Belarus is a landlocked Eastern European country having a strategically advantageous location. It provides direct access to the three Common Economic Space (CES) countries, allowing the free movement of goods, capital, workforce, and services. The country’s developed transport and logistics infrastructure links CIS countries.
The country ranks 49th out of 190 economies in the World Bank’s Ease of Doing Business Report 2020. It provides great support when starting a business in Belarus, protects minority investors, and helps trade across the border.
A subsidiary is one of Belarus’s easiest and most popular forms of business entities. It is an individual division of a legal entity formed in the territory of a foreign state with the participation of the company’s property. A foreign company can open a subsidiary to conduct commercial activities in the territory of the Republic of Belarus. It demands fewer paper requirements and compliance with local rules and regulations. The below guide explains everything you must know about setting up a subsidiary in Belarus.
What are the Types of Subsidiaries in Belarus?
Most companies prefer to establish a subsidiary as an LLC as it enables them to conduct business activities with fewer restrictions. Let’s get acquainted with different types of subsidiaries that help you form a subsidiary system in Belarus.
1. Limited Liability Company (LLC):
- It is delegated for small to medium-sized businesses, which implies an easy incorporation process.
- To establish an LLC, two or more individuals who offer a charter capital split into shares are required.
- The corresponding amount is of a nominal value, and the corresponding shares are recorded in the foundation documents.
- The LLC’s members are responsible for the company’s debts and obligations depending on their contributions.
2. Joint Stock Company
- Two or more founders can establish a joint stock company.
- They should offer a share capital divided into shares designated in the company charter.
- The shareholders are not accountable for the debts and losses of the joint stock with their assets. Their liability is restricted to their contribution.
- An open joint stock company’s shareholders don’t have to seek the approval of fellow shareholders to sell their shares. They can register shares in a trade market.
- One must have a share capital of €4,500 (10,500 BYN) to set up an open joint stock company in Belarus.
3. Closed Joint Stock Company
- This form of a subsidiary is a common type of joint stock company that two or more founders establish.
- They collectively offer a share capital and receive shares with a nominal value.
- Their contribution determines their liability, and they are not accountable for their assets to the company’s obligations and debts.
- The shareholders may only sell their shares to the public after obtaining the approval of fellow shareholders.
- One must contribute a share capital of €1,125 (2550 BYN) to set up a closed joint stock company in Belarus.
4. Limited Partnership
- This type of subsidiary business in Belarus is an ordinary partnership without minimum capital requirements.
- It is a legal entity and is considered unique from the members’ identity.
- A limited partnership can be established by two or more members. They are categorized into limited and general partners.
- Out of the total number of members, at least one is a general partner accountable for management decisions and withstanding unlimited liability.
- At least one of the members is a limited partner responsible for the company’s debts and obligations only to the amount of their contribution.
5. General Partnership
- It is an entity set up by two or more members.
- There is no minimum capital requirement for general partnership in Belarus.
- All the members are treated as general partners.
- They are responsible for management decisions and the partnership’s representation.
- The members share the partnership’s profit rather than withstanding unlimited liability to the partnership’s obligations and debts.
6. Individual entrepreneur
- An individual entrepreneur involved in any business activity doesn’t have to undertake a legal entity status.
- A sole proprietorship involves having up to three employees and full accountability for the owner.
- No distinction is made between the owner and the company.
How to Set Up Subsidiaries in Belarus?
The process of establishing a subsidiary in Belarus can differ according to the company’s business activities. But the following steps will eliminate your confusion about registering a subsidiary company in Belarus.
Step-1: Prepare the charter and develop regulations on activities
- The parent company validates the subsidiary’s charter, based on which a conforming decision is made on whether to allow the entity to establish a subsidiary or not.
- The charter must include details like the company’s name and location. Moreover, it must specify that the newly established company is a subsidiary of the main company.
- If the main company has multiple shareholders, the decision to set up a subsidiary is taken at a meeting of shareholders.
- An official person of the parent company prepares a set of documents to be delivered to the registration authority.
Step-2: Registration of the subsidiary
- The deadline for registration of the subsidiary is five working days since the company commenced its operation.
