If the owner of a legal entity in the Russian Federation is a foreign company or foreign nationals, the question of how to engage a foreign national as a top manager to control and execute the company’s activities in Russia often arises in practice. When it comes to an ordinary employee, all issues with the execution of documents are usually handled in a standardized manner by means of the company and/or the citizen himself obtaining authorization documents for the right to work and stay in Russia, and the execution of labor relations. But often it is the sole executive body (General Director) of a legal entity that is in question, and here certain peculiarities arise.

What is important to consider when hiring a foreign company director:

Permit documents for the right to work in Russia

As a general rule, in order to hire a foreign citizen, it is necessary to have authorization documents for the right to employ him as an employee, both for the company – employer (customer of works, services) and for the citizen – employee (performer of works, services). In particular, the documents in question are:

– Permit to hire and use foreign workers (RNP) in the name of the employing company (only for workers from countries with a “visa” regime) [1];

– Work permit (RNR) for a foreign citizen (only for workers from “visa” countries) [2] for a certain position and in a certain constituent entity of the Russian Federation where he/she will work, formalized through the employing company;

– work patent for a foreign citizen (only for workers from visa-free countries) [3]) for a certain position and in a certain constituent entity of the Russian Federation where he/she will work, executed directly by the employee;

– an ordinary multiple-entry work visa for a foreign citizen (only for workers from countries with a “visa” regime), issued by the employer. Often, in addition to the initial issuance of a visa, the employer is required to register the legal entity with the Ministry of Internal Affairs in order to subsequently issue an invitation to enter the Russian Federation, through which the employee will be entitled to obtain a work visa.

The law also establishes a number of exceptions when the above documents are not required. In particular, they are not required if a foreign citizen:

  • has a temporary residence permit in the Russian Federation (RVP) [4];
  • has a residence permit in the Russian Federation (VNZh) [5];
  • is a participant of the State Program on rendering assistance to voluntary resettlement in the Russian Federation of compatriots living abroad and their family members resettling with them in the Russian Federation [6];
  • is a student studying in a legally defined program at a state-accredited educational institution [7];
  • is an accredited employee of duly accredited representative offices of foreign legal entities on the territory of the Russian Federation, on the basis of the principle of reciprocity in accordance with international treaties of the Russian Federation [8];
  • has the status (certificate) of a refugee on the territory of the Russian Federation or has received temporary asylum (certificate) on the territory of the Russian Federation (before the loss or deprivation of this status/asylum), or has a temporary identity card of a stateless person in the Russian Federation [9];
  • is a citizen of a country that is a member of the EAEU (Belarus, Kazakhstan, Kyrgyzstan, Armenia) [10].

There are other legitimate exceptions, but they are unlikely to be appropriate for this position.

In addition, an employer also does not have to issue an additional RNP if:

– the employee has a work permit for a highly qualified specialist (HQS RNR), or engages a HQS family member to work for the employee [11].

This category of employee is often qualified for the position of director and has certain privileges when it comes to drawing up documents and staying in Russia (for example, the absence of necessary quotas). But it is important to understand that there are certain requirements for such a specialist, in particular, it is necessary to comply with and pay the minimum salary (in the standard case – 750,000 RUB per quarter).

– issue a work permit for a foreign citizen to work in a branch, representative office or subsidiary organization in the Russian Federation of a foreign commercial organization registered in the territory of the member states of the World Trade Organization (WTO work permit) [12].

As can be seen, in the case of “visa” workers the issue is always strongly tied to the employer, so often all the necessary documents are required to be executed before hiring.

The above-mentioned documents are the main documents required to start employment in Russia, including for a foreign manager. In addition, the process of registering a foreign citizen as an employee in a Russian company will generally also require additional documents, such as a VHI policy (contract), mandatory fingerprint registration and photographing procedures, medical examination, documents confirming education, measures to provide housing for such an employee, provision for migration registration at the place of temporary stay in Russia and other documents depending on the status of the foreign citizen.

Peculiarities of labor relations

When formalizing employment relations with the CEO, it is important to take into account the fact that the CEO is not just an ordinary employee, but the sole executive body of a legal entity and the head of the company. And in this case, the employment contract must comply with the special conditions set out in the Labor Code of the Russian Federation, i.e. it must have its own peculiarities of an employment contract with the CEO [13].

