Russia: Types of Company
Joint Activity Agreement
This page was last updated on 16 Nov 2018.
A joint activity agreement (JAA) or simple partnership is made with a Russian company to carry out business in Russia and usually requires the foreign company to contribute funds, property or know-how in the form of tangible or intangible assets to the joint activity. The JAA provides for division of profits which need not be in proportion to the partners' contributions.
The joint activity is taxed at the level of its participants (with the exception of value added tax). One of the participants must maintain separate books for the joint activity. The existence of a joint activity agreement with a foreign company does not automatically lead to creation of a permanent establishment (PE) in Russia. However, in practice it can be very difficult to defend the "non-PE" position since the law is not very clear in this regard.
A JAA must be registered with the tax authorities (despite the fact that a simple partnership itself is not a taxpayer), the state registration chamber for representative offices, and the various social funds.