
Kiev
Sven Henniger
vul. Shovkovychna 42-44
01601 Kiev, Ukraine
T +38 / 044 / 490 55 28
info@ukraine-consulting.eu
Minsk
Polina Meleshko
ul. Surganova 29
220012 Minsk, Belarus
T +375 / 17 / 290 25 57
info@belarus-consulting.eu
Almaty
Kirill Afanasyev
ul. Zheltoksan 111 A
050000 Almaty, Kazakhstan
T +7 / 727 / 333 44 48
info@kazakhstan-consulting.eu
Aktau
Kirill Afanasyev
Mangistauskaya oblast,
District 14, building 61
130000 Aktau, Kazakhstan
T +7 / 7292 / 470038
info@kazakhstan-consulting.eu
www.russia-consulting.eu