In particular, with managers:

– a fixed-term labor contract may be concluded for a period in accordance with the adopted decisions of the founders and/or constituent documents of the company, but not more than 5 years in total – according to the norms of the Labor Code of the Russian Federation. [14] At the same time, there are no restrictions on the right to conclude such a contract for an indefinite period of time;

– the employment contract must comply directly with the company’s constituent documents and the norms of special federal laws depending on the organizational and legal form of the legal entity [15]. For example, the charter of a limited liability company may provide for the approval of the terms and conditions of an employment contract with the CEO by the company’s board of directors (supervisory board) [16];

– there are specific provisions for his liability [17];

– special grounds for termination of the employment contract have been established [18];

– special safeguards are in place [19].

The second peculiarity for such a manager is that he is a foreigner. And in this case, the labor code and migration legislation of the Russian Federation also has specific conditions for an employment contract with a foreign employee [20]. Particularly with a foreign CEO, it is important to provide:

– Availability of sufficient validity of the foreign citizen’s identity document [21], taking into account the required authorization documents and, if necessary, obtaining a new document in advance;

– accurate data and uniformity of translation of all personal data and their correspondence in all documents of the foreign citizen, as well as in the company’s constituent documents upon his appointment. This will help to avoid problems and discrepancies in the data of the employer and state authorities, since formally, in the event of a discrepancy between even one letter in the name of the CEO in the data of the Unified State Register of Legal Entities and the data in the work permit, the employer and the employee may be held liable for employment without a permit [22].

– compliance of the data of the company – employer in the employment contract and persons authorized to sign it, as well as in the constituent and other documents;

– availability of relevant decisions on the appointment of such person to the relevant position in the form prescribed by law;

– the term of the employment contract, as this determines the term of work permits, visas, and other documents, as well as the deadlines for filing documents for the registration of the change of CEO;

– an indication of the status of a foreign citizen in the Russian Federation. For example, this is required by a highly qualified specialist (hereinafter – HQS) [23]. It also depends on the execution of authorization documents, social security contributions of the employee.

– indication in the employment contract of information about the foreign worker’s authorization documents (in addition to the standard information) [24]. If a patent is available, it is also important to control its payment (check the checks), because in case of non-payment of personal income tax in the form of a fixed advance payment, it is considered invalid [25].

–  indication in the employment contract of other necessary information depending on the status of a foreign citizen, if it is established by law. For example, for an HQS employee – an indication of the mandatory availability of a VHI contract (policy) or an agreement concluded by the employer with a medical organization on the provision of paid medical services to such an employee (including for non-working members of his/her family), as well as its details, and for citizens of Uzbekistan, Azerbaijan, Tajikistan – the main details of the employer and the employee, professional requirements for the employee, information on the nature of work, working conditions and remuneration, working hours and rest, living conditions, as well as the term of the contract. [26];

It should also be taken into account that the position of a foreign manager does not imply the remote nature of work outside the Russian Federation. According to the general sense of the norms of the Labor Code of the Russian Federation, if the head of an organization will perform job duties outside its location (its structural subdivisions) through the use of information and telecommunication networks, including the Internet, and public communication networks, the remote nature of work with an ordinary head is possible [27]. In the opinion of the Russian Ministry of Labor, it is not permitted to conclude an employment contract on remote work with a citizen to carry out labor activities only outside the Russian Federation [28].

However, with a foreign CEO as a foreign employee, there is no such possibility in the territory of the Russian Federation, although this is not expressly provided for by the Labor Code of the Russian Federation [29]. This is largely a practical position of migration state authorities, which do not accept relevant employment contracts when issuing permits, based on special norms and general principles of migration legislation of the Russian Federation, based on which it is the employer who is responsible for this employee and is liable for compliance with the law in respect of a foreign worker in Russia. In addition, migration legislation binds permit documents, e.g., a patent or a work permit, to the subject of labor activity on the territory of the Russian Federation, and if the work is performed in a subject of the Russian Federation different from that specified in these documents, accordingly, it will be considered an administrative violation. [30].

It is also important to note that only a foreign citizen temporarily or permanently residing in the Russian Federation and meeting the requirements stipulated by Russian law may fill the position of chief accountant or other official charged with maintaining accounting records as part of internal overlap [31]. Otherwise, it is necessary to assign these functions to another appropriate person or to conclude an appropriate contract with an accounting services organization.

In addition, if a company has certain peculiarities, for example, it draws up an employment contract with a part-time employee, which is not prohibited by law, it is also important to take this into account when drawing up labor relations and authorization documents.

It should not be forgotten that, in general, an employment contract with a general director is signed by a person authorized by the owner on the employer’s side [32].

Peculiarities of taxation, contributions to the SFR and being in Russia

It is necessary to calculate in advance and take into account taxation and the amount of social deductions for a foreign employee-head, because depending on the status of a foreign citizen in the Russian Federation in accordance with migration, tax and social legislation, there will be different deductions to the budget of the Russian Federation.

