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This Guide gives basic background knowledge of Russian laws to foreign enterprises that are looking for the opportunities to develop Russian market. It addresses some of the key issues which a foreign investor should consider when opening a Russian subsidiary, including types and features of companies, currency import and export, tax regime, foreign employee requirements and judicial efficiency.

Please note that the Guide has an introductory nature and does not cover the entire rules and exceptions. Many relevant regulations in Russia are subject to frequent changes; also, many special measures were adopted in 2022-2023 that can significantly change the regular legal regime in various areas. We would be happy to provide you with professional advice with due account to the specifics of your particular circumstances.

If a foreign investor wishes to operate a business in Russia through a permanent business unit in place, it can choose between a Russian legal entity (local subsidiary) or a branch / representative office. In case of regular commercial activities, a subsidiary is a preferred option, of which an LLC is the most typical corporate form.
Company types and features
The most common types of Russian commercial corporations are limited liability companies (“obshchestvo s ogranichennoy otvetstvennost'yu”, “OOO” in short; “LLC”) and joint-stock companies (“aktsionernoye obshchestvo”, “AO”; “JSC”). They jointly represent almost 99 per cent of all commercial legal entities in Russia; of their total amount, LLCs stay for around 98 per cent and JSCs provides 2 per cent.

LLC is a privately held corporation with a charter capital represented by “stakes” (or “participatory interest”), which are not deemed as securities (shares) and are not subject to securities regulations. Contrary to this, the charter capital of JSC is divided into shares which have the formal status of securities; each issue of shares by a JSC must be registered with the Central Bank (or a licensed private registrar company).

The JSCs are classified into non-public (private) JSCs and public JSCs (“PJCS”).The difference of PJSCs is that they may raise capital for their activities through the sale of shares to the public. They are subject to strict public reporting and disclosure requirements and offer less flexibility in terms of corporate governance structure. PJSC is the least popular form of business among foreign investors in Russia.

The owners of both LLCs and JSCs are not liable for the company’s obligations; the risk of losses they only bear is limited to the nominal value of their participatory interest / shares. However, the liability may occur in some limited number of cases, including:

  • in case of the company’s insolvency caused by the fault of the participants / shareholders;
  • in the event of transactions entered into by the company pursuant to instructions from (or with consent of) the controlling participant / shareholder.

Both LLCs and JSCs are fully independent legal entities as they operate their privately owned property, may acquire and exercise various rights on their own behalf and bear obligations, be a claimant and a respondent in court, pay taxes and custom duties etc.; they are not liable for obligations of their participants / shareholders.

As a general rule, an LLC and a JSC are granted full legal capacity from the moment of state registration, i.e. they have the right to maintain any kind of business aligned with its charter; however, some types of activities require licence (currently 54) or a membership in a “self-regulated organization” (non-commercial industry association with established professional rules; this currently applies to construction business, appraisal services and some others). It is indeed possible that a foreign investor sets up a fully owned subsidiary as a platform and gradually broadens its scope to engage in new industries, but from a risk management perspective, it may be more advisable to assign the new areas to each separate legal entity.

Foreign companies may also operate in Russia through a Representative Office (“RO”) or a Branch Office. Both representation forms are deemed as a part (subdivision) of respective foreign legal entity and thus are not legally independent. Under the Russian laws, ROs are not allowed to conduct commercial activities and have a limited role of promoting their “parent” companies (gathering information about Russian market, search for clients and partners, fostering commercial relations etc.).Branch Office can perform most of the functions of a company; however, it will not be appropriate in all circumstances. In contrast to a subsidiary, the company will be liable for the debts and wrongdoings of its Branch Office. One should also note lengthy and expensive establishment process of both ROs and Branch Offices (8-12 weeks, RUB 138 000 accreditation fees).
Participation in an LLC and JSC
A company may be established by any Russian or foreign individual or legal entity, no local partner is formally required. In certain industries, there are some limitations on the share of foreign ownership (e.g. banking, insurance and media companies).

Chinese mainland, Hong Kong and Singapore companies are equally treated by the Russian laws; each jurisdiction has a double taxation agreement with Russia, one should also note existing Russia - PRC and Russia - Singapore agreements for promotion and mutual protection of investments.

Both LLCs and JSCs may be established by one founder, but a Russian company may not have another company with a sole owner (participant / shareholder).

The number of participants in an LLC is limited to 50. If the limit is exceeded, the company has to be converted into JCS within one year or otherwise may be liquidated by court upon the claim of registration authority. The number of shareholders in JSC is not limited, but a non-public JSC having more than 50 shareholders has to disclose its annual report and annual financial statements.

As to the shareholdings disclosure, the participant details of an LLC including names, their participatory interest and its nominal value are reflected in the State Register of Legal Entities (“State Register”) which is publicly available. In case of a JSC, the shareholders are not disclosed in the Register (save for initial founders) but the company must hire a professional licensed registrar which for a fee maintain the register of shareholders.

An LLC participant may sell (or otherwise transfer) its participatory interest to third parties subject to the restriction: by virtue of law, the other participants (and the company itself if allowed by its charter) have a pre-emptive right to purchase the stake at the price offered to a third party (or stipulated in the charter) pro rata to their interest in the company. In addition, a charter may require the seller to obtain prior consent of other participants and the company itself for such third-party transactions or even completely prohibit them. The transfer formalities include a notary that certifies respective contract and filing for changes in the State Register.

If it is expressly stated in the charter, an LLC participant also has the right to “withdraw” from the company at any time by putting its participatory interest onto the company in return for cash (or payment in kind) equivalent of its stake, assessed by reference to book value. In some cases, the law also permits a participant to have its interest bought back by the company.

