How to make Russian business international so that nothing will happen
As we wrote earlier , we had reasons to withdraw part of our business and part of our clients' business outside Russia. It was connected at once with several factors:
I wanted to avoid the nightmare of working with individuals - performers (freelancers, webmasters, freelancers). It was necessary to simplify the procedures for concluding contracts with foreign customers - companies. At the same time eliminate the risks associated with currency control, registration of transaction passports and other charms of foreign economic activity in the Russian Federation.
It would be convenient for shareholders to apply British law in shareholder agreements and other corporate procedures. Well, get nice bonuses in the form of protecting assets and reducing the tax burden on the business.
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We always started with building a legal business model (we determined the types and types of legal relations and contractual relations), and then we moved on to the choice of jurisdictions for doing business.
What was important when choosing a jurisdiction?
When the legal model was approved, model agreements were developed and the jurisdiction for doing business was chosen, they were transferred to its implementation.
We initially understood that we do not need to hang on ourselves and our clients additional risks of using “ghost companies”, that is, companies that exist only on paper, without their own staff, office, business processes. Such companies can be recognized as controlled and controlled from the territory of the Russian Federation in accordance with the law on controlled companies, and this status increases the tax burden several times, complicates reporting, and also entails additional risks for the Russian part of the business.
So, in order to avoid recognizing the company as being controlled from Russia, it was necessary each time to build business processes in such a way that management decisions were taken in the territory of the country where the company is registered, so that the company has its own staff responsible for business processes. And this state is not “monkey”, not knowing anything about the business, and not the director-denominations, but real people with real areas of responsibility.
We registered a local company, opened accounts with it in a local or foreign bank, rented an office in a city with a developed infrastructure. Then they hired local staff and moved some people from Russia to debug business processes, manage and control. At the same time, they were engaged in setting up IT: Internet, telephony, organizing virtual storage of documentation and data, as well as setting up a CRM system.
At the same time, they concluded contracts with payment systems or payment agents that allow them to accept payments, including on Russian cards, in rubles in favor of a foreign merchant. Among the tested payment intermediaries, I would like to highlight Russian companies: Yandex.Money, Qiwi, Roboks - integration with them and technically and legally possible for merchants from various countries.
In addition, we have developed and reflected in corporate documents decision-making processes. Often, a situation arose when representatives of the management of the Russian part of the business were to take part in making decisions on a non-resident company. In this case, a special advisory or management body was created in the non-resident company to which representatives of the Russian management were invited. However, such a body held meetings exclusively on the territory of a non-resident company and never acted on the territory of the Russian Federation, again to exclude the risk of recognizing the company as controlled.
As a result, all these procedures required significant time expenditures (from one to two years) and funds for the creation and maintenance of such activities (from 50 to 500 thousand dollars a year).
But at the same time the implementation of this solution allowed:
We did it first for our clients, and then for our own SOLAR STAFF service, which just allows us to attract individuals as freelancers without going through all this “long” way.
I wanted to avoid the nightmare of working with individuals - performers (freelancers, webmasters, freelancers). It was necessary to simplify the procedures for concluding contracts with foreign customers - companies. At the same time eliminate the risks associated with currency control, registration of transaction passports and other charms of foreign economic activity in the Russian Federation.
It would be convenient for shareholders to apply British law in shareholder agreements and other corporate procedures. Well, get nice bonuses in the form of protecting assets and reducing the tax burden on the business.
')
We always started with building a legal business model (we determined the types and types of legal relations and contractual relations), and then we moved on to the choice of jurisdictions for doing business.
What was important when choosing a jurisdiction?
- Convenience of working with customer companies from a specific region (EU, USA, China);
- Compliance of legislation with our expectations for the developed legal model;
- Transparency and clarity of corporate procedures and the current legal system;
- The possibility of owning and managing a business by foreign citizens (Russians), as well as the simplicity of formalizing labor relations with foreigners in a given country (including migration procedures);
- Acceptability of the tax burden and transparency of the tax system;
- The level of costs for opening and maintaining a business;
- Availability of competent personnel in the local market (including experience, education, language skills);
- The possibility of opening bank accounts for companies, or the possibility of using foreign accounts;
- Transparency and clarity of corporate procedures and the current legal system;
- The possibility of entering into contracts with payment service providers to receive payments from customers and pay remuneration to performers (when it was necessary for the model).
When the legal model was approved, model agreements were developed and the jurisdiction for doing business was chosen, they were transferred to its implementation.
We initially understood that we do not need to hang on ourselves and our clients additional risks of using “ghost companies”, that is, companies that exist only on paper, without their own staff, office, business processes. Such companies can be recognized as controlled and controlled from the territory of the Russian Federation in accordance with the law on controlled companies, and this status increases the tax burden several times, complicates reporting, and also entails additional risks for the Russian part of the business.
So, in order to avoid recognizing the company as being controlled from Russia, it was necessary each time to build business processes in such a way that management decisions were taken in the territory of the country where the company is registered, so that the company has its own staff responsible for business processes. And this state is not “monkey”, not knowing anything about the business, and not the director-denominations, but real people with real areas of responsibility.
We registered a local company, opened accounts with it in a local or foreign bank, rented an office in a city with a developed infrastructure. Then they hired local staff and moved some people from Russia to debug business processes, manage and control. At the same time, they were engaged in setting up IT: Internet, telephony, organizing virtual storage of documentation and data, as well as setting up a CRM system.
At the same time, they concluded contracts with payment systems or payment agents that allow them to accept payments, including on Russian cards, in rubles in favor of a foreign merchant. Among the tested payment intermediaries, I would like to highlight Russian companies: Yandex.Money, Qiwi, Roboks - integration with them and technically and legally possible for merchants from various countries.
In addition, we have developed and reflected in corporate documents decision-making processes. Often, a situation arose when representatives of the management of the Russian part of the business were to take part in making decisions on a non-resident company. In this case, a special advisory or management body was created in the non-resident company to which representatives of the Russian management were invited. However, such a body held meetings exclusively on the territory of a non-resident company and never acted on the territory of the Russian Federation, again to exclude the risk of recognizing the company as controlled.
As a result, all these procedures required significant time expenditures (from one to two years) and funds for the creation and maintenance of such activities (from 50 to 500 thousand dollars a year).
But at the same time the implementation of this solution allowed:
- Fully legalize payments to physicists, with minimal tax losses and risks;
- Reduce the tax burden on the business, in some cases bringing the effective tax rate on profits to 5% using exclusively legitimate procedures;
- To significantly simplify work with non-resident customers and further investment processes;
- Allow to implement all shareholder agreements and option programs.
We did it first for our clients, and then for our own SOLAR STAFF service, which just allows us to attract individuals as freelancers without going through all this “long” way.
Source: https://habr.com/ru/post/293288/
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