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Advice re: UK registered Ltd Co working in Russia?

I was wondering if you could help me:

We act for a UK registered company who is going to be doing construction work in Russia, and I have a few questions:

1 - Will they need to register for VAT in the UK, and if so, will anything be claimable, such as any materials, machinery, services, etc?  Are we looking at partial exemption rules?

2 - Will they need to register for VAT in Russia?  What would be the general implications of this?

3 - They are going to be engaging UK labour (not sure if subcontractor or employed as yet) to work in Russia - will PAYE/NIC be payable on this income, if it is employed staff?  Does the CIS scheme still work as normal in Russia?

4 - They will also be employing Russian staff - how does this work for PAYE, etc?

I am basically doing the research for my supervisor, so will be grateful for any assistance you can give me?

Thanks

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23rd Mar 2012 15:41

As one of your sources of information, yo may try the Russo British Chamber of Commerce.

They're not great, but just one place where you may get one or two pieces of the jigsaw.

SA

 

Thanks (1)
By Hansa
23rd Mar 2012 16:34

not a good idea I suspect

First, your questions (as far as I can)

1. You would have to convince the VAT office that this was an exporting company as, presumably no UK or even EU sales would take place.

2. Yes but this is very different to UK VAT - a local accountant could assist, It would also have to register as a branch in Russia on which Russian corporate taxes would be payable

3. Hmmm you'll need specialist advice for this although my general understanding is that for employment of LESS than 1 year abroad, the workers will remain fully UK & NIC'able.  Take great care as the Russians may also want to tax the workers - there is no real reciprocity between UK & Russia.

4. Another nightmare in the offing.  Yes you will need the branch to register for Russian payroll taxes.

It may be better to use (say) a Cyprus company which has a good DTT with Russia and won't have the baggage of regulation that UK co's have, or even forming a Russian subsidiary.

Thanks (1)