In JSCs, the transfer of shares is not limited by law. The pre-emptive right of other shareholders and the company is not a default rule, but it may be provided for by the charter of a non-public JSC; it may also make a transfer to third party purchasers subject to the other shareholders’ consent but the term of such limitation (lock-up period) may not last for more than 5 years from the date the relevant provisions are included in the charter. The transfer does not have to involve a notary or registration authority as it is effected by making the respective entries in the shareholders’ register only.

There is no statutory withdrawal right from a JSC: a shareholder cannot leave a company except by selling its shares. In certain instances, a shareholder may also put (sell back) its shares on to the company.

Note that in 2022, the special rules and procedures were established for transactions with participatory interest / shares of Russian companies involving persons from the list of so called “unfriendly states”. The rules are constantly evolving.
Charter capital
The statutory minimum charter capital amounts are stipulated as follows:

  • for LLC and non-public JSC – RUB 10,000.00;
  • for public JSC – RUB 100,000.00.

Special requirements apply to the minimum amount of charter capital of the companies operating in certain regulated industries (e.g. banking, insurance, distribution of alcohol etc.).

The initial charter capital of an LLC must be fully paid within 4 months of its state registration. In JSCs, the founders must pay 50 per cent of the charter capital within 3 months of its registration, with the remainder payable in full within the first year. A participant / shareholder may not be released from the obligation to pay its agreed contributions to the charter capital.

At least RUB 10,000.00 (100,000.00 for PJSC) must be paid in cash; all other contributions (in excess of the statutory minimum) may be paid in cash or in kind (e.g. movable and immovable properties, participation interest or shares in other companies, state and municipal bonds and intellectual property rights having a monetary value). Any contribution in kind must be valued by an independent appraiser.

After a company has been established and the initial charter capital has been fully paid, it may be increased with contributions by participants/ shareholders made in cash or in kind. In an LLC, an increase is effected by increasing the nominal value of some or all participating interests, while in a JSC the shareholders may decide either to issue additional shares or to increase the par value of existing shares. Debt-to-equity conversion (where capital is paid in by offsetting debt owed to a participant / shareholder) is permitted.
Corporate governance
The corporate governance structure of Russian companies consists of:

  • the General Meeting of participants / shareholders (“GSM”) and
  • the Executive Body: Chief Executive Officer (“CEO”) (optionally, CEO and Management Board or Executive Board (“Management Board”).

LLCs and non-public JSCs with less than 50 shareholders may optionally also have the Board of Directors (also known as Supervisory Board or Supervisory Council; “Board of Directors”). For PJSCs, a Board of Directors is mandatory.

General Meeting

The GSM is the supreme governing body which is responsible for the company’s most fundamental issues. Its competence typically includes, among other things: changes to the company charter or to the charter capital amount; approval of annual report and annual financial statements; distribution of profit; approval of “major transactions” (as defined by laws); reorganization or liquidation. In LLCs and non-public JSCs, the competence of GSM is not limited by statutory provisions and may be expanded by the charter to include any other issues (e.g., approval of specific transactions including those within ordinary business, recruitment, salary, bonuses etc.). If a company structure provides for the Board of Directors, the majority of issues pertaining to GSM competence may be delegated to the competence of the Board of Directors, except of some critical issues (e.g. reorganization or liquidation, charter amendments). This does not apply to PJSCs.

The GSM must be convened annually. In an LLC, the annual meeting must be held between March 1 and April 30, while in a JSC between March 1 and June 30. Any other meetings are considered as “extraordinary” (special) ones.

Most resolutions at a GSM (both in LLCs and JSCs) are passed by a simple majority vote. Some decisions require a qualified majority: in case of LLC, 2/3 for approving amendments to the charter, increase of charter capital, change of company’s name and place and some other specific issues as provided by law or the company’s charter; in case of a non-public JSC, 75 per cent are required for amendments to the charter, decisions on reorganisation or liquidation, on the number, nominal value, category (type) of authorised shares and the rights granted by these shares, for approval of certain major transactions and buy-back by the company of its own shares. A company’s charter may provide for higher voting thresholds for any issue.

A unanimous vote is required in JSCs to approve transformation of a company into a non-profit partnership, as well as for introducing some amendments to the charter of LLC or non-public JSC (e.g., on delegating the powers of GSM to the Board of Directors or to the Management Board, on the procedure for exercising the pre-emptive right, on extending the competence of GSM in a non-public JSC etc.).

LLC, amore “closed” corporation by its nature, have a much wider list of matters requiring unanimity. In particular, in addition to the charter amendments described above, a unanimous resolution of all participants is required for:

  • reorganisation or liquidation of a company;
  • approval of appraised monetary value of non-cash contributions to the charter capital;
  • increase in its charter capital through admission of new participants to the company or additional contribution by certain participants;
  • set-off of claims against the company in the course of payment of contributions by admitted new participants or additional contributions by the participants;
  • granting, limiting or cancelling of additional (i.e. those not stipulated by law) rights and obligations of the participants;
  • adoption or removal of the provisions on disproportionate voting or profit distribution;
  • certain matters relating to pre-emptive right and withdrawal from the company;
  • and other matters as may be specified in the charter.

If there is only one participant / shareholder, there is no need for convening a GSM as any issue within the competence of GSM may be resolved by such participant / shareholder in the form of written resolution.

Board of Directors

Unlike other jurisdictions, the Board of Directors under the Russian laws is a supervisory body rather than executive one. It is responsible for the overall oversight and direction of the company’s activities. As mentioned above, both LLCs and non-public JSCs may operate without the Board of Directors. If there is no Board of Directors, almost all issues of its competence (except of calling the GSM and approval of its agenda) may be vested in the GSM.