For example, if a citizen is recognized as a resident of the Russian Federation in accordance with the provisions of the Tax Code of the Russian Federation, the personal income tax rate will be 13% in general. However, there are various exceptions, for example, HQS income from labor activity is always taxed at the rate of 13%, while other income is taxed at the following rates: 13% – for residents, 30% – for non-residents [33].

The amount and necessity of social insurance contributions also depend on the status of a foreign citizen in the Russian Federation and may differ. For example, for permanently residing foreign citizens from visa-free countries (who have a residence permit, but not HQS, not EAEU citizens), the employer makes contributions to SFD (medical, social and pension insurance), injury insurance contributions, such citizens have the right to receive medical care under MHI (exception – non-working family members of HQS), the right to receive a pension if they have resided in the Russian Federation and paid contributions for at least 15 years [34], entitlement to benefits for injuries sustained during employment [35], payment of benefits for incapacity for work, pregnancy and childbirth, lump-sum benefits to women registered in medical organizations in early pregnancy, lump-sum benefits at the birth of a child, monthly childcare allowance, social burial allowance [36].

The terms of a foreign citizen’s stay in the Russian Federation are important not only for taxation and deductions, but also for the preservation of their permit documents, because if the terms of stay do not meet the minimum established by law, these documents may be canceled.

If the company is not yet registered in the Russian Federation and only plans to open a business in Russia

Initially, it is necessary to plan and/or check the compliance of the company’s planned activities (OKVED codes) with the possibilities of attracting foreign workers in this area. The Government of the Russian Federation has the right to annually establish the permissible share of foreign workers used in various sectors of the economy by business entities [37]. It sometimes happens that an industry does not establish even a minimum number of opportunities for the employment of foreign workers. For example, in 2024 in retail trade in medicinal products in specialized stores (pharmacies) (OKVED  47.73[38]) it is impossible to employ foreign workers [39].

For violation of this requirement, the employer may be held administratively liable in the form of an administrative fine:

– for officials – from 45,000 thousand to 50,000 thousand RUB;

– for legal entities – from 800,000 to 1 million RUB or administrative suspension of activities for a period of 14 to 90 days [40].

After determining whether it is possible to hire a foreign worker, it is necessary to take into account from which country the company plans to hire a candidate from and whether he or she has any “preferential” status in Russia.

If we are talking about “visa-free” countries, it will be necessary to wait for such a citizen to obtain a patent for the right to work in Russia in the relevant position and in the relevant constituent entity of the Russian Federation. But since the general director is directly involved in the registration of the company with the state authorities, in this case there is a rather limited period for the registration of the company itself – 2 months, since this is the period given by law to a foreign citizen for employment under a patent. Otherwise, by the time the company is registered after the expiration of this period, and the citizen is not hired, he will either have to be employed by another employer, or the patent will be canceled [41].

In the case of a candidate from a “visa” country, it is impossible to do without the prior appointment of a Russian citizen or a foreigner with available authorization documents and/or a certain status as CEO.

This is to enable that officer on behalf of the company to:

1) to freely participate in the registration of a new company and opening of bank accounts in the Russian Federation (this is impossible without the CEO’s participation);

2) exclude the risks of liability for labor activity and employment of a foreign citizen in Russia without permits for both the foreign citizen and the established legal entity, since the position of the CEO assumes the start of such activity from the date of establishment of the company and its registration with the authorized state bodies of the Russian Federation.

3) arrange all necessary authorization documents on behalf of the company in the Russian Federation for the right to work in Russia for the foreign candidate to be eventually appointed to this position, including the ability to pay all necessary state fees, insurance and other required documents on behalf of the company.

If the candidate has a special “preferential” status, for example, is a citizen of the EAEU, the issue is solved more easily, because he does not need to issue any additional permits and visas.

It is worth noting that fines for violations of Russian migration legislation by a legal entity are considered to be among the largest and often reach RUB 1 million for a single violation (e.g., for employment without permits). [42]). For the foreign citizen himself, violation of migration laws may entail not only fines, but also deportation from the Russian Federation [43].

If it is known for certain that the new company plans to attract and subsequently change the CEO, these points should be taken into account when appointing the first person to the position of the sole executive body of the company. In particular, it is possible to immediately appoint such a person for a certain period of time. This can be stipulated in the company’s charter, specified in the decision on the appointment of the general director, and a fixed-term employment contract can be concluded with such a person. These provisions are permitted by the civil and labor legislation of the Russian Federation, and will minimize the company’s losses when deciding to change the sole executive body. It is important to envisage everything in advance, correctly calculate the time limits and draw up the legal formalities correctly.

