1. Ulf Schneider Managing Partner RUSSIA CONSULTING Group Gothenburg, 4 th April 2013 Seminar: How to do business with Russia Starting a Company in Russia

2.  Why to start business in Russia  Representative Office / Brach / Subsidiary  How to register an OOO / LLC  Typical issues during Start-Up Content 2

3. Why to start business in Russia 3

4.  Status symbols are important: RepOffice/OOO  Show commitment to the market  No DDP deliveries without Russian entity  Tax reasons incl. low tax rates 20% CIP 13% PIT Why to register your company in Russia 4

5.  Inexpensive labor force  I can delegate everything  We have problems on our home market, Russia should save us No good reason to do business in Russia 5

6.  Is everybody and everything corrupt? NO !  Can you cope with the Russian bureaucracy? YES !  Russia is not a part time job FULL ENGAGEMENT !  You need a million in order to start business ? or You start a business in order to make a million ? Obstacles when starting in Russia 6

7. 7 Representative Office Branch Regarded as prestigious in Soviet times Today a sign for active market presence Export Subsidiary / OOO

8. Transformation 8 BranchRep-Office Subsidiary / OOO Transformation possible (however, new accreditation required) Liquidation of branch and foundation of subsidiary Liquidation of Rep-Office and foundation of subsidiary

9. Comparison 9 Subsidiary Branch Office  Active commercial activity  Legally independant  Active commercial activity  Legally not independant  VAT, CIT/Profit Tax, Property Tax  Entitled to deduct input-VAT  Liability-protection; Limitation to Russian entity  Liability of Swedish-Company  Capital infusion is rather difficult  Capital infusion is rather easy  Profit repatriation subject to Dividend Withholding Tax  Profit transfer to Sweden very easy  Currency Control with Swedish-entity  Currency Control with Russian clients and distributors

10.  JV generally have major business risks  Less control / not transparent  Different understanding of business culture  If JV, then JV entity should not be in Russia General saying: “First the Western partner brings the money and the Russians the experience” “Later the Russians have the money and the partner a new experience” Joint Venture 10

11.  One or several shareholders  No double 100% structures  Minimum charter capital 10.000 Rubles (2.000 SEK)  Serious Legal Address required  General Director (can be outsourced)  Reporting and accounting from day one, quarterly 10-15 reports Register an OOO / LLC 11

12.  Opening a bank account can be so difficult  How to limit the rights of the General Director?  Who should become Chief Accountant – Friend of the GD?  How to structure the reporting to the HQ Corporate reporting vs. Russian reporting Cash (invoice) vs. accrual (acceptance protocol) “Prepayment” vs. real prepayment Register an OOO / LLC 12

13.  Losses in several quarters can lead to an „invitation“ by the loss commission of the tax authorities  Now more civilized procedures  Relations with public authorities should be handled like with other business partners Relation with public authorities 13

14. Grey Import - A no-go 14  Illegal important structures – also financially a bumerang Invoicing (with all official documents) Swedish AB SwedenRussia Import company Subsidiary-OOO Invoicing Delivery (Grey accounting) (no deduction of input-VAT)

15.  Illegal structures with payback  Check for unserious consulting invoices Payback – Obnalichka - Обналичка 15 95% payback in cash „Consulting“ OOO Subsidiary-OOO Invoicing Bank payment

16.  Russia grants great opportunities  Obstacles await you everywhere, however, Russia is much improving  Stick to your principles, take your time, insist on your rights and …..  ….. never do dirty deals ! Conclusion 16

17. Clients and Memberships 17

18. Our office 18

19.  Accounting Outsourcing  Tax Consulting  IT Services / ERP  Interim Management  Office Sublease  Recruiting  Outstaffing  Visa and Work Permit Thank you for your Attention! 19 Ulf Schneider Managing Partner +7 / 495 / 956 55 57 SchneiderU@russia-consulting.eu

20. Our Offices www.russia-consulting.eu Moscow Ulf Schneider, Lars Flottrong, Mike Allen ul. Bakhrushina 32/1 115054 Moscow, Russia T +7 / 495 / 956 55 57 info@russia-consulting.eu Hamburg Ulf Schneider Alstertor 15 20095 Hamburg, Germany T +49 / (0)40 / 226 33 760 info@germany-consulting.de St. Petersburg Andreas Bitzi Finlyandskiy pr. 4a 194044 St. Petersburg, Russia T +7 / 812 / 458 58 00 info@russia-consulting.eu Kiev Sven Henniger vul. Shovkovychna 42-44 01601 Kiev, Ukraine T +38 / 044 / 490 55 28 info@ukraine-consulting.eu Minsk Polina Meleshko ul. Surganova 29 220012 Minsk, Belarus T +375 / 17 / 290 25 57 info@belarus-consulting.eu Almaty Kirill Afanasyev ul. Zheltoksan 111 A 050000 Almaty, Kazakhstan T +7 / 727 / 333 44 48 info@kazakhstan-consulting.eu Aktau Kirill Afanasyev Mangistauskaya oblast, District 14, building 61 130000 Aktau, Kazakhstan T +7 / 7292 / 470038 info@kazakhstan-consulting.eu Warsaw Piotr Linke Al. Jerozolimskie 81 02-001 Warsaw, Poland T +48 / 22 / 695 03 10 info@poland-consulting.com