Foreigners who want to set up a foundation in Russia are invited to discuss all the formalities with one of our company formation representatives. With vast experience in this field, our local agents can properly manage the procedures and guide entrepreneurs throughout this process. In the following lines, you can discover some of the aspects linked to non-governmental organizations that can be established in Russia, with the mention that company incorporation in Russia enters our attention.
How to set up a foundation in Russia
The foundations are organizations that, because of their non-profit orientation, are subject to some special taxation regulations. The foundations which function in the area of education, health care, culture, and other social services are exempt for the payment of VAT.
Regardless of the cause of your foundation, you will have to be aware of the legal aspects implied by its functioning. The law that regulates the set-up and operational activities of a foundation is the Federal Law on Non-Commercial Organizations (NCO Law). If you decide to register it as a charitable organization, it will be subject to the Charities Law. However, the foundation is more flexible in terms of inner organization, activities, and expenditures than a charity. In any case, we recommend you employ the services of an expert in company formation in Russia to prevent potential complications and misunderstandings in legal matters.
To have a long-lasting and renowned foundation, you will need to invest a great deal of time and energy in configuring the projects and in finding the best people to help you accomplish them. You might need as well to organize founding events and to be able to secure the resources for the well-functioning of your foundation.
A few aspects of the legislation involving foundations in Russia
According to Russian legislation, namely the Civil Code, foundations are considered non-governmental or non-commercial organizations (NCOs). In the present case, the foundation is in the category of Non-Commercial Unitary Organization, where the founders do not have the right to membership.
The Charities Law includes a subcategory of NCOs called charity organizations. It can be said that this subcategory has a distinct status for public associations, institutions, and foundations, which implies certain limits regarding the activities they can carry out. Also, there are specific tax benefits when it comes to NCOs especially foundations in Russia.
To better understand what applicable legislation on foundations in Russia is all about, we recommend that you contact our specialists. We are at your disposal with support regarding the registration formalities of this structure.
The taxation system in the case of foundations in Russia
NCOs in Russia are subject to an income tax rate of 20% but in certain cases. On the other hand, according to the Russian Tax Code, specific types of income are not included in the tax base of NCOs to define the profit tax. Thus, such income is outlined as receipts for particular purposes. But in order for foundations to benefit from this advantage from a tax point of view, an NCO is obliged to keep distinct accounting for its taxable and non-taxable income and expenses. Here are other interesting aspects:
- In order to benefit from the nontaxable status, income must meet the definition of “donation” as mentioned in Article 572 of the Russian Civil Code.
- Donations offered to foundations in Russia must be recognized as gratuitous (at no charge) basis and intended for the maintenance and development of various activities of an NCO in Russia.
- Also to benefit from tax-free status, donations are registered in separate accounting.
- It is important to specify that donations such as in-kind contributions or the free use of a property are not considered donations. Even so, no taxes are imposed in this regard.
Why setting up a foundation in Russia is a good idea?
The largest country in the world, Russia is a rich biodiversity and home to some rare or endangered species. This represents just one potential subject area for your foundation, along with the artistic originality of the people or the diversity of local traditional customs.
The establishment of a foundation in Russia says a lot about your accomplishments in your professional life as well as your implication and care for society. The foundation gives you the possibility to contribute to the well-being and development of a part of the world for which you have a special passion or interest. Our experts in company formation in Russia can be your advisors on all the legal matters implied by the opening of your foundation.
Now that you have an idea about the taxation of non-profit organizations in Russia, you can proceed to its establishment, with the help of our local agents. They can help you open a company in Russia.
Investing in Russia, a solid business destination
Foreign entrepreneurs continue to trust the potential offered by Russia in terms of investments and portfolio expansion in this territory. Strong investment and fiscal stimulus support Russia’s economy to a good extent, alongside adaptable consumption. Here are some data and figures about Russia’s economy:
- The labor market in Russia is expected to grow by approximately 2.2% in 2023.
- A GDP growth of approximately 2.8% is estimated until the end of 2023.
- According to recent forecasts, the economy in Russia is expected to grow by around 1.1% in 2024.
- Also for 2024, an economic growth of approximately 2.3% is estimated.
Working with our local agents in Russia
Would you like to set up a company in Russia? One of our local company formation representatives can handle the procedures and deal with the paperwork involved. Our foreign clients can be represented by our team in company formation in Russia as we have experience in a wide range of business matters in this country.
Don’t hesitate to contact us for support and any other legal services you need when you want to set up a foundation in Russia.