FAQ

Yes. Non-residents may open accounts with authorised Russian banks in roubles and foreign currency, subject to the bank’s onboarding, KYC and compliance procedures.

In practice, the formal legal possibility to open an account does not mean that every bank will onboard every client. The document package, the ownership chain, the business profile and the payment routes are all reviewed carefully.

If the investor operates in Russia through a Russian subsidiary, branch or representative office, a local banking setup is usually required for day-to-day operations.

For most business contracts, written form is the practical and expected standard in Russia.

For cross-border contracts, written form is especially important for evidence, banking, customs, tax and compliance purposes.

Certain transactions require an enhanced form, such as notarisation or additional corporate formalities. Therefore, relying on informal exchanges or unreviewed purchase orders is usually not advisable for market-entry projects.

Foreign investors typically consider four main options:

• a Limited Liability Company (LLC / OOO);
• a Joint Stock Company (JSC / AO);
• a Branch Office; and
• a Representative Office.

In practice, LLCs and JSCs are Russian legal entities, while branches and representative offices are forms of presence of a foreign company in Russia rather than separate legal persons.

Customs matters in Russia are governed primarily by the Customs Code of the Eurasian Economic Union (EAEU), together with Russian national customs legislation. This is important because Russia is part of a common customs territory with Armenia, Belarus, Kazakhstan, and Kyrgyzstan.

In practice, this means that investors should look not only at Russian rules, but also at EAEU-wide customs rules, including the common customs tariff, customs procedures, and general declaration framework.

Commercial disputes in Russia are usually heard by the state arbitrazh courts. Despite the name, these are state commercial courts, not arbitral tribunals. They typically handle contractual, corporate, tax, insolvency and other business disputes. Parties may also agree to arbitration where the dispute is arbitrable under the applicable law.

For most market-entry projects, the key taxes are corporate profits tax, VAT, withholding tax on certain Russian-source payments to foreign companies, and payroll-related taxes where local employees are engaged.

• Corporate profits tax applies to Russian companies and, in certain cases, to foreign companies operating in Russia through a taxable presence.
• VAT is relevant both for domestic supplies and for imports into Russia.
• Withholding tax may apply where a Russian payer makes certain payments to a foreign company.
• Personal income tax and social contributions become relevant once the business hires staff in Russia.
• Property tax and customs duties may also matter, depending on the asset base and the import structure.

Russian currency control uses its own legal definitions of “resident” and “non-resident”, and these definitions do not always match tax residence in the everyday sense.

As a rule, a company incorporated in Russia is treated as a resident for currency control purposes, while a foreign company is generally treated as a non-resident.

This distinction matters because reporting obligations, account rules and documentary requirements depend on that status.

Yes. As a general rule, the parties may choose foreign law to govern their contractual rights and obligations.

However, this does not exclude the application of mandatory Russian rules where they are relevant. In practice, this may include, among other things, customs rules, currency control requirements, product regulation, counter-sanctions restrictions and certain corporate-law matters connected with a Russian entity or asset.

For that reason, an English or Indian law template should not be used in Russia-facing transactions without Russian law review.

For most market-entry projects, an LLC is the default choice. It is the most common corporate form for operating businesses in Russia and is generally more practical than a JSC for small and medium-sized ventures.

An LLC is usually preferred because it is easier to administer, more flexible from a governance perspective, and better suited to a straightforward ownership structure.

As a general rule, regular commercial imports into Russia should be structured through a person of an EAEU member state acting as the declarant / importer of record. A foreign company may act as declarant only in limited cases expressly allowed by EAEU law, and these exceptions should not be treated as the default route for ordinary trading activity.

For most Indian businesses, the practical solution is to import through a Russian resident structure — typically a Russian subsidiary, a local distributor, or another Russian import partner. A branch or representative office of a foreign company is not a universal substitute for a Russian importing entity.

Yes. In most cross-border contracts, the parties may agree to arbitration and set out the seat, rules, language and number of arbitrators in the dispute resolution clause. In practice, arbitration is often preferred for cross-border contracts because it offers a neutral forum and facilitates enforcement under the New York Convention. However, certain disputes remain subject to mandatory jurisdiction rules and cannot simply be moved to arbitration or to a foreign court.

As a high-level reference point, the main rates to keep in mind are as follows.

• Corporate profits tax: 25%.
• Standard VAT rate: 22%.
• Reduced VAT rate: 10% for certain categories of goods and services.
• Personal income tax for Russian tax residents: progressive rates from 13% to 22%, depending on the type and amount of income.

These are only headline figures. The actual tax cost in a transaction depends on the nature of the income, the legal structure, treaty availability, and the supporting documentation.

For Russian residents, cross-border payments are not just a banking matter — they must also comply with currency control rules.

In practical terms, the key requirements usually include the following:

• foreign accounts must be disclosed where Russian law requires notification and reporting;
• certain cross-border contracts must be put on record with the servicing bank once the applicable threshold is reached;
• amendments and supporting documents must be submitted to the bank on time;
• the contract should accurately reflect the real commercial relationship and payment flow;
• the obligations of the foreign counterparty must be performed or otherwise lawfully terminated in due time.

