Business in Russia

International contract with Russian counterparty should mandatorily provide for applicable law apart from contract subject, pricing, delivery terms and parties’ details. Clauses on applicable international laws, principals and customs. (Since most of the international contracts are sales contracts it is recommended to make reference to the Vienna Convention 1980 as well as INCOTERMS rules). The contract should also include provisions for force-majeur circumstances, payment terms, penalties, acceptance of goods procedure and dispute settlement location. Besides in case the contract is made in a foreign language it should be necessarily duplicated in Russian.

INCOTERMS – (International commercial terms) is a code of practice used for increasing efficiency and standardization of terms for delivery contracts required for international paperwork. INCOTERMS includes all major right and obligations of counterparties depending on delivery terms. INCOTERMS is an important trade tool. They are included into sales contracts as a guidelines for importers, exporters, lawyers, freight and insurance companies. Failure to adhere to INCOTERMS rules applied to a contract can result in heavy fines.

Repatriation of hard currency earning is return of cash assets back to the national homeland. Repatriation obligation is enshrined in Art. 9 of the Federal Law “On Currency Regulation and Currency Control” as of December 10, 2003 No. 173-ФЗ. According to the law, residents of the Russian Federation are obliged to ensure that the money stipulated by the international agreement is received from the counterparty for performed services, works or supplied goods, as well as under loan agreements. Besides residents of the Russian Federation are liable to ensure refund of money paid in case of counterparty’s failure to fulfill obligations. In case of failure to fulfill repatriation obligation, a statutory fine is imposed in accordance with Art. 15.25 Code of Administrative Offenses of the Russian Federation. Fines can equal the total amount of non-refunded funds

In case of international agreement, there are risks of prosecution by customs authorities of the Russian Federation, currency control authorities (represented by tax authorities of the Russian Federation), tax authorities of the Russian Federation in case of non-compliance with tax laws

The easiest way is to create LLC. To do this the following should be submitted to registration authority: notarized completed application as per the form P11001 (or apply with the specified form to the registration authority personally),  notarized power of attorney for the representative (if acting through the representative), LLC charter in duplicate, directive on LLC creation, receipt of state duty paid, letter of guarantee or certificate of ownership of the premises where  LLC is supposed to be located, passport or other identification document with notarized translation into Russian. Besides, foreign citizen has the right to run Individual Entrepreneur activity, but it is necessary to obtain temporary residence permit in Russia or a residence permit.