The Board of Directors may include the individuals only. As a general rule, the Board member position is unpaid (however, the GSM may decide to remunerate and compensate the Board members). The members of executive bodies cannot comprise more than ¼ of the Board of Directors, nor can a CEO act as the Chairman of the Board of Directors.

If an LLC opts to have the Board of Directors, its election, terms of office, competence and decision-making procedures are all governed by the charter of the company and the internal regulations. The law does not provide for any mandatory rules in this regard but rather points out some typical issues that may belong to its competence such as:

  • giving main directions to the company's activities;
  • appointment and compensation of executive bodies, their early termination;
  • the company's participation in business associations;
  • approval of the company’s internal documents;
  • establishment of branches and representative offices;
  • approval of major transactions and interested-party transactions in cases provided by laws;
  • preparing, convening and holding the GSM etc.

In JSCs, the regulation of the Board of Directors is much more detailed. The number of directors depends on the number of shareholders holding voting shares: three as a minimum for non-public JSCs (five for PJSCs), seven if a company has more than 1,000 shareholders, nine if more than 10,000 shareholder. The Board members are elected annually by the GSM and may be re-elected unlimited number of times; the GSM may also dismiss the Board at any time. The Board is elected by cumulative voting. In addition to the issues listed above, the Board’s competence must include, in particular:

  • approval of decision to issue company’s shares (or securities converted into shares) and placement memorandum;
  • recommendations on the amount of dividends and its payment terms;
  • use of reserve fund and other funds of the company;
  • approval of annual report and annual financial statements (if so provided by the charter);
  • approval of the registrar’s candidature and its terms of engagement as well as its termination etc.

As a general rule, the resolutions by Board of Directors are passed by a majority vote, unless the law provide for a qualified majority (e.g., ¾ for decisions to temporary suspend the powers of CEO in some cases etc.) or unanimity (e.g., charter capital increase by means of additional share issue, issue of bonds convertible into shares etc.); the company’s charter may also stipulate the higher thresholds. Each Board member has one vote; the charter may provide for the right of the decisive vote of the chairman in case of equality of votes.

CEO and the Management Board

The CEO (may also have a title of Director General, Director, President of otherwise as per the company’s charter) is responsible for executive management functions and other day-to-day operations of the company. It is the only body entitled to act on behalf of the company without the power of attorney.

The CEO may be represented by: (1) an individual; (2) two or more individuals acting jointly as one CEO (“two-signature rule”); (3) two or more individuals acting independently as two or more CEOs (not to be confused with the Management Board, below); and (4) external legal entity (or individual manager) acting on a contractual basis as a management company (or a manager).

CEO is appointed by the GSM or the Board of Directors (if so provided by the company’s charter). There is no statutory prescribed term of office of CEO so the issue must be governed by the charter.

CEO has very broad powers as it is generally in charge of all issues that fall outside the competence of GSM or the Board of Directors. Among other things, it has the authority to implement the resolutions of GSM and the Board of Directors, to represent the company, to enter into transactions on its behalf, to handle HR issues, to issue powers of attorney and to give the binding instructions to the employees. The authority of CEO may be limited by making some of decisions subject to approval by GSM or the Board of Directors (e.g., transactions over a certain value etc.); such limitations must be set out in the company’s charter.

In Russian companies, CEO is exposed to a vast number of liability norms throughout plenty of branches of legislation. It bears full responsibility for the company’s activities under labour, tax, customs law etc. and may be fined along with the company itself or even become a subject to criminal proceedings. The general advise is that a person gets a forehead knowledge of basic applicable rules and possible sanctions (both general ones and those of the relevant sector / industry) and seeks a timely legal advice in case of any ambiguities.

A CEO may also face civil liability as it may be claimed by the company itself or by a participant / shareholder to compensate the company for any damages resulting from the breach of obligation “to act reasonably and in good faith while serving the company’s interests” (same may be applied to the members of the Board of Directors or the Management Board, as well as to “shadow directors”). As mentioned above, in certain cases the managers and controlling persons may be liable in the event the company becomes insolvent.

The Management Board is a collegial body that does not have executive powers but functions alongside with CEO rather as an advisory organ. It’s typical role includes discussion of the company’s day-to-day operating activities, joint elaboration of most important decisions, coordination of various subdivisions etc. If the Management Board is established in a company, CEO acts as its chair.

From the practical point of view, Management Boards are unusual body for wholly owned subsidiaries of foreign entities which typically need less complicated governing structure. Moreover, Management Board members are considered employees of the company which entails working permits and working visas for non-Russian individuals.
Registration formalities
An LLC and a JSC are deemed incorporated from the moment of its state registration with Tax authority.

The state registration is a straightforward procedure: the founding participants / shareholders (or their representatives acting under notarized power of attorney) submit the required set of documents to the Tax authority, which reviews the documents strictly within three business days and then awards the registration. If there are no grounds to deny registration, the entry is made in the State Register and the applicant immediately receives the confirmation by email. The set of documents include:

  • application for state registration of legal entity;
  • the founders’ incorporation resolution;
  • the company’s charter;
  • receipt for payment of state duty (RUB 4,000);
  • proof of shares issue registration(for JSCs only);
  • proof of the company’s address (letter of intentions by landlord or similar; not mandatory but recommended).

If there is a foreign individual among the founders, she / he must additionally submit the passport (or equivalent personal identity) with notarized translation into Russian; foreign legal entity must submit statement from the corporate register of its state of incorporation (or similar document evidencing its legal status).

