How can a foreigner start a small business in Russia?

Gateway to Russia

Apr 29 2025

Valery Matystin / TASS

If you dream of opening your own coffee shop, studio or store, you need to register a legal entity called an ‘individual entrepreneur’ (‘Individualny predprinimatel’ or 'IP'). Here's how to do it.

Any foreigner from 18 years of age can do business in Russia. But, it is necessary to have a temporary residence permit or a residence permit in the country. And this can only be done in the region where you are registered.

For what types of business is the 'IP' status appropriate?

‘IP’ registration in Russia is suitable for those who want to engage, primarily, in small business, in which the head of the company makes a sole decision. The 'IP' has no authorized capital and no board of directors. Usually, it is retail trade, cleaning, tire service, beauty salons, cafes, etc.

You can choose a field in the ‘All-Russian Classifier of Types of Economic Activities’ (‘OKVED’ https://www.consultant.ru/document/cons_doc_LAW_163320/ - in Russian).

What documents are required to register as an 'IP'?

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To register an 'IP', a foreign citizen will need a passport with a temporary residence permit or a residence permit. A copy of the passport with a notarized translation into Russian is also required.

In addition, it is necessary to fill in and print out application form No. P21001 (in Russian).

You must also pay a state fee of 800 rubles ($10) – but this is only when submitting the documents in person.

Where in Russia can you register an 'IP'?

– Online on the website of the Federal Tax Service and on the 'Gosuslugi' website. To register, besides documents, you will need an enhanced qualified electronic signature. You can obtain it at the certification centers of the Tax Service (addresses in Russian).

– In person at a ‘Moi Dokumenty’ (‘My Documents’) center (or ‘MFC’ – ‘Multifunctional Center’), which are available in all regions of Russia. You can find out whether they accept documents for the registration of an individual entrepreneur on the ‘MFC’ website (in Russian).

– In person at the tax inspectorate at the place of your registration.

Applications are reviewed within three working days. You can check your status on the website of the Federal Tax Service and you will receive a notification of tax registration by email. Immediately after that, you can start working: rent premises, hire employees and conclude contracts with clients.

What taxes does an individual entrepreneur pay?

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There are several main types of taxation for an individual entrepreneur:

– General taxation system (assigned by default, unless the entrepreneur has declared another) – you pay personal income tax ('NFFL') from 13% to 22%, depending on income. Not only for yourself, but also for your employees. You also have to pay value added tax 'NDS' (10-20%) depending on the type of business. Such a system is suitable if there are a lot of suppliers and customers.

– Simplified – tax on income (6%) or tax on income minus expenses (15%). This is the most popular system among individual entrepreneurs. The main thing is that income should not exceed 450 million rubles (approx. $5.5 mln) per year, the company can not have more than 130 employees and the cost of means of production should not exceed 200 million rubles (approx. $2.5 mln).

– Automated simplified – this is for entrepreneurs with an income of less than 60 million rubles (approx. $700,000) per year and no more than five employees. Moreover, they must receive their salaries only on bank cards.

In addition, the regions may have tax breaks for certain types of activities. More information about taxes for individual entrepreneurs can be found on the FTS website (in Russian).