At present, the classic repatriation requirement for export proceeds is suspended, but this does not eliminate the need to structure settlements properly and close contractual obligations in a legally acceptable way.

A bilingual Russian-English contract is usually the safest format for cross-border transactions.

Even where the parties negotiate in English, a Russian version is often needed in practice for banks, customs authorities, notaries, internal compliance and possible court proceedings.

If the contract is bilingual, it is advisable to state expressly which language version prevails in case of inconsistency.

An LLC has participatory interests rather than shares and is usually preferred where the ownership structure is relatively simple. A JSC issues shares and is used where a share-based corporate structure is needed.

A JSC is not automatically a public company: Russian law distinguishes between public and non-public JSCs. As a rule, the minimum charter capital is RUB 10,000 for an LLC, RUB 10,000 for a non-public JSC, and RUB 100,000 for a public JSC.

In practice, there are three main models.

First, the investor may establish a Russian subsidiary and import goods directly. This gives the investor the highest degree of control over customs clearance, logistics, contracts, and sales in Russia.

Second, the investor may work through a Russian distributor or other local import partner. This is often the faster route where the investor wants market access without building its own Russian operating platform from the start.

Third, a foreign company may in some cases use its Russian branch or representative office for limited customs purposes permitted by law, but this is a narrow and technical route. It should be assessed separately and should not be presented as a standard solution for commercial imports.

Yes, in principle. India and Russia have a bilateral treaty on legal assistance and legal relations in civil and commercial matters, which provides a treaty basis for recognition and enforcement of court judgments between the two countries. In practice, enforceability still depends on the nature of the judgment, procedural compliance and the documents submitted with the application.

Not automatically. A foreign company is not subject to Russian profits tax merely because it sells to Russian customers. Russian taxation usually arises in two main situations:

1. the foreign company carries on business in Russia through a permanent establishment; or
2. it receives certain types of Russian-source income that are subject to withholding tax, such as dividends, interest, royalties, and some other listed payments.

In practice, this means that a simple cross-border sale into Russia does not by itself create full Russian corporate taxation. The real questions are whether the foreign company has created a taxable presence in Russia, whether any payment is subject to withholding tax, and whether treaty relief is available. If treaty relief is claimed, the foreign company must usually provide residence and beneficial ownership documentation before payment.

As a general rule, Russian residents must place certain contracts on record with the servicing bank once the amount of obligations reaches the statutory threshold.

For the purposes of a high-level FAQ, the main thresholds are currently RUB 3 million for import contracts and loan arrangements, and RUB 10 million for export contracts.

The exact treatment of a transaction should still be checked in context, because the classification of the contract and the payment mechanics matter.

The contract should address dispute resolution expressly rather than leaving the issue open.

Depending on the transaction, the parties may choose Russian state commercial courts (Arbitrazh Courts) or arbitration. The choice should be made together with the governing-law clause, the enforcement strategy and the practical ability of the parties to participate in the chosen forum.

At the same time, some categories of disputes are not fully flexible from a Russian law perspective. In particular, disputes closely connected with Russian corporate registration, internal corporate governance or other matters of exclusive jurisdiction should be analysed separately before a foreign forum is selected.

Yes. A Russian company may be incorporated with one founder, and that founder may be a foreign individual or a foreign legal entity, subject to standard corporate law requirements and document formalities.

In other words, there is no general requirement to have a second shareholder or a local Russian partner solely for incorporation purposes.

Before the first shipment, investors should verify at least the following points:

• who will act as the importer of record / declarant;
• the correct customs classification of the goods;
• the customs value methodology and supporting documents;
• whether any permits, conformity documents, labeling, or product-specific requirements apply;
• the documentary package for customs clearance, including the contract, invoice, packing list, transport documents, and other supporting papers; and
• the allocation of customs, tax, and logistics responsibilities in the commercial contract.

In practice, many customs problems arise not because the goods cannot be imported, but because the transaction chain and document set were not aligned in advance.

Yes. Both Russia and India are parties to the 1958 New York Convention, so arbitral awards may in principle be recognized and enforced in the other jurisdiction. For investors, this usually makes arbitration more enforcement-friendly than ordinary court litigation in purely cross-border disputes.

In simplified terms, a permanent establishment is a sufficient taxable presence of a foreign company in Russia through which regular business activity is carried on. A mere representative or preparatory presence is not always enough; the analysis depends on the actual functions performed in Russia.

If a permanent establishment exists, the foreign company is generally taxed in Russia on the profits attributable to that Russian activity and must comply with the corresponding filing and reporting obligations.

As a general rule no since India is a friendly state. A substantial part of the special approval regime introduced in recent years targets dealings with persons connected to jurisdictions classified by Russia as “unfriendly states”. As a result, Indian investors are often outside the core scope of those restrictions.

That said, each transaction should still be checked individually, because the legal analysis may change if there are additional parties, financing elements, security arrangements or corporate links to other jurisdictions.

