How to make your capital work for you

Konstantin Borisov, managing director, MORGAN HUNT EXECUTIVE RECRUITMENT

Can you explain the Russian pay system? How do medical insurance and pension insurance work?
The pay system in Russia consists of a salary, base and an annual bonus dependent on individual and company performance. Russia has a developed a private medical insurance system. The pension system, however, is state-run: the government controls investment and its spending. Pensions are invested in low-risk securities, such as state bonds. Russia is an attractive country to work in partly because it has the lowest income tax rate in Europe -13 percent.

Can expats bring their family with them?
Of course, and many do. Living conditions don't differ much from those in Europe. There are private English language schools for expat children, and job opportunities for spouses. There are many web sites (, for example) designed to help expat families to integrate.
Some expats prefer not to bring their families with them, and travel home as often as possible.
Some companies, especially multinationals, cover expats' travel costs on trips home several times per year.


In what ways can business involving foreign capital be organized in Russia?

I would identify three ways: purchasing an existing business, setting up an organization with foreign participation, and opening representative offices and branches of a foreign company. All these are types of direct investment in the Russian economy and are therefore regulated by the law on foreign investment in the Russian Federation. However, banks, credit and nonprofit organizations, insurance companies and certain other industries and sectors are regulated by separate laws.

Setting up a company with foreign capital is a basic way of securing investment from outside the country. The law currently requires only one additional document, which must be submitted by the legal entity (the founder) to the registration authorities: an extract from the register of foreign legal entities of the relevant country. Apart from that, the procedure is the same as for setting up a Russian company.

There are several ways of purchasing an existing business in Russia: acquiring shares, acquiring a company's underlying assets, acquiring an enterprise as a property holding, or restructuring a legal entity by way of a merger or takeover.

The system for creating branches of foreign legal entities is regulated by the law on foreign investment in the Russian Federation, which states that branches of foreign companies are subject to accreditation as stipulated by the Russian government. A representative office may only represent and protect the interests of the parent organization in Russia, and may not undertake any functions performed by the parent organization. Representative offices of foreign legal entities may be opened in Russia only with special permission from the accrediting body.

We welcome your questions: or here, in the comments

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