Foreign Companies in Russia: Key Facts for Investors

Who counts as a foreign company in Russia now

Russian law distinguishes the foreign entity itself from a Russian legal entity it owns. A subsidiary registered in Russia is a Russian company for regulatory, tax and banking purposes, even with 100% foreign ownership; the foreign parent sits above it. That distinction drives almost every practical question, from land ownership to public procurement.

The investor base has rotated. According to UNCTAD data cited by Izvestia in 2025, 75% of foreign direct investment now comes from countries Russia classifies as friendly, compared with 25% previously. In practice this means more capital from China, the Gulf, Turkey, India, South-East Asia and the CIS, and fewer European and North American corporate groups.

Three routes dominate: a newly registered subsidiary, an acquisition of an existing Russian business (often a former Western asset sold to local management or a third-party buyer), and a contractual presence through distribution, licensing or localised manufacturing without a separate legal entity.

• Subsidiary: full commercial activity, limited liability, foreign parent controls the charter capital
• Branch: commercial activity permitted, but accreditation and tax registration required, and the parent carries liability
• Representative office: market research and liaison only, no commercial revenue
• Acquisition: faster than greenfield, but carries legacy liabilities, staff and compliance history

Four ways to hold a presence, and what each allows

The choice is not cosmetic. A representative office cannot book revenue; a branch exposes the foreign parent; a subsidiary ring-fences risk but adds administration and reporting. Accreditation through the state registration and accreditation framework is the gate: without it, the foreign entity cannot open accounts or hire locally.

Where a joint venture is used, the shareholders' agreement matters more than the charter. Deadlock clauses, dividend policy, exit mechanics, and who controls the bank account and the customs broker are the points that actually break deals. Treat the JV agreement as a risk document, not a formality.

• Sequence: reserve the name, prepare charter and parent documents with apostille and certified translation, register with the tax authority, obtain accreditation where required, open accounts, register with the social funds
• Timeline depends on document legalisation and bank onboarding, not on the registration office itself
• Budget for accounting, HR and customs support from month one; Russian reporting obligations are front-loaded

Ownership limits that decide the structure before you start

Several restrictions are hard limits, not negotiable at the local level, and they should shape the structure before any money moves.

Foreigners cannot own agricultural land in Russia; the permitted route is a lease of up to 49 years. Border territories are closed to foreign land ownership, and this explicitly includes Sochi, Anapa, Gelendzhik and Novorossiysk, so hospitality and resort projects there require a Russian-owned asset-holding structure or a lease.

Investment in strategic sectors requires prior government approval under Law 57-FZ. The list covers defence-adjacent industry, certain subsoil assets, telecoms and media among others, and approval is a condition of the transaction, not a post-closing item.

Investors from countries Russia designates as unfriendly face a separate layer: special account regimes for certain payments, government approval requirements for disposals, and dividend and exit mechanics that differ from those of friendly-country investors. These rules change; a Russian corporate lawyer and an independent compliance adviser should confirm the current position for your specific jurisdiction before structuring.

• Agricultural land: no foreign ownership, lease up to 49 years
• Border areas including Sochi, Anapa, Gelendzhik, Novorossiysk: closed to foreign land ownership
• Strategic sectors: prior approval under Law 57-FZ
• Unfriendly-country investors: special account regimes and government approvals apply

Payments, banks and compliance

Settlement is the operational constraint that foreign entrants underestimate. Bank of Russia data for 2025 show 86% of exports settled in rubles and friendly-country currencies, which tells you how the trade plumbing has rebuilt itself away from dollar and euro correspondent chains. Domestic retail infrastructure is also largely digital: 88% of retail payments were cashless in 2025 (Bank of Russia), so consumer-facing businesses must integrate local acquiring from day one.

Bank onboarding is the longest single step for most new entrants. Expect detailed KYC on the ultimate beneficial owners, source-of-funds documentation, and questions about the goods or services flow. Accounts can be opened, but relationships are decided case by case, and a second bank is prudent rather than optional.

Sanctions screening is a normal part of onboarding, not an obstacle to be routed around. Great Russia's position is that every investor should take independent legal and compliance advice in their own jurisdiction and in Russia, and should not rely on any article, including this one, for a compliance conclusion.