- The registration authority should provide the following documents:
- Application for state registration
- The charter’s electronic copy
- Charter in 2 copies
- A document authorizing the payment of state duty
Step-3: Nomination of the chief accountant and head of a subsidiary
- The parent company nominates the head of the subsidiary.
- It does this by issuing a decision and a suitable power of attorney.
- The company’s head appoints its chief accountant.
Step-4: Open accounts to foreign legal entities
- To open a local bank account in Belarus, the head or another official representative of a foreign company should prepare, translate and verify all the required documents.
- Lastly, to finish the setup of a subsidiary business in Belarus, they must apply to the bank with a statement about opening a current (settlement) account.
Benefits of Setting Up a Belarus Subsidiary
Setting up a subsidiary company in Belarus comes with several unique benefits, which are discussed below:
- As an LLC, a parent company owns limited liability for the subsidiary. Its subsidiary can work under any culture and structure it finds suitable. Both the parent company and its subsidiary obtain the maximum possible benefits.
- The company’s head can independently manage the subsidiary but conform to the parent company’s strategy.
- The subsidiary company is not responsible for the debts of the main company.
- Foreign investors can reclaim profits and capital after paying duties, taxes, and other fees following Belarusian laws.
- Foreign investors obtain the protection of their intellectual property valid under Belarus laws.
- Investors and their families receive multiple-entry business visas in context to the investment while setting up a subsidiary business in Belarus.
- It doesn’t present any minimum share capital requirement and doesn’t need foreign currency control.
- Double taxation treaties are signed with 65 countries.
- Favorable tax rules and free economic zones, developed infrastructural rules, and strategic privatization options are a few other benefits of a subsidiary company in Belarus for foreign companies.
Documents to Prepare When Opening a Subsidiary in Belarus
The companies should prepare the following documents to support their application for subsidiary incorporation:
- Identity document (for an individual symbolizing the interests of the company to open a bank account)
- A copy of the certificate/certificate of state registration/other document authorizing the legal entity’s registration
- Copy of the charter with the seal confirming registration
- A card with specimen signatures of individuals entitled to sign documentation
- Supporting documents validating the right to sign the aforementioned individuals
- The non-resident beneficiaries should provide copies of their passports and their certified translation into Belarusian or Russian.
- Bank statements representing the foreign investor’s financial sustainability
- A business plan specifies the business operations, the number of employees, the projected training for Belarus employees, etc.
- Certificate of Incorporation
- Memorandum and Articles of Association
- E-version of the Articles of Association
- Invoice of payment of state fees
- Company feasibility report
- Directors’ and Shareholders’ register
- Legal registered address
- Notarized passport copies/identity cards and the photos of the company’s director(s) with their curriculum vitae
- Proceedings of the company establishment
- Office location certificate
- Share certificate
- Tax identification number
- Specimen signatures
- Before submitting the documents, ensure they are certified with the Apostille stamp.
What Business Forms Can Belarus Subsidiaries Take?
The subsidiaries can choose from various legal business structures in Belarus. The two most common forms of a subsidiary are:
- Currently, most companies running in Belarus are PLLCs (Private Limited Liability Companies). Usually, shareholders are not responsible for the company’s dues exceeding the number of shares they have capitalized.
- The LLC structure boasts a legal framework that needs a minimum of two shareholders and two directors. Belarus imposes a minimum requirement of share capital amounting to $1. You will always need to provide the yearly financial records to the Income Tax Authority of Belarus.
Belarus Subsidiary Laws
Belarus’ subsidiary laws rely on your chosen entity. LLCs require a minimum of one shareholder and one individual director (irrespective of nationality and residence). Moreover, you require only 1 EUR in share capital to incorporate your subsidiary.
While preparing your incorporation documents, you must ascertain that they are written in Belarusian and Russian. The nearby notary public should legalize all documents. LLCs must submit yearly audited financial statements to conform to the Belarus subsidiary laws.
The compliance checklist for the incorporation of foreign subsidiaries in Belarus includes the following:
- Obtain the incorporation certificate that is issued by the Registrar of Companies.
- Gather the unique company number
- Present all the vital details of the shareholders to the Registrar.
