ulf schneider managing partner russia consulting group gothenburg, 4 th april 2013 seminar: how to...

Ulf SchneiderManaging Partner

RUSSIA CONSULTING Group Gothenburg, 4th April 2013

Seminar: How to do business with Russia

Starting a Company in Russia

Why to start business in Russia

Representative Office / Brach / Subsidiary

How to register an OOO / LLC

Typical issues during Start-Up

Content 2

Why to start business in Russia 3

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

Why to register your company in Russia

4

Inexpensive labor force

I can delegate everything

We have problems on our home market, Russia should save us

No good reason to do business in Russia

5

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 ?

orYou start a business in order to make a million ?

Obstacles when starting in Russia 6

7

Representative Office

Branch

Regarded as prestigious in Soviet times

Today a sign for active market presence

Export Subsidiary / OOO

Transformation 8

BranchRep-Office

Subsidiary / OOO

Transformation possible (however, new

accreditation required)

Liquidation of branch and foundation of subsidiary

Liquidation of Rep-Office and foundation of subsidiary

Comparison 9

Subsidiary Branch Office

Active commercial activity

Legally independant

Active commercial activity

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;

Limitation to Russian entity

Liability of Swedish-Company

Capital infusion is rather difficult Capital infusion is rather easy

Profit repatriation subject to Dividend

Withholding Tax

Profit transfer to Sweden very easy

Currency Control with Swedish-entity Currency Control with Russian

clients and distributors

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”

Joint Venture 10

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

Register an OOO / LLC 11

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

Register an OOO / LLC 12

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

Relation with public authorities 13

Grey Import - A no-go 14

Illegal important structures –

also financially a bumerang

Invoicing(with all official documents)Swedish AB

Sweden Russia

Import company

Subsidiary-OOO

Invoicing

Delivery

(Grey accounting)

(no deduction of input-VAT)

Illegal structures with payback Check for unserious consulting invoices

Payback – Obnalichka - Обналичка 15

95% payback in

cash

„Consulting“ OOO

Subsidiary-OOOIn

voic

ing

Ba

nk

pa

yme

nt

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 !

Conclusion 16

Clients and Memberships 17

Our office 18

Accounting Outsourcing

Tax Consulting

IT Services / ERP

Interim Management

Office Sublease

Recruiting

Outstaffing

Visa and Work Permit

Thank you for your Attention! 19

Ulf SchneiderManaging Partner

+7 / 495 / 956 55 57SchneiderU@russia-consulting.eu

Our Offices

www.russia-consulting.eu

MoscowUlf Schneider,

Lars Flottrong, Mike Allenul. Bakhrushina 32/1

115054 Moscow, RussiaT +7 / 495 / 956 55 57

info@russia-consulting.eu

HamburgUlf Schneider

Alstertor 1520095 Hamburg, GermanyT +49 / (0)40 / 226 33 760

info@germany-consulting.de

St. PetersburgAndreas Bitzi

Finlyandskiy pr. 4a194044 St. Petersburg, Russia

T +7 / 812 / 458 58 00info@russia-consulting.eu

KievSven Henniger

vul. Shovkovychna 42-4401601 Kiev, Ukraine

T +38 / 044 / 490 55 28info@ukraine-consulting.eu

MinskPolina Meleshkoul. Surganova 29

220012 Minsk, BelarusT +375 / 17 / 290 25 57

info@belarus-consulting.eu

AlmatyKirill Afanasyev

ul. Zheltoksan 111 A050000 Almaty, Kazakhstan

T +7 / 727 / 333 44 48info@kazakhstan-consulting.eu

AktauKirill Afanasyev

Mangistauskaya oblast,District 14, building 61

130000 Aktau, KazakhstanT +7 / 7292 / 470038

info@kazakhstan-consulting.eu

WarsawPiotr Linke

Al. Jerozolimskie 8102-001 Warsaw, Poland

T +48 / 22 / 695 03 10info@poland-consulting.com