Simplified Tax Regime in Russia: Individual Enterpreneur (IP) or Sole Trader

Author: waytorussia (on 11 Mar 2020)
If you are working in Russia as a freelancer, a contractor or on the permanent basis you might want to consider registering a Limited company in Russia. It is called OOO — society with a limited liability — общество с ограниченной ответственностью in Russian or  an "individual entrepreneur" — a sole trader (индивидуальный предприниматель - ИП or IP in Russian).
Don't write it off as a crazy idea: the internet and the banking infrastructure is very well developed in Russia. You can be very flexible in terms of controlling your accounts, submitting your tax reports, and doing accounting online. Plus, this tax system is very attractive if you are earning less than €2 Mln a year.
As you register the company or the entrepreneur status you should directly apply for the simplified tax system (упрощенная система налогообложения - УСН or USN in Russian - chapter 26.2 of the Russian tax code) and then you can choose to pay 6% on your revenue or 15% on your profits (articles 346.20 of the Russian tax code), which makes it a very attractive form of running a business even if you are based abroad.
To set up a company you would have to pay about €100 for a Limited liability one and less than €20 for the entrepreneur status. The problem with entrepreneur status (IP) is that you need a temporary residence permit (RVP) in Russia to open it, so if you don't want to bother getting it opening a limited liability company is a better option.
Moe Delo offers Russian company registration packages for €100 (basic) and for €150 (extended) — with a consultation on the best company form to choose. We recommend the latter, because as an English-speaking customer you might benefit from that extra level of customer support.
Once you register, you would have to submit your tax report every 3 months for IP and every month for OOO. This could all be done online and if you avoid cash operations, it's quite easy to do if you are in the simplified tax regime section. As an IP you are allowed not to employ any staff and this reduces your paperwork obligations dramatically. As an OOO you have to get at least one director, so that means more paperwork.


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DISCLAIMER: The information in this article does not constitute legal advice and we take no liability, financial or otherwise, that may arise from using or not using the information provided in this article. We are not lawyers and do not provide legal services ourselves. To get a professional legal advice, please, contact the lawyers we recommend in this article as they can give you an official response for any tax-related question you might have, which you can then use in court or when dealing with authorities.


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