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.
| Quick Facts | |
|---|---|
| Legal framework | Governed by the Civil Code of the Russian Federation and Federal Law on Non-Profit Organizations |
|
Purposes to open a foundation |
Raise funds for: social, charitable, educational, scientific, cultural events |
|
Types of foundations |
– charitable, – cultural, – educational, – scientific, – non-commercial foundations |
| Minimum capital (Yes/No) | No minimum capital is required. |
| Founders |
Legal entities or individuals |
| Governing body |
Board of trustees or a supervisory board |
| Registration of a foundation (Yes/No) |
Yes, it requires registration with the Ministry of Justice or local authorities. |
| Required documents |
Charter, founding documents, application forms and information of founders |
| Tax status |
Non-taxable on donations if registered as a non-commercial organization |
| Accounting requirements | Must maintain financial records, submit annual reports, and undergo audits. |
| Funding sources |
Donations, grants, fundraising, government support, and from other non-commercial activities |
| Operating obligations |
Must operate according to its charter and report activities to authorities. |
| Duration |
Foundations operate indefinitely unless otherwise stated in their charter. |
| Dissolution procedure |
Must follow legal procedures involving liquidation, asset distribution, and notifying authorities. |
| Legal assistance | Find support from our law firm in Russia for registration, compliance, and operational issues. |
Table of Contents
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 that 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 our expert in opening a company 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 special events and to be able to secure the resources for the well-functioning of your foundation in Russia.
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.
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) 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 a 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.
Sectors in which your foundation can activate in Russia
Many charities in Russia operate in important sectors where a lot of financial support is needed. Opening a foundation/charity in Russia is relatively easy, but it is good to inform yourself beforehand, to know the legislation, and then to start the incorporation process. Below are some sectors of interest where you can start your foundation in Russia:
- Education is one of the most active and interesting areas in Russia, where you can develop your charitable activities. Many of the regions of Russia need financial support. Through your charity, you can build schools or rehabilitate existing ones. You can also invest in school materials and the education of the underprivileged population.
- Another interesting option is the formation of a foundation for public benefits like housing people without accommodation, supplying food, clothes, education, etc. Such charities can be developed in poor regions of Russia, where financial assistance is more than welcome.
- Foundations in Russia can be successful in the scientific field. Financial support can be directed towards research projects in medicine, education, innovation, and research, among others. In this case, talented young people who do not have opportunities at hand in this sector can also be financially supported.
- Environmental protection can be another area of interest for those who want to set up a foundation in Russia. Financial support can be directed towards the conservation of natural parks, sustaining biological diversity, animal welfare, and sustainable development in Russia’s regions.
Public benefit explained
Charities in Russia that raise money for public benefit are the most popular. Public benefit means that a charity directs its attention to society or disadvantaged communities with charitable actions, financial support, and benefits. In this sense, foundations must have a clear purpose, acting in the best interest of the community by fundraising money, implementing charitable work, and satisfying both public and benefit aspects. The holder of a foundation in Russia is solely responsible for the purposes of the entity in question and must carry out varied activities and make proper decisions to benefit the public, region, or community.
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.
On the other hand, foreign entrepreneurs who want to set up a company in Russia are advised to use the complete services offered by our accountants in Russia. 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.