The application for state registration must be signed with a notary-attested signature by each founder (or founder’s executive body in case of legal entity). If a visit to a Russian notary is practically unfeasible, a signature may be attested by a foreign notary with subsequent apostille and notarized translation into Russian.

Note that a foreign individual may be appointed to the CEO position during the registration only subject to compliance with work permit regulations (see below), no exceptions if the person acts as a founder of the company.

In case of an LLC, the whole process, including collecting the required documents, may take 2-3 weeks; however, delays are possible. In case of a JSC, where a shares issue must be registered with the Central Bank or a registrar prior to filing with Tax authority, the expected timeline is extended to approximately 4-6 weeks. It further takes 1-5 business days to open a bank account and make the company fully operational. A company is permitted to open bank accounts in both RUB and foreign currency; however, some Russian banks refuse to open US dollar accounts to new clients these days.
Import, export and use of any foreign currency in Russia require no approval from any agency or body. Capital injections and dividend distributions are not restricted. Also, there are no limits on exchanging foreign currency for companies and individuals save for some temporary cash restrictions from 2022.The sale and purchase of foreign currency may only take place through “authorized” (i.e. duly licensed) Russian banks.
Currency Residents / Non-residents
The Law on currency regulation and currency control (“Currency Control Law”) divides legal entities and individuals into Residents and Non-residents. Note that the residence criteria are different from those established for the tax purposes.

Residents include:

  • Russian citizens and foreign nationals whose permanent place of residence is the Russian Federation on the basis of Russian residence permit;
  • legal entities established under the Russian laws as well as their representative offices / branches abroad;
  • Government of the Russian Federation, constituent entities (regions) of the Russian Federation and municipal units.

All other individuals and entities are deemed Non-residents, including representative offices / branches of legal entities in Russia.
Foreign currency transactions between Residents
Under the Civil Code, Russian rouble (“RUB”) is the national currency and legal tender of the Russian Federation. Generally, foreign currency operations between Residents are not permitted, although the Currency Control Law does make some exceptions (e.g., they may borrow from and then repay to authorized Russian banks in foreign currency).

Commercial contracts in Russia may set the price with reference to foreign currencies, but the actual payment must be made in RUB. The parties to such contract are advised to agree a fixed exchange rate or refer to exchange rate of the agreed institution on the specific date (typically, the Central Bank rate on the date of payment).

Payments in cash between legal entities may not exceed RUB 100,000.00 or equivalent in foreign currency.
Foreign currency transactions between Non-residents
ayments in foreign currency and RUB may be made without restrictions between Non-residents: from abroad bank accounts to bank accounts with authorized Russian banks and vice versa as well as between bank accounts within the Russian Federation.
Foreign currency transactions between Residents and Non-residents
Transactions between Residents and Non-residents (e.g., a foreign participant / shareholder and its Russian subsidiary) involving payments in RUB and foreign currency are also generally permitted without limitations; however, a number of specific rules and procedures may apply as described below.

Contract registration

Residents must file their contracts with Non-residents for registration to a Russian bank that handles the payments under the contract. The list of contracts is formalised in regulations and includes, among others, foreign trade contracts for import and export of goods to / from the Russian Federation, contracts for work or services or transfer of intellectual properties as well as loan agreements. Registration is not required if the amount of liability under the relevant contract does not exceed:

  • RUB 3,000,000.00 for import contracts and loan agreements;
  • RUB 10,000,000.00 for export contracts.

Residents must submit to the Russian bank supporting documents (contracts and others) related to any currency operations under the contracts with Non-residents valued over RUB 600,000.00 (subject to some exceptions).

Currency repatriation

As of beginning of 2022, subjects to some exceptions, the Currency Control Law required Residents to “repatriate” (i.e. to ensure receipt of money into their Russian bank accounts by contractual deadlines):

  • revenues payable under export contracts in RUB and foreign currency for certain types of primary commodities (such as crude oil and petroleum products, oil gas, iron ore, timber, scrap metals etc.), with step-by-step abolition of this obligation for RUB contracts (0 % by January 1, 2024, except for wood);
  • refund of prepayments made to Non-residents under import contracts for goods and services if the goods or services are not delivered or performed;
  • repayments of loans with borrowers that are Non-residents in RUB or in foreign currency.

If an exporter is not subject to repatriation requirement, the Currency Control Law still required it to ensure proper discharge of contractual obligations on the part of Non-resident under the threat of a fine amounting to up to 5-30 per cent of amount payable, which is the same as the fine for failure to repatriate the money.

On August 8, 2022, the Presidential Decree No. 529 completely abolished the repatriation requirement until respective amendments are made in the Currency Control Law. Earlier, another Decree awarded the Governmental Commission with authority to restrict the Resident’s right to credit foreign currency to their accounts abroad.
Operation of overseas accounts and other issues
Under the Currency Control Law, Residents (except of certain categories of public servants) may without restrictions open bank accounts abroad. However, they are required to file notices to tax authorities about opening / closure of such accounts and about change of account details; they also must submit regular cash flow reports in respect of such accounts. Breach of these obligations may lead to fines.

Operation of overseas account by Residents is subject to certain restrictions. A list of permitted transactions is established by the Law. In particular, it is allowed:

  • to transfer funds from Russian (and other overseas accounts) to the abroad accounts;
  • to credit to overseas accounts (i) interest on the balance of funds, (ii) the minimum deposit required for opening an account, (iii) proceeds of foreign exchange transactions using fund on the overseas accounts;
  • to receive payments from Non-residents under foreign trade contracts to the overseas accounts provided that such Residents are not subject to repatriation requirement;
  • and other cases provided by the Currency control law.

