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Russia, often known as the Russian Federation, is a nation that spans Eastern Europe and Northern Asia. It is the world's biggest nation by area, comprising over 17,125,191 square kilometers (6,612,073 square miles) and containing one-eighth of the Earth's habitable continent. Russia spans eleven time zones and borders sixteen sovereign states, more than any other country on the planet. With a population of 145.5 million, it is the ninth-most populated nation in the world and the most populous country in Europe. Moscow, the biggest metropolis wholly inside Europe, is the country's capital and largest city. Saint Petersburg is Russia's cultural capital and the country's second-largest metropolis. Novosibirsk, Yekaterinburg, Nizhny Novgorod, and Kazan are other prominent cities.
Between the third and eighth centuries AD, the East Slavs formed as a distinct ethnic group in Europe. In the ninth century, the medieval state of Kievan Rus' formed. It embraced Orthodox Christianity from the Byzantine Empire in 988. Rus' eventually collapsed, and the Grand Duchy of Moscow developed and expanded to become the Tsardom of Russia. Russia had significantly expanded by the early 18th century via conquest, annexation, and exploration to become the Russian Empire, the third-largest empire in history. Following the 1917 Russian Revolution, the monarchy was abolished, and the Russian SFSR became the world's first legally socialist state. Following a civil war, the Russian SFSR, together with three other republics, formed the Soviet Union, of which it was the biggest and most important element. The nation went through a period of tremendous industrialization, which cost millions of lives. During the Cold War, the Soviet Union emerged as a superpower and challenger to the United States after playing a critical part in the Allied victory in World War II. Some of the most important technological breakthroughs of the twentieth century occurred during the Soviet period, including the creation of the world's first man-made satellite and the launch of the first person into space.
After the Soviet Union disintegrated in 1991, the newly independent Russian SFSR called itself the Russian Federation. Following the constitutional crisis of 1993, a new constitution was established, and Russia has been ruled as a federal semi-presidential republic ever since. Vladimir Putin has controlled Russia's political system since his victory in 2000, and Russia has seen democratic backsliding, transforming into an authoritarian state.
With a universal healthcare system and free university education, Russia is placed 52nd on the Human Development Index. Russia's economy is the world's tenth biggest in terms of nominal GDP and the sixth largest in terms of PPP. It is a nuclear-weapons state, with the world's biggest arsenal of nuclear weapons and the fourth-highest military spending. Russia has the world's greatest mineral and energy resources, and it is one of the world's major producers of oil and natural gas. It is a permanent member of the United Nations Security Council, a member of the G20, SCO, BRICS, APEC, OSCE, and WTO, as well as a prominent member of the CIS, CSTO, and EAEU, and was ejected from the Council of Europe in 2022. In addition, Russia has 30 UNESCO World Heritage Sites.
There are 28 calendar days in a year, and any days that are not used are carried over.
Employees may be eligible to extended paid leave if they work in hazardous or dangerous circumstances, have irregular working hours, work in the far north, or meet other legal requirements.
Russia recognizes seven public holidays.
The employer pays sick leave payment for the first three days of sickness, and the Social Insurance Fund from the fourth day forward.
Sick leave pay varies based on duration of service, but it is never more than 2,301 RUB each day.
Maternity leave is compensated for 140 calendar days, with extra paid childcare leave available until the child becomes 18 months old. The Social Security Fund pays for the allowance.
Paternity leave is enclosed in parental leave.
The child's caregiver, whether a relative or a guardian, is entitled to paid parental leave until the kid reaches the age of 18 months. The Social Security Fund pays for the allowance.
Only one parent is permitted to take childcare leave.
Employees pursuing higher education are eligible to 40 days of paid leave during their first two years of school and 50 days of paid leave in subsequent years. The employer is responsible for paying the allowance.
Employers may fire an indefinite-term employee only for a legally recognized reason. Numerous legally acceptable reasons are not employee-specific, such as redundancy due to business reorganization or staff reductions. Others are individual to the employee, such as the employee becoming incapable of performing the job, frequent failure to meet job requirements, or a single act of serious misconduct, such as illegal absence without a good reason, being intoxicated at work, or stealing from the company.