Yes. A foreign company may establish a branch office or a representative office in Russia. However, these structures are not separate legal entities, and the foreign parent remains responsible for their activities.

As a rule of thumb, a representative office is used mainly for liaison, market development, and similar support functions, while a branch may carry out broader business activity. For full-scale operating business in Russia, investors usually prefer a Russian subsidiary, most often an LLC.

No free trade agreement between India and the EAEU is currently in force. However, negotiations are ongoing.

For practical purposes, investors should plan customs costs and import structuring based on the rules currently in force, rather than on a future preferential regime that has not yet entered into effect.

For Russia-related disputes, the institutions most commonly considered are the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation (ICAC / MKAS) and the Russian Arbitration Center (RAC). Depending on the transaction structure and chosen seat, parties may also consider non-Russian institutions. The right choice depends on the contract, the place of enforcement, sanctions-related risks, language, cost and the expected profile of the dispute.

Where a foreign company receives certain types of Russian-source income, the Russian payer is often required to withhold tax and remit it to the budget. In practice, withholding tax issues frequently arise in relation to dividends, royalties, interest, and certain other cross-border payments.

The applicable rate depends on the type of income, the domestic tax rules, the availability of treaty relief, and the ability of the foreign recipient to provide the required supporting documents.

The practical route depends on the banks involved, the currency, the goods or services, and the compliance profile of the parties.

For that reason, payment mechanics should be discussed with the servicing banks at the structuring stage rather than after the contract is signed.

As a matter of practice, it is advisable to build in extra time for compliance checks, payment-chain confirmation and operational testing of the chosen route before the first commercial shipment or service payment.

The Federal Tax Service (FTS) is the authority responsible for state registration of Russian legal entities.

Where the founder signs from India, the practical route is usually to prepare the incorporation package in advance and arrange for signature certification through an accepted notarization route, including Russian consular notarization where available. The exact mechanics should always be checked in advance for the specific founder and document set.

Yes. The India–Russia double tax treaty remains relevant and may reduce or eliminate Russian withholding tax in certain cases, subject to the treaty wording and the facts of the structure.

In practice, treaty relief should not be assumed automatically. It normally requires, among other things, proper residence confirmation, a defensible beneficial ownership position where relevant, and clean transaction documentation.

Yes. A foreign investor may enter the market either by acquiring an existing company or by subscribing for an increase of charter capital in an existing company.

In an LLC, a share transfer is generally subject to mandatory notarization, and certain corporate actions involving charter capital also require notarized corporate documentation. In addition, transactions involving parties connected with jurisdictions subject to the Russian “unfriendly states” regime may require additional approvals and should be checked case by case before signing.

In practice, VAT is an indirect tax borne by the final customer, while businesses generally act as collectors and remitters. A Russian seller usually charges VAT on top of the price (this has to be carefully specified in the contract), receives that amount from the customer, and remits it to the budget. The seller does not economically bear the VAT on its own taxable sales, except to the extent input VAT is not recoverable.

For a business purchaser, the key question is whether the VAT paid to suppliers can be taken as an input VAT deduction. As a rule, a deduction is available where the purchased goods, works or services are used in VATable business activity. If they are used for exempt activity, non-business purposes, or the paperwork is defective, the VAT may remain a real cost. Import VAT can also generally be deducted, but only if the statutory conditions are met.

From a practical perspective, VAT recovery depends heavily on documentation. The usual package is: a properly issued VAT invoice from the supplier, the relevant primary documents, and proper recognition of the purchase in the accounts. For imports, supporting customs documents are also critical. In other words, even if the commercial deal is real, poor paperwork can block the deduction.

So the practical rule is simple: in a normal B2B chain, the seller charges VAT, the buyer initially pays it, and the buyer later recovers it through deduction if the purchase is correctly documented and used in VATable operations. That is why VAT clauses, invoicing workflow, and document discipline matter almost as much as the tax analysis itself.

In some cases, yes. Individuals may carry on business as an individual entrepreneur (IP), but this option is generally relevant only where the person has the required immigration status in Russia.

For foreign investors entering the Russian market from abroad, the main practical routes are usually a Russian subsidiary, a branch office, or an acquisition of an existing business.

Yes. Russia has a simplified taxation system, commonly referred to as the STS. At a high level, it offers two basic models: 6% on revenue or 15% on revenue minus deductible expenses, subject to statutory eligibility criteria.

However, STS should not be treated as a universal low-tax solution. The interaction between STS and VAT has changed materially, and the VAT position now needs to be checked separately by reference to revenue thresholds and the chosen VAT model. For that reason, STS should always be assessed against the expected turnover, margin profile, and counterparty mix.

Yes. Russian transfer pricing rules can apply to related-party transactions and to certain other transactions treated as controlled for tax purposes. This is relevant not only for classic intercompany sales, but also for financing, service arrangements, licensing, and other intra-group flows.

For cross-border structures, pricing should be reviewed before implementation, not after the fact. Where the statutory criteria are met, notification and supporting documentation may be required.