In 2022, a number of Presidential Decrees and other regulations have been adopted that establish substantial temporary amendments to the general currency operations regime. In particular, they prohibit Residents:

  • to grant foreign currency loans to Non-residents from so called “unfriendly states”;
  • to transfer dividends from Russian LLCs and JSCs in foreign currency to their overseas accounts (currently, applies to legal entities only).

Also, the Governmental Commission has been granted an authority to introduce restrictions on crediting of foreign currency by Residents to their overseas accounts.

As to the Non-residents, they are allowed to open bank accounts in RUB and foreign currency with authorized banks and transfer funds between their Russian and overseas accounts without limitations.

Individuals must declare RUB and foreign currency in cash in the event they take it in or out of Russia in the amount exceeding equivalent of USD 10,000; from March 2, 2022 foreign currency export in cash of more than USD 10,000 is temporary prohibited.
The tax system in Russia is regulated by the Tax code. Taxes and social insurance contributions are administered by the Federal Tax Service.
Taxes: overview
The taxes are classified into:

1. Federal taxes:
  • Corporate profit tax;
  • VAT;
  • Excise duties;
  • State duties;
  • Personal income tax;
  • Mining resources extraction tax;
  • Excess-profits tax on hydrocarbon production;
  • Levies for use of fauna and aquatic biological resources;
  • Water tax.

2. Regional taxes: Corporate property tax; Transport tax; Gambling industry tax;

3. Local taxes: Land tax; Individual property tax; Sales duty
Corporate taxation
Below is the overview of main taxes payable by Russian companies.

Corporate profit tax


  • Russian companies on their worldwide income;
  • Foreign companies that conduct business in Russia through a permanent establishment and / or receive income from a Russian source

Under the Tax code, a “permanent establishment” is a representative office, branch or any other separate subdivision or place of activity through which a foreign company regularly conducts certain types of business as specified in the Tax code.

Foreign companies having effective place of management in the Russian Federation may be also deemed as tax residents of the Russian Federation for the purpose of corporate profit tax.

Tax base:

  • Total income received less deductible expenses (for Russian companies and foreign permanent establishments);
  • Income from a Russian source (for foreign companies)

Total income includes operating income (sale of goods, services etc.) as well as proceeds from other activities (such as rental incomes, interest on deposits etc.). Tax code provides the list of incomes that are exempt from profit tax, e.g. properties received as a contribution to the company’s charter capital etc.

Most business expenses are deductible for profit tax purposes, provided that they are “economically justified” and properly documented. The exhaustive list of non-deductible expenses established by the Tax code includes among others contribution to a charter capital, penalty payments to the budget, employee remuneration not provided for by the labour contracts etc.


  • 20 % (of which 3 % are paid to federal budget and 17 % to regional budget)

Regional authorities have the right to provide incentives to certain types of taxpayers by reducing the regional portion of the rate (e.g., residents of special economic zones, participants of regional investment projects etc.).
Some types of taxpayers may benefit from zero rate, e.g. medical and educational institutions.

Special rates are applied to certain types of income. Dividends received by foreign companies from Russian subsidiaries are taxed at the rate 15 % (may be subject to reduction under applicable double taxation treaty). Dividends received by Russian companies from Russian and foreign companies are subject to 13 % profit tax; further, dividends are tax exempted (0 % rate) if Russian company has held at least 50 % share in the charter capital of respective subsidiary continuously for at least one year. If the subsidiary is a foreign company, it must not belong to the country that appears on the “black list” of offshore jurisdictions by the Ministry of Finance.

Interest and royalty paid to foreign companies are subject to 20 % withholding tax (again, may be reduced under applicable DTT).



  • Russian companies and individual entrepreneurs.

Taxpayer may be exempted from VAT liability upon its request if the gross sales during three consecutive prior months does not exceed RUB 2 mln (excluding VAT).

Tax base:

  • sale of goods, works and services within the Russian Federation;
  • import of goods into the Russian territory;
  • construction activities for the taxpayer’s own use;
  • transfer of goods (works, services) within the Russian Federation for the taxpayer’s own purposes, if these expenses are not deductible for the purpose of corporate profit tax

VAT is charged on the value of goods (works, services) supplied by the taxpayer, inclusive of excise duties (for excised goods) but exclusive of VAT. In case of import of goods, the customs value of goods (basically, the price under the respective import contract) is applied.

The tax is generally calculated as the difference between the company’s “output” VAT (invoiced to its customers) and “input” VAT (invoiced to the company by suppliers or paid to customs during the import of goods). If output VAT exceeds the input one, the difference is usually recoverable subject to the established procedure.


  • 20 % standard rate

Reduced 10 % rate applies to certain food products, goods for children, mass media items (e.g., newspapers) and medical goods. 0 % rate is applicable to export of goods from Russia and some other operations (e.g., certain international transport services, goods and services supplied to foreign diplomatic missions etc.).

Corporate property tax

Corporate property tax is payable to the budget of the relevant region in accordance with the Tax code and respective regional regulations.

The tax is charged on the company’s immovable property (other than land plots). The tax base for the most assets is the average annual net book value of the property. For some types of assets, cadastral value of the property is applied (e.g. business centres and shopping malls, non-residential premises used as offices, shops, catering facilities or intended for such use, property owned by a foreign company in Russia having no permanent establishment in Russia etc.).

The tax rate is set by regional regulations. If the property is taxable on its book value, the maximum rate cannot exceed 2,2 %; if on cadastral value, the maximum limit is 2 %.