Once the new legal entity has been registered, the current CEO can proceed to draw up all the necessary authorization documents for the foreign national who is to be hired for the position. This process is quite lengthy and it is also important to bear this in mind.

Once all the authorization documents have been drawn up, it is necessary to change the CEO of the company: make the relevant decisions by the company’s participant, formalize labor relations, register the changes in the state bodies of the Russian Federation, make all the necessary changes in banks, and carry out all other actions related to this process and necessary for the company. It is important to take into account how the current director was accepted, how to properly terminate labor relations with him and carry out the procedure for appointing a new person so that no labor disputes arise and the company can carry out its current activities without hindrance.

If the business is already established in the Russian Federation, the company is registered with the state authorities and has an appointed general director

In this case, the actions will be a little easier if the company has an existing manager for the time being to prepare all the necessary changes. However, if his term of office is coming to an end, it will be necessary to look for and agree on a candidate who is suitable for further changes.

As in the case of starting a business in Russia, it is initially necessary to check whether it is possible to employ a foreigner based on the scope of the company’s activities, as mentioned above. If required and possible, it is possible to change the OKVED to the necessary one. It should always be borne in mind that all registration changes take some time.

After that, it is possible to decide on the process of drawing up permits, if they are required by the status of a foreign citizen, and to formalize labor relations taking into account the above provisions.

It is important to take into account that in the case of registration of authorization documents on the part of the employer, a valid general director is needed, who has the right to work in the Russian Federation, so before changing the personal composition of the sole executive body, it is necessary to calculate all the terms and steps. The process of calculating timelines in advance will make it easier to understand how long the current CEO will still be in office.

Our support

Please note that migration and sanctions legislation of the Russian Federation is often subject to changes and may be interpreted differently by state authorities or have practical peculiarities in different constituent entities of the Russian Federation. Therefore, in order to obtain up-to-date information on each specific case, clarify your situation, analyze documents in advance, determine the status of a foreign citizen and build the overall process of changing the head to a foreign citizen, we recommend to contact Konsu specialists who have extensive experience in this area in advance.

[1] п. 4, subparagraph 1), paragraph 4.5. of Art. 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[2] para. 17, paragraph 1, Article 2 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[3] para. 17, paragraph 1, Article 2 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[4] subpar. 1) paragraph 4 of Article 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[5] subpar. 1) paragraph 4 of Article 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[6] subpar. 2) п. 4 of Article 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[7] subpar. 7.1) p. 4 of Art. 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[8] subpar. 9) п. 4 of Article 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[9] subpar. 11), 12), 13) paragraph 4 of Art. 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ, Art. 3 of the Federal Law “On Refugees” of 19.02.1993 N 4528-1.

[10] п. 1 of Art. 97 of the EAEU Treaty, Astana 29.05.2014, Art. 7 of the Treaty between the Russian Federation and the Republic of Belarus of 25.12.1998, Art. 1 of the Agreement between the Government of the Russian Federation and the Government of the Republic of Armenia of 25.09.2000, Art. 1 of the Agreement between the Government of the Republic of Belarus, the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Russian Federation and the Government of the Republic of Tajikistan of 30.11.2000, subparagraph 1 of para. 4.5 of Article 13 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[11] paras. 2), 3) subparagraphs 4.5. of Art. 13, Art. 13.2 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[12] paras. 5) п. 4.5. art. 13, Art. 13.5 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[13] Chapter 43 of the Labor Code of the Russian Federation;

[14] p. 2, Art. 59, Art. 275 of the Labor Code of the Russian Federation;

[15] Articles 274, 278 of the Labour Code;

[16] subpar. 4) subparagraph 2 of Article 33 of the Federal Law “On Limited Liability Companies” dated 08.02.1998 N 14-FZ;

[17] Art. 277 of the Labor Code of the Russian Federation; Art. 53.1. Civil Code of the Russian Federation; Art. 71 of the Federal Law “On Joint Stock Companies” dated 26.12.1995 N 208-FZ; Art. 44 of the Federal Law “On Limited Liability Companies” dated 08.02.1998 N 14-FZ; and others.