Terminating an employee for poor performance or serious misconduct entails a lengthy procedure that includes recording the employee's misdeeds, issuing warnings, and notifying the employee in advance. In fact, rather than going through this process, many employers arrange for the employment contract to be terminated by mutual consent, which can occur at any time and, subject to certain constraints, on any conditions agreed upon by the employer and employee.
Fixed-term contracts are typically terminated when the stipulated circumstances are met (e.g., the conclusion of a project, the end of the season for seasonal labor, the return of a permanent employee temporarily replaced by the fixed-term contract employee), or when the contract's term expires. The employer must notify the employee at least three days prior to the contract expiring that it will not be extended or renewed. If the employer fails to do so and the employee continues to work, the contract is transformed immediately to an indefinite contract.
An employee on probation may be terminated with three days' written notice that includes the basis for the termination. Employees who desire to resign must offer two weeks written notice. Severance pay is also available in some other conditions, such as conscription or inability to work. In these instances, severance pay is typically two weeks' salary, though various other considerations can change the amount.
A notice period is required only in limited circumstances.
In Russia, the maximum probation period is three months. Employers are still required to provide a reason for terminating an employee's employment if the contract is terminated during the probationary period.
The severance pay is only required in certain circumstances.
For most workers, the standard workweek is 40 hours over five days. For workers under the age of 16, the weekly limit is 24 hours. For workers between the ages of 16 and 18, the weekly limit is 35 hours, with certain categories of disabled employees. Workers who work in jobs that expose them to potential harm may not be able to work more than 36 hours in a seven-day period.
Overtime is permitted for a maximum of four hours spread over two consecutive days, as well as for a total of 120 hours annually. To work additional hours, employees must provide written consent. To reward employees for working the first two hours of overtime, which is normally done for free, companies pay them 150% of their normal salary. In addition, overtime pay for additional hours is given at 200% of the standard rate. Workers must agree to work on weekends, public holidays, or days they normally don't work if requested to do so. If the employee is being paid 200% of their usual rate, they are being paid 200% of their usual rate. If they are being paid the usual rate and receive an unpaid day off, they are being paid the usual rate and receive an unpaid day off.
Employees under the age of 18 and pregnant women may not work overtime. Employees who have children under three years old and who also have disabled children under the age of eighteen are allowed to work overtime only if they give permission.
A premium payment is also given to employees who are allowed to work between the hours of 10 p.m. and 6 a.m., based on the details worked out in consultation with the employee's representative, and which factors in relevant union contract provisions and any applicable collective agreement.
The government minimum wage is 12,792 RUB per month, although it may be higher in certain areas.
Russia provides universal health care. Some big companies provide their workers private health insurance. All people in Russia have the right to free medical care.
In Russia, a company may offer supplemental health insurance to workers as a supplementary benefit.
Russian legal entities are taxed on their global earnings (credit relief is available for foreign tax paid, up to the amount of the Russian tax liability that would have been due on the same amount under Russian rules).
The maximum CIT rate for all Russian Federation taxpayers has been established at 20%. The following allocation percentage is in effect from 2017 to 2024: 3 percent of CIT income are given to the federal budget, while 17 percent is transferred to the appropriate component areas' budgets. Regional legislation allows for a reduction in the rate of tax due to regional budgets (17 percent out of a total of 20 percent) for specific categories of taxpayers. The lower regional rates implemented prior to September 3, 2018, shall remain in effect until their expiration date, which must be no later than January 1, 2023.
Foreign legal entities (FLEs) pay 20% tax on revenue received from Russia via a permanent establishment (PE) and are also liable to withholding tax (WHT) on income acquired from Russian sources that is not linked to a PE (at rates varying from 10 percent to 20 percent , depending on the type of income and the method used to calculate it).
Russia will implement progressive taxes on January 1, 2021. In general, an annual income of up to RUB 5 million is taxed at a rate of 13%, while income beyond this level is taxed at a rate of 15%. There are, however, a few exceptions to this rule:
The sale and receiving of property other than securities as a gift, as well as taxable insurance and pension payments, are taxed at a flat rate of 13%.
Any excess value of awards and prizes obtained during competitions, games, and other activities held for the purpose of promoting products, work, and services is taxed at 35%.
Loans made with an interdependent entity (i.e. an entity over which the person has direct or indirect control), with an employer, or reflecting the offset of a counterclaim from an individual to the lender are classified as 'beneficial loans.' Beneficial loan interest rates are less than 9% (for non-Russian currency loans) and less than two-thirds of the Central Bank of Russia's refinancing rate (for ruble denominated loans). The difference between real interest paid and interest computed at the applicable rate is taxed at 35%.