Transport tax

Transport tax is payable on transport vehicles (motor cars and others) by the registered owners of such vehicles (companies and individuals). The tax base is determined by reference to the engine power (in HP). Tax rates are set by the Tax code (e.g., RUB 3,5 per HP for 100-150 HP motor cars), while the regional authorities have the right to increase / decrease the rates by a maximum of 10 times. The tax is paid annually.

Land tax

Land tax liability applies to land plot owners (companies and individuals). The tax base used for calculation of tax is the relevant land plot’s cadastral value (which is in practice close to its market value). Tax rates are set by local authorities and may not exceed 1,5 % of cadastral value (0,3 % for agricultural and residential land).

Simplified Tax System (“STS”)

A company can opt for Simplified Tax System which is a special tax regime for small and medium-sized businesses giving exempts from:

  • Corporate profit tax (save for the tax on dividends);
  • VAT (not including import VAT);
  • Corporate property tax (not including properties taxed on the basis of its cadastral value, e.g. business centres and shopping malls, offices)

Instead, the following tax rates are applied under the STS:

  • 15 % of income less deductible expenses (regional authorities have the right to set the rate in the range from 5 to 15 %); or
  • 6 % of income (regional authorities have the right to set the rate in the range from 1 to 6 %)

STS is available for companies that meet the following criteria: (i) at least 75 % owned by individuals; (ii) turnover less than RUB 200 mln; (iii) less than 100 employees; (iv) do not have branches or representative offices.
Social insurance charges and Personal income tax
In addition to the described corporate taxes, there is a number of charges that can create a notable part of the fiscal burden.

Russian companies are considered to be tax agents for their employees and thus must withhold and pay personal income tax from the salaries. For Russian tax residents (individuals that stay in Russia for at least 183 days in any consecutive 12-month period), the tax rate is set at the level of 13 %; if annual income exceeds RUB 5 mln, 15 % rate is applied to the excess. Non-residents are subject to tax on income from Russian sources (including salary) at the rate of 30 %; if a non-resident is considered to be a “highly qualified specialist” (see Labour compliance), his / her employment-related income is taxed in line with Russian residents.

The employees of Russian companies, regardless of their citizenship (except for “highly qualified specialists”), are subject to mandatory social, pension and medical insurance. This requires employers to pay contributions to the Social Fund of Russia on the part of the employees’ remuneration (employees are not subject to the charges). From 2023, the joint single rate of such insurance contributions is applied: 30 % for an aggregate annual income of up to RUB 1 917 000 (to be reconsidered annually) and 15,1% for income in excess of this amount. Reduced rates may be applied by some categories of employers (e.g., small and medium enterprises). Additionally, employers must pay contributions to the Social Fund for insurance against work-related injuries and diseases at rates ranging from 0,2 % to 8,5 % of monthly salary depending on the risk category of employer.
Russian and non-Russian personnel have to be equally treated from labour law perspective. Formally, there are no restrictions as to positions that can be occupied by foreign nationals. In some particular economic areas, the regulations set the limit on foreign employees’ proportion (e.g., 80 % in construction business etc.).
Foreign national employees
Standard procedure

Bringing an employee from abroad under the standard rules may be quite complicated and lengthy process. In general, a Russian company which intends to employ a foreign citizen must comply with the following procedure which can take 4-5 months:

  • Filing an application on the “anticipated needs” of hiring foreign employees (essentially, a “quota application”). The deadlines are established independently by regional authorities. The applications are handled by a cross-agency commission of the respective region and can be granted or dismissed (in full or in part). The quota allocated to each company depends on the general quota set each year for all foreign employees in Russia (2023: 123,943) and each region (Moscow and Moscow region: 10,949), as well as professional occupation, country of origin and other social and economic criteria. There is also a list of jobs that are not subject to quota, which allows skipping this step; the list includes mostly medical, engineering / technical and arts / sports occupations but also mentions CEO and CFO.

  • Filing an application for general authorisation for recruitment of foreign nationals (corporate permit). The application is filed with immigration department of respective Regional office of the Ministry of Internal Affairs. The general authorisation within the applicant’s allocated quota may only be granted if there is a positive opinion of the regional public employment service; such opinion is requested by immigration department as a part of the process. The positive opinion may be denied for various reasons, including availability of opportunities to meet the applicant’s labour needs with Russian labour resources. Prior to both step one and step two, the employer must submit to the relevant employment centre the latest information on anticipated job vacancies for foreign employees. The corporate permit is valid for one year.
  • Applying for individual work permit and visa invitation. Applying for a work permit for each employee is the employer’s responsibility. The application is filed with immigration department and must include medical certificates obtained by an employee from Russian medical institutions; such certificates are valid for 1 year and may be also submitted within 2 months after filing the application. Also, within a month after the work permit is issued, an employee must submit a certificate proving her / his command of Russian language, history and fundamentals of Russian law; if they fail to do so, the work permit may be cancelled. A work permit is issued along with visa invitation.

A work visa is issued by Russian embassy or consulate in the respective country. Initially, a single-entry visa is issued which is valid for up to 3 months. Once the foreign individual has arrived to Russia, he / she can apply to the Regional office for his / her visa to be replaced with one-year multi-entry work visa. Along with work visa, business visa are available for foreign nationals intending to conduct short business activities in Russia (e.g., business trips, negotiations, market studies, preparations to set up a company in Russia etc.).