- Provide the share certificates to all the shareholders (in case the subsidiary is a public company) after acquiring the subscription money from the subscribers. The certificates should incorporate the shareholder’s name, the number of share certificates, the face value of the share, the total number of shares purchased, preference or equity share, and the received amount.
- Appoint a first auditor for the company
- Register Official Company Address
- Conduct meetings of the Board of Directors (BODs)
- Reveal the Interest of Directors
- Maintain books of accounts for a Private Limited Company (It shows a precise and unbiased opinion of the company’s state of affairs.)
- Maintain Statutory Registers (including the company’s name, registered office address, the company’s CIN (Corporate Identity Number), phone number, fax number, email ID, and website (if any))
Taxes on Subsidiaries in Belarus
Foreign companies pay the same tax rate as national companies, but only on their Belarus-sourced revenue.
Foreign companies may not establish branches in Belarus but may establish subsidiaries, representative offices, or permanent establishments, which are taxed at the 18% rate.
A subsidiary in Belarus is subject to the following taxes:
(Income of non-resident companies established in Belarus which are not associated with the activities of a permanent establishment is liable to pay withholding tax at rates varying from 0% to 15%.
|VAT (Also called consumption taxes)||20%|
18%: general rate
10%: for sale of high-tech goods of own production; also applicable for science and technology parks and their citizens
25%: for banks and insurance companies
15%: income tax of foreign organizations that don’t operate in Belarus via a permanent representation:
12%: dividends and relevant income; income generated from the disposal of shares in the authorized fund of companies situated in Belarus
6%: income generated from international transportation
10%: income generated from any debt obligations
5%: on dividends, royalties, and income from debt obligations (if the source of payment of this income is an inhabitant of the Hi-Tech Park)
|Real estate tax|
1%: for organizations
2%: in the attendance of the objects of incomplete construction at the companies
|Local taxes and fees|
Up to 5%: resort fee
Up to 5%: harvesting fee
|Capital gains tax||18%|
|Compulsory insurance premiums for temporary incapacity, maternity, etc.||6%|
|Compulsory social insurance/pension insurance (retirement, disability, or a wage earner’s death)||29%|
Tax Incentives for Businesses Setting Up a Subsidiary in Belarus
Tax incentives are crucial components for the incorporation of foreign subsidiaries in Belarus. The Belarus government offers various tax incentives to encourage foreign investors to invest in the country. A few of these tax incentives include:
- In the last few years, the government in Belarus has implemented a value-added tax system to build obligatory public infrastructure development.
- Belarus provides the lowest duty rates on raw materials.
- The government imposes zero VAT on certain services for the incorporation of foreign subsidiaries in Belarus. They are financial, educational, insurance, cultural, housing, medical, certain medical equipment, and prosthetics and devices for disabled persons.
Other Important Considerations
Apart from the discussed compliance checklist for incorporation of foreign subsidiaries in Belarus, you must note a few other important considerations, as discussed below.
To set up a subsidiary system in Belarus, companies should consider insurance, residence permits, applying for any licenses (if required), and registration with the federal tax administration.
You may have to travel to and from Belarus. So, freeing up your schedule for a minimum of 1-2 months is recommended. Alternatively, you can work with another company executive employee to manage laborious facets of incorporation.
Certain parts of the subsidiary procedure may involve costs. Hence, you must budget the amount you will allocate for every step. The government may also require high investment capital for your subsidiary, depending on the conditions of the relevant sector. Communicating with your finance or accounting department before establishing your Belarus subsidiary is advisable.
Various permits and clearances are required for subsidiary company formation in Belarus. You must devote time to finding directors and drafting your articles of association.
How Multiplier’s Employer of Record Helps You Hire & Expand in Belarus
It demands considerable time and investment to grow your business in a foreign country. Moreover, conforming to a country’s labor rules and industry standards demands significant time and effort. You can use services from a third-party service company like Multiplier to set up a subsidiary system in Belarus.
Multiplier administers all the official procedures, including payroll processing, onboarding talent, determining taxes on subsidiaries, etc., while approaching a new market. It eliminates the need for setting up an entity. Furthermore, Multiplier streamlines onboarding local and global talent while assuring compliance with Belarus’ regulations and labor laws.