Belarus - Raiffeisen Bank International AG

2. Company Law
Forming a company as a foreigner
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Foreign legal and natural persons can form companies in Belarus either on their own or together with one
or more Belarusian partners. Freedom of establishment is practically unrestricted, and foreign and
Belarusian investors are treated equally. Neither a Belarusian minority nor a joint venture structure is
required. As a result, companies can be 100 per cent foreign owned. The posts of general manager and
company treasurer, which are important in Belarusian law, can also be held by foreigners (though they must
have a residence in Belarus).
When one is working the Belarusian market, the question often arises what form of business organization
one should use to do so. If one plans to develop a presence of one’s own in Belarus, one must choose
between setting up a representative office and forming one’s own company. The fundamental difference
between these two forms of business organization is that a representative office does not have its own legal
personality and is merely the extended arm of the parent company. In contrast, a company formed in
Belarus has its own legal personality. One must decide the most advantageous form of market presence
in each individual case based on the role of one’s branch in Belarus and the legal implications of that role.
If an Austrian company does not actually want to actively carry on business locally and if its Belarusian
branch is solely designed to assist customers and the parent company, we would normally recommend
setting up a representative office as a first step.
Representative office
The procedure for the opening and closing of representative offices of foreign companies in Belarus is regulated
by the directive of the Council of Ministers of the Republic of Belarus (No. 929 of 22 July 1997).
According to this directive, approval from the Belarusian foreign ministry is required to open a representative
office. Representative offices do not have their own legal personality. The head of the representative
office is appointed by the parent company and acts on the basis of the powers he or she has been granted.
A representative office is a ‘permanent representation’ for the purposes of Belarusian tax legislation. It must
therefore be registered with the tax authorities, submit an annual tax return and keep books in a businesslike
manner. The big advantage of a representative office is—so long as its activities do not make it a permanent
business establishment—that it is only captured by the Belarusian tax system to a very limited
extent. Apart from social security contributions for staff and VAT on goods and services purchased by a
representative office, it does not have to pay any local taxes to speak of. This favoured tax status is lost if
a representative office’s activities make it a permanent business establishment (i.e. if it carries on a commercial,
for-profit activity locally). If that is the case, the representative office will be taxed like a company
formed in Belarus. Under Belarusian foreign exchange legislation, a representative office has non-resident
status.