Highly qualified specialists

Alongside with standard rules described above, the special procedure is established for so called Highly qualified specialists (“HQS”) which is a foreign employee with professional experience, skills and achievements in a specific area provided that the monthly remuneration proposed to him / her by Russian employer is at least RUB 167 000. The process of obtaining work permit and work visa is much less complicated for HQS and takes about 1-2 months; also, there are other considerable benefits:

  • quota application and corporate permit are not required on the employer’s side;
  • command of Russian language, history and fundamentals of law obligation is not applied;
  • medical certificates are not required;
  • a work permit is valid for up to 3 years (1 year in case of a non-HQS permit);
  • a work permit may be valid for multiple Russian regions rather than the only employer’s region;
  • multi-entry visa from the date of issuance for up to 3 years with extension opportunity for subsequent 3-years periods;
  • work visa for accompanying family members may be obtained for same period.

Employer must file a notice to the Regional office on conclusion and termination of employment contract with all categories of foreign nationals within 3 working days. Moreover, all foreign nationals are subject to mandatory registration with migration authorities at the place of his / her stay in Russia; the responsible hosting party for the purpose of registration will in most cases be the hotel or the landlord (company / individual) of an apartment at which a foreign citizen is staying.
Labour law - key points
Russian labour law is very employee-oriented and rigid. Below is the summary of some basic statutory requirements:

  • An employment agreement is obligatory. Indefinite term as a rule, fixed-term in exceptional cases;
  • Probation period for a maximum of 3 months is permissible (up to 6 months for the CEO and deputies, chief accountants and deputies, head of branch offices);
  • Salaries must be paid in RUB not less than twice a month. A monthly salary may not be less than the minimum monthly wage established by law (2023: RUB 16 242); in addition, each region may establish its own minimum not lower than the national one (Moscow: RUB 24 801);
  • Normal working week cannot exceed 40 hours. Any additional time is overtime which an employer may request in a limited number of circumstances; employee’s written consent is required. Overtime is double paid (first two hours that are 150 % paid). It must not exceed 4 hours within two consecutive days or 120 hours per year;
  • Break for rest and meals during a working day must be not less than 30 minutes; time-off not less than 42 consecutive hours a week (2 days-off a week, as a general rule). Minimum annual leave is 28 calendar days;
  • An employee may terminate his / her employment agreement at any time with two weeks written notice; on the employer’s part, it can be terminated only on the exhaustive list of grounds specified by the Labour code (unilateral termination is not permitted); in case of CEO, additional grounds may be provided by employment agreement.
We consider Russian court litigation as an effective mechanism for protection of commercial interests, not least those of foreign investors and their Russian subsidiaries. An enforceable court decision may be obtained within roughly 6-10 months. Enforcement requires additional skills and resources and it is strongly recommended to engage an attorney for this stage as well.
There is the system of specialized commercial courts in Russia called arbitrazh courts there the most of the commercial litigation is conducted. These courts belong to the state judicial authority and should not be confused with arbitral tribunals that resolve disputes by way of arbitration.

Generally, the arbitrazh courts in Russia deal with any type of economic disputes involving legal entities as well as private persons duly registered as “individual entrepreneurs”. Both contract and property disputes, corporate conflicts, bankruptcy proceedings, business reputation cases and review of business related decisions by state bodies and officials (tax, customs, licencing, fines etc.), all of these falls within jurisdiction of arbitrazh courts.
Filing the statement of claim
To initiate a case, the plaintiff shall file a statement of claim with the arbitrazh court of the region where the defendant is located. The plaintiff also may choose the court of the region where the contract was to be performed. Moreover, the parties may agree the competent court to hear their cases, either in contract or separately, including submission to any foreign jurisdiction (provided that this does not violate exclusive jurisdiction of Russian courts).

In debt collection cases arising from contracts or unjust enrichment, it is compulsory to send a pre-litigation letter of claim to the defendant one month ahead of filing the statement of claim, unless the contract provides other timing / procedure.

The statement of claim shall set forth the plaintiff’s case in rather detailed narrative, including all the circumstances that give rise to the claim and the legal reasoning behind it (citations of laws). The plaintiff shall also file its evidence along with the statement.

Hiring an attorney is not a prerequisite for a company involved in arbitrazh court case. Both plaintiff and defendant and any third party may be represented by director general (CEO) or in-house lawyer. Legal representatives acting under a power of attorney must also have a higher legal education or a degree in law.

Filing fees depend on the amount of claim. The maximum state duty is RUB 200,000.00.

The general limitation period is 3 years from the day when the person becomes aware (or should have become aware) of the other party’s default. The limitation period rule applies only in case the defendant has put forward a respective objection.
Interim measures
The plaintiff may file for pre-judgement relief if absence of such relief may complicate or render impossible the execution of the court decision, as well as to prevent significant damage to the party. This can include arrest of defendant’s money and other properties, preliminary injunction and other measures. The application for interim relief may be filed alongside with the statement of claim or later on at any stage of the process. The court shall review the application within one day which results in an interim order or dismissal. The interim order is enforced by the Enforcement authority in the same manner as the court decision.

However, the usual chances to obtain an interim order are low. The courts are extremely reluctant unless the plaintiff provides an overwhelming evidence of assets concealment by defendant or other heavy misdoings.
Court of first instance
The court shall commence proceedings within 5 days after receipt of the statement of claim. If it accepts the statement for proceedings, the court shall issue an order that sets a date of “preliminary hearings” (which is in practice held in a 1-2 months) and requires the parties to perform specific actions in preparation of trial. The defendant is typically prescribed to submit the statement of defence with legal and factual objections to each claim.

Any pending case can be tracked at the Database of the Arbitrazh Cases that contains every order and the final decision in the case. The case number or the name of the party may be used for search.

At preliminary hearings, the parties can briefly present their cases, submit evidences and file their motions (to dismiss the claim without hearing, to invite third parties, to request documentary evidences from third parties etc.).Then the court appoints hearings on the merits of the case.

