Land Development

A UK resident purchased land of total market value over $20 mln in the St. Petersburg region. The client wished to attract investments to develop the land plots into villages. There were effectively three projects which involved three groups of participants: one plot would be sold and proceeds repatriated to the UK, another plot would be developed, and finally, it is planned to buy some additional land in a nearby village.

The project provided exceptional investment opportunity but was complicated by a number of factors. Some plots were classified as agricultural land and could not be owned by a foreign entity (or a Russian entity with major foreign shareholder), and generally speaking, could not be developed. The target land plot could only be acquired through purchase of houses on it but still it could only be privatised by the current house owners, former members of a collective farm, and only then sold to the investors. Additional complicating factor was that at least two tax systems and a number of different taxes were involved.

We structured the project, providing both a transparent vehicle to investors and, at the same time, a tax efficient solution taking into consideration UK and Russian tax systems and various taxes involved (income tax at both individual and corporate level, VAT, withholding taxes and etc). We also advised on corporate structure, which included onshore and offshore companies and a non-commercial entity, drafted articles of association.