[18] art. 278, 280 of the Labor Code of the Russian Federation;

[19] Art. 279; п. 2 part 1 of Article 278 of the Labor Code of the Russian Federation;

[20] Chapter 50.1 of the Labor Code of the Russian Federation;

[21] paras. 60, 69.6 of the Administrative Regulations of the Ministry of Internal Affairs of Russia on the provision of the state service of issuing permits for the recruitment and use of foreign workers, as well as work permits for foreign citizens and stateless persons, approved by Order of the Ministry of Internal Affairs of Russia of 01. 08.2020 N 541. 08.2020 N 541; item 24.2 of the Administrative Regulations of the Ministry of Internal Affairs of Russia on the provision of state service for the issuance, issuance, extension and restoration of visas to foreign citizens and stateless persons, approved by Order of the Ministry of Internal Affairs of Russia from 04.12.2019 N 907; item. 47 of the Regulations on the establishment of the form of visa, the procedure and conditions for its registration and issuance, extension of its validity, its restoration in case of loss, as well as the procedure for visa annulment”, approved by the Decree of the Government of the Russian Federation from 09.06.2003 N 335; pts. 34, 39.3 of the Administrative Regulations of the Ministry of Internal Affairs of Russia on the provision of state services for the registration and issuance of patents for the implementation by foreign citizens and stateless persons of labor activity on the territory of the Russian Federation, approved by Order of the Ministry of Internal Affairs of Russia from 05.10.2020 N 695; Art. 6, 24 of the Federal Law from 15.08.1996 N 114-FZ “On the order of exit from the Russian Federation and entry into the Russian Federation”;

[22] Resolution of FAS North Caucasus District of 18.07.2014 in case N A53-3768/2013;

[23] paras. 3, 4, 6 (2) of Article 13.2 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[24] p. 1 of Article 327.2 of the Labor Code of the Russian Federation;

[25] p.5 of Art. 13.3 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[26] ч. 2 of Art. 327.2 of the Labor Code of the Russian Federation, p. 14 of Art. 13.2 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ; part. 2 of Art. 6 of the Agreement of 15.04.1994 “On cooperation in the field of labor migration and social protection of migrant workers”.

[27] ч. 1 of Art. 312.1, Ch. 49.1, Ch. 43 of the Labor Code of the Russian Federation;

[28] Letter of the Ministry of Labor of Russia from 09.09.2022 N 14-2/OOG-5755

[29] Chapter 50.1 of the Labor Code of the Russian Federation;

[30] Part 1, 2, 3 of Article 18.10, Part 1, 4 of Article 18.15 of the CAO RF;

[31] П. 3 Art. 14 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” dated 25.07.2002 N 115-FZ; Art. 7 of the Federal Law “On Accounting” dated 06.12.2011 N 402-FZ;

[32] ч. 2 of Art. 16, par. 1, 4, 6 of Art. 20 of the Labor Code of the Russian Federation; subparagraph 2 of paragraph 1 of Art. 40 of the Federal Law “On Limited Liability Companies” dated 08.02.1998 N 14-FZ; subparagraph 2 of paragraph 3 of Art. 69 of the Federal Law “On Joint Stock Companies” dated 26.12.1995 N 208-FZ; subparagraph 7 of paragraph 1 of Art. 20 of the Federal Law “On State and Municipal Unitary Enterprises” dated 14.11.2002 N 161-FZ;

[33] п. 3 of Art. 224 of the Tax Code of the Russian Federation; par. 8 of Art. 26 of the Federal Law “On Agricultural Cooperation” of 08.12.1995 N 193-FZ, and others.

[34] п. 1 of Art. 3 of the Law “On State Pension Provision in the Russian Federation” of 15.12.2001 N 166-FZ; part. 3 of Art. 4 of the Law “On Insurance Pensions” of 28.12.2013 N 400-FZ; part. 2 of Art. 4 of the Law “On funded pensions” dated 28.12.2013 N 424-FZ; subparagraph 5) of paragraph 1 of Art. 11 of the Federal Law dated 15.12.2001 N 166-FZ “On State Pension Provision in the Russian Federation”;

[35] Clause 2, Article 5 of the Law “On Compulsory Social Insurance against Accidents at Work and Occupational Diseases” of 24.07.1998 N 125-FZ;

[36] Part 1 of Article 2 of the Law “On Compulsory Social Insurance for Temporary Inability to Work and in Connection with Maternity” of 29.12.2006 N 255-FZ;

[37] п. 5 of Article 18.1 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ;

[38] All-Russian Classifier of Economic Activities (OK 029-2014 (KDES Ed. 2);

[39] p. i) item 1 of the Decree of the Government of the Russian Federation from 16.09.2023 N 1511;

[40] ч. 1 of Article 18.17 of the CAO RF;

[41] Para. 1 п. 7, subpar. 4 p. 22, p. 28 of Art. 13.3 of the Federal Law “On the Legal Status of Foreign Citizens in the Russian Federation” of 25.07.2002 N 115-FZ.

[42] Art. 18.15 of the CAO RF;

[43] Art. 18.10 of the CAO RF.