At the hearings (court session) on the merits, the court reviews evidences and circumstances essential for the case while the parties can make statements, file motions, put questions to each other and present their arguments on all issues in question. In simple claims for non-payment of goods and services, it may take 1-2 sessions to complete the case.

In the arbitrazh court proceedings, the documentary evidence is given primary weight, while oral testimonies and witness examinations are very rare. Russian laws do not provide for direct, party-to party discovery. The court may suggest the parties to present the evidence, but generally, due to the adversarial principle, both plaintiff and defendant shall each bear the burden to prove its claims and objections.

A party may request that the court retain an expert “to clarify the questions that require special knowledge” and make suggestions as to the particular expert (or expert institution) to be retained. However, the court ultimately determines whether an expert is necessary, selects the expert and formulates the questions to be answered (albeit with input from the parties).

Parties to a contract can choose any foreign law to govern their relations, provided that the contract involves “foreign element” (though a few overriding mandatory rules of Russian law will still apply); when there are no “foreign element” (e.g., a pure domestic contract between two Russian companies), the choice of foreign law is also permissible but all mandatory (imperative) rules of Russian law must be abided. When foreign law is applicable, the court is responsible for determining its content, with due account to “its official interpretation, application and doctrine in the relevant foreign state”. In practice, the court relies on the legal opinion obtained by the party from foreign attorneys.

Compared to other countries, proceedings in Russia are expeditious. The court must issue a decision within 6 months after receipt of the statement of claim, while the appellate instance must review the case within 2 months from the day when the case has arrived. According to the statistics by the Supreme Court, these timelines are met in 97 and more per cent of cases.

The final decision is announced at the conclusion of the last hearings, after a brief (5-20 minutes or more) recess in which the judge considers the matter. A written decision in full, with statement of evidence on which it is based, legal norms which guided the court and other reasoning, shall be issued within 5 days (practically, 2-4 weeks).

The court decision enters into force 30 days after the full text has appeared, unless it is appealed (which must be done within 30 days). If appealed, the decision enters into force from the date of the final ruling by the court of appeal, unless it amends or annuls the decision.
Court of appeal and cassation
There are three levels of appeal in Russia which shall be followed one after another, including:

  • courts of appeal;
  • courts of cassation appeal;
  • economic panel of the Supreme Court (“second cassation”).

In the court of appeal, the panel of three judges reviews both the facts and the law de novo, generally re-trying the case; however, new evidence may be submitted only upon showing that it could not have been presented in the court of first instance due to the reasons beyond this party’s control.

In the district court of cassation, the appeal is also heard by a panel of three judges; cassation review is limited to the issues of law (no evidence is re-evaluated). A cassation appeal does not automatically stay the execution of the court decision (or the appellate ruling); however, a stay may be issued upon a motion by the party.

In the “second cassation”, the Supreme Court judge reviews the arguments of appeal without meeting the parties and then renders a ruling on whether or not to accept the appeal for hearing at the session of the Commercial Bench. The average success rate of overcoming this filter is 1 per cent.
Litigation costs
The losing party shall pay the court costs of the prevailing party, including the filing fees (state duty) and attorney fees. If the claim was partially sustained, the costs are allocated in proportion to which the plaintiff prevailed on its claim.

The chances to recover the attorney fees in full are minute.The laws establish that the court shall award attorney fees within “reasonable limits”, which most often means dramatic reduction of the paid sums. There is a common practice of awarding RUB 20,000 - 100,000. Expecting more than RUB 150,000 is hardly realistic.

The prevailing party may submit an application for the attorney fees award within 3 months after the last decision / ruling on the merits of the case.
Once the court decision has entered into force, the plaintiff can apply for the writ of execution. When obtained, this may be submitted directly to the debtor’s bank that is obliged to debit the debtor’s account with the awarded amount. If no results, the plaintiff may resort to the official enforcement regime.

Enforcement is done by the Federal Service, which is the part of the Ministry of Justice. Due to the enforcement officer’s heavy workload that may be as high as 700 new cases monthly, the task may end up fruitless if left alone.Thus, professional attorney support that may facilitate the process is strongly advised.
Recognition of foreign judgements and arbitral awards
Russia is a party to the 1958 New York Convention, which allows recognizing and enforcing an arbitral award obtained in another signatory jurisdiction. The only reservation states that, with regard to awards made in non-contracting states, the Convention is applied to the extent to which those states grant reciprocal treatment. As a rule, the court cannot review any foreign arbitral award on its merits. The grounds for refusing a recognition are generally the same as those set forth in the Convention.

Recognition of foreign court judgements in Russia is possible if so allowed by the international agreement between the Russian Federation and the respective country (currently, around 40 jurisdictions, including China, France, Italy, Finland, India, Egypt and others). The reciprocity and international comity principles may also be applied, if mutual recognition can be proven.
Arbitration in Russia
International arbitration in Russia is governed by Law No. 5338-1 “On International Commercial Arbitration”, Federal law No. 382-FZ “On Arbitration (Arbitration Proceedings) in Russia” and the Arbitrazh Procedure Code.

All civil claims are generally arbitrable except of disputes expressly listed by the laws, including those arising of bankruptcy, labour, administrative law, public procurement matters, certain types of corporate disputes and some others.

The law provides that only permanent arbitral institutions have a right to administer all disputes with a seat in Russia and Russian corporate disputes (seated in Russia or abroad). Permanent institutions must be established by non-profit organizations and require a permit. Foreign arbitral institutions can also obtain the status provided that they possess a reputation that is recognized worldwide. The current list of authorized institutions includes: HKIAC, VIAC, SIAC and ICC Court along with 7 Russian arbitration centres.

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