• Settlement currencies: ruble and friendly-country currencies dominate export flows
• Documentation: UBO chain, source of funds, contract and logistics papers, tax residency evidence
• Operational: two banking relationships, local acquiring, treasury policy for currency conversion
• Compliance: independent advice is mandatory in practice, and internal screening should cover counterparties, banks and logistics providers

Tax and the incentive menu

The baseline is straightforward. Corporate profit tax is 25%, with 0-5% available in special regimes (Federal Tax Service, 2025). The standard VAT rate is 22% and has applied since 1 January 2026 (Federal Tax Service, 2026). Rates and thresholds change, so the numbers should be confirmed with a tax adviser at structuring stage rather than assumed from any published summary.

Beyond the baseline sits a set of instruments designed for investors who commit capital for a fixed period. Special investment contracts (SPICs) offer a stabilised regime in exchange for investment and localisation commitments: 90 such contracts had been signed, covering more than ₽2 trillion of investment (Government of Russia, 2025).

Special administrative regions host 674 companies (Ministry of Economic Development, 2025) and are used mainly for holding and redomiciliation structures. In the Far East, the Free Port of Vladivostok had 2,130 projects (KRDV, 2026), and the Arctic Zone counted 1,000 residents with ₽1.1 trillion declared (KRDV, December 2025). Each instrument has its own eligibility test, minimum investment and reporting duties.

• Baseline: 25% profit tax; 0-5% in special regimes (2025)
• VAT: 22% standard rate since 1 January 2026
• SPIC: 90 contracts, ₽2 trillion plus of investment (2025)
• Special administrative regions: 674 companies (2025)
• Far East and Arctic: Free Port of Vladivostok at 2,130 projects (2026); Arctic Zone at 1,000 residents, ₽1.1 trillion declared (December 2025)

Where foreign capital actually sits, and what premises cost

Extractives and metals remain the deepest pool: Russia is the world's largest palladium producer at 44% of global supply (USGS, 2025). Chemicals and fertilisers, agro-industry (subject to the land rule above), food processing, logistics, pharmaceutical production and machinery assembly all host foreign-owned or foreign-linked companies. Consumer and retail is now dominated by Russian brands that replaced departing chains, which makes local brand acquisition a realistic entry route.

Office economics favour the tenant in the capital. Moscow office vacancy stood at 7.6% in Q2 2026 (IBC Real Estate), which gives a new entrant negotiating room on rent, fit-out contributions and lease length. Regional markets vary widely and should be priced locally.

For investors who prefer a portfolio route to direct operations, the public market is small relative to the economy: stock market capitalisation is 19.5% of GDP against a target of 66% by 2030 (Bank of Russia, August 2026), and 106 licensed investment platforms were operating as of May 2026. Ruble financing is expensive, with the key rate at 14% (Bank of Russia, September 2026), so projects that need leverage should model the interest line carefully.

• Sector depth: metals and mining, chemicals, agro-processing, logistics, pharma, machinery
• Premises: 7.6% Moscow office vacancy (Q2 2026) supports tenant-side negotiation
• Portfolio route: market capitalisation 19.5% of GDP, 66% target by 2030 (August 2026); 106 licensed investment platforms (May 2026)
• Financing: key rate 14% (September 2026) sets a high bar for debt-funded projects

The practical order of steps, and what usually goes wrong

A workable sequence for a new entrant looks like this: define the commercial model and whether revenue must be booked locally; confirm sector restrictions and whether Law 57-FZ approval is needed; choose the legal form; legalise and translate parent documents; register and accredit; open bank accounts; register with tax and social funds; put accounting, customs and HR in place; then start operations. Legal review of the compliance position in the investor's home jurisdiction should run in parallel from day one.

Most delays come from three places: document legalisation and translation quality, bank onboarding, and underestimating local reporting. Most value destruction comes from two others: a JV agreement without an exit mechanism, and a structure designed before the land or sector restriction was checked.

Costs should be modelled in rubles with a currency buffer, and the exit route - sale to a strategic buyer, buy-back by a local partner, or holding structure - should be sketched at entry rather than at the point of departure.

This article is general information about how the market works. It is not investment, tax or legal advice, and it does not take account of any individual investor's circumstances.

• Step order: model - restrictions - legal form - documents - registration - accounts - tax and funds - operations
• Parallel track: independent home-jurisdiction and Russian compliance advice
• Buffer: currency, timeline and a second banking relationship

FAQ