How to make Russian business international so that there is nothing for it

    As we wrote earlier , we had reasons to withdraw part of our business and part of our customers' business outside of Russia. This was connected with several factors at once:

    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, issuing transaction passports and other delights 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, and get nice bonuses in the form of asset protection and reducing the tax burden on the business.

    We always started with building a legal model of doing business (we determined the types and types of legal relations and contractual relationships), after which we moved on to choosing jurisdictions for doing business.

    What was important when choosing a jurisdiction?

    • Convenience of work with companies-customers from a certain region (EU, USA, China);
    • Compliance of legislative norms with our expectations on the developed legal model;
    • Transparency and understandability of corporate procedures and the current system of law;
    • The ability to own and manage a business by foreign citizens (Russians), as well as the ease 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 ability to open bank accounts for companies, or the ability to use foreign accounts;
    • Transparency and understandability of corporate procedures and the current system of law;
    • The possibility of concluding contracts with payment service providers to receive payments from customers and pay remuneration to performers (when it was necessary according to the model).

    When the legal model was approved, model agreements were developed and the jurisdiction for doing business was selected, and they moved to its implementation.

    We initially understood that we did not need to hang upon ourselves and our customers the additional risks of using “ghost companies,” that is, companies that exist only on paper, without their own personnel, office, business processes. Such companies can be recognized as controlled and managed from the territory of the Russian Federation in accordance with the law on controlled companies, and such a status increases the tax burden by 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 controlled from Russia, it was necessary to build business processes each time so that management decisions were made in the country where the company was registered, so that the company had its own staff responsible for business processes. And this staff is not “monkeys” who don’t know anything about business, and not nominal directors, but real people with real areas of responsibility.

    We registered a local company, opened accounts for it at a local or foreign bank, and rented an office in a city with developed infrastructure. Then they hired local staff and moved some people from Russia - for debugging business processes, management and control. At the same time, we were involved in setting up IT: Internet, telephony, organizing a 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, which made it possible to accept payments, including with Russian cards in rubles, in favor of a foreign merchant. Among the tested payment intermediaries, I want to highlight Russian companies: Yandex.Money, Qiwi, Robox - integration with them is both technically and legally possible for merchants from various countries.

    In addition, we developed and reflected management decisions in corporate documents. Often a situation arose when representatives of the management of the Russian part of the business were to participate in decision-making on a non-resident company. In this case, a non-resident company created a special advisory or management body to which representatives of 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 eliminate the risk of recognizing the company as controlled.

    As a result, all these procedures required considerable time (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:

    1. Fully legalize payments to physicists, with minimal tax losses and risks;
    2. Reduce the tax burden on the business, in some cases bringing the effective profit tax rate to 5% using exclusively legitimate procedures;
    3. Significantly simplify work with non-resident customers and further investment processes;
    4. Allow to implement all shareholder agreements and option programs.

    We did this first for our customers, and then for our own SOLAR STAFF service , which just allows us to attract individuals as freelance artists without going through all this “long” way.

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