Non-residents are subject to a flat PIT rate of 30% on all kinds of income derived from Russian sources, with the exception of the following:
Dividends paid by Russian businesses are taxed at a rate of 15%.
Income from highly skilled foreign professionals is taxed at a rate of 13% /15%.
Certain income of foreign citizens from non-visa nations is taxed at a rate of 13 percent /15 percent.
The income of refugees for job responsibilities is taxed at a rate of 13% /15%.
Interest income from Russian banks up to RUB 5 million is taxed at 13%, while income beyond this level is taxed at 15%.
The standard value-added tax in the Russian Federation is set at 20 percent. Books, and certain items of food and children goods receive a reduced rate of 10 percent. Housing services are tax-exempt.
To live and work in Russia, employees must have both a Russian work permit and a visa.
There are two types of visas available.
The visa is valid for 90 days for a single entrance. It will be issued by the Russian Consulate based on a work visa invitation, which workers will get after they acquire a work permit.
The local office of the Russian Migration Police reissues the multiple-entry visa depending on the length of the work permit's validity.
Employees must also be in possession of a Russian work permit. Anyone from a country other than the Commonwealth of Independent States (CIS) may apply for the regular work permit, which is valid for the duration of the employment contract. It is necessary to initially get a temporary residency permit. Skilled professionals earning more than 1 million RUB per year may apply for a work visa for highly skilled professionals, which is processed more quickly. This three-year authorization permits family members to get Russian visas.
Because the Russian Federation imposes extra limitations on persons traveling with HIV/AIDS, all workers are required to schedule a doctor's visit. All persons must be tested for HIV/AIDS, TB, and leprosy by a doctor.
In Russia, employment contracts might be indefinite or for a defined length of no more than five years. A fixed-term contract is only permitted in the conditions specified by law. An employment contract must be prepared in Russian, and both the employer and the employee must get a copy signed by both sides. An employment relationship may be formed without a written contract if the employee starts work with the employer's knowledge and implicit permission, although it is highly advised that the connection be formalized with a written contract before the employee begins work.
The term of a fixed-term contract must be specifically indicated in the contract, otherwise the deal will be automatically transformed to an indefinite contract. The contract may include a trial term of no more than three months (six months for some executive positions).
The applicant must present the employer with identity papers, their official labor book, which records the candidate's work history, and proof of the candidate's education and credentials for the position as part of the recruiting process. If it is required for the position, the applicant will also show their criminal record or an official certificate stating that they have no criminal record. Workers under the age of 18 must also undergo a medical examination to confirm they are physically able to work.
There is no set length for assignments. This is usually indicated in the employment contract for fixed-term employments.
Russian Rouble
Learning how to set up a Russian subsidiary is a difficult undertaking that is dependent on a number of different factors. To begin, your location inside Russia has an influence on the incorporation procedure. Certain cities or areas have their own versions of Russia's subsidiary legislation, and one city may make incorporation more onerous than another. Before establishing your Russia subsidiary, you may make the incorporation procedure simpler by finding a suitable site.
A subsidiary may be a limited liability company (LLC), a joint-stock corporation, or a branch office. The entity you choose will have an influence on how you operate in the nation. Setting up a Russia subsidiary as an LLC, for example, would provide you more flexibility, while a branch can only do specified activities.
The following are the stages to forming an LLC:
1. Drafting and notarizing memorandum and articles of association
2. Completing a registration application form through the Russian Trade Register
3. Providing information about your parent company, including statutory documents, a tax registration number, and more
4. Issuing a statement through your parent company showing that you have good financial standing
5. Opening an in-country bank account and depositing any required share capital
Different subsidiary structures have their own Russia subsidiary laws that must be followed as well. If you're found to be noncompliant, you might suffer financial fines or delays, so if you don't use a global PEO, we suggest consulting with a lawyer, consultant, or other professional.
LLCs are managed by shareholders, who have restricted responsibility depending on the amount invested. To establish a subsidiary in Russia, you just need one shareholder, but you'll need at least 10,000 rubles in initial capital. Furthermore, LLCs need a certain style of management, comprising a board of directors and an executive committee nominated by the shareholders' general meeting.
