A proposal to add a Belarusian company to a group structure rarely fails on the business case. The engineering talent in Minsk is deep, salaries are competitive, and the Hi-Tech Park regime still makes the numbers work for software companies. Where these proposals stall is the approval memo. Legal, compliance, tax and treasury all need to sign off, and each of them looks at Belarus through a different risk lens.
That review has become far more structured since 2022. Western sanctions on Belarus are layered and no longer move in the same direction. Belarus has its own countermeasures aimed at owners from so-called unfriendly states. None of this makes a Belarusian subsidiary impossible, and many international groups run R&D centres in Minsk today. It does mean HQ wants clear answers before it approves, not after the entity is registered.
Below are the questions a typical HQ legal and compliance function works through, roughly in the order they come up: sanctions, ownership and control, governance, tax and cash repatriation, data, people and banking, and finally the exit route. If you are the person preparing the business case, treat it as the list of objections to answer before the memo goes out.
Sanctions screening comes first because a negative answer ends the discussion. In practice the work has three layers.
An EU, UK, US or Swiss parent sits under its own rules, and a multinational may sit under several at once. These regimes are no longer moving together. The EU renewed its Belarus measures in February 2026 for another year, to 28 February 2027, and its sectoral restrictions largely track those it applies to Russia. Most compliance teams start from the Council’s overview of EU restrictive measures against Belarus.
The United States has taken a different path. In March 2026 OFAC lifted the restrictions on Belarusian sovereign debt and removed Belaruskali and the Belarusian Potash Company from the SDN list. The core executive orders remain in force, however, and EU and UK rules are now noticeably stricter than US ones. The approval memo should state which regime governs which entity and person, including EU or US nationals working for a non-EU company.
The new company will have a landlord, a bank, IT vendors, perhaps local customers. EU, UK and US rules all extend restrictions to entities owned or controlled by designated persons, so ownership has to be checked as well. Several large Belarusian banks are designated or restricted, which makes bank choice a sanctions decision as much as a treasury one. Teams with US exposure also check the OFAC Belarus sanctions programme for current general licences, since these change the picture for specific counterparties.
Laptops, servers, network equipment, software licences and technical support all move from the group into Belarus. Some of these fall within EU export bans on dual-use and advanced technology goods, and some contracts need clauses prohibiting re-export. EU rules also expect parent companies to use best efforts so that their subsidiaries outside the EU do not undermine sanctions. Compliance will want an inventory of what the Belarusian office will receive, who ships it, and under which classification.
Once sanctions are cleared, the next question is who will hold the shares. This matters more in Belarus than in most jurisdictions, because Belarusian law now treats owners differently depending on where they come from.
Since 2022 Belarus has kept a list of foreign states it considers unfriendly. It covers EU member states, the US, the UK, Switzerland, Norway, Canada, Australia, New Zealand, Iceland, Liechtenstein, Albania, North Macedonia and Montenegro. For participants connected to these countries, a series of presidential edicts restricts some ordinary corporate actions. Selling or otherwise disposing of shares, reorganising the company and withdrawing from it require permission from the Council of Ministers. Permission is not automatic, and where it is granted it usually comes with conditions, including a substantial payment linked to the market value of the stake. Similar rules apply to disposing of real estate held by companies with a significant unfriendly-state shareholding.
HQ legal teams draw two practical conclusions from this.
Compliance will also ask how the group’s ultimate owners will be identified and disclosed locally. Belarus has no public register of beneficial owners, which leads some teams to assume there is little to do. In reality the obligations are ongoing and triggered by events: banks, the Hi-Tech Park administration and other counterparties request beneficial ownership data at onboarding and whenever something changes. Our article on beneficial ownership reporting in Belarus covers the thresholds and timing in detail.
A Belarusian LLC is usually run by a single director who acts for the company without a power of attorney. That person signs contracts, bank documents and tax filings, and carries personal liability for many compliance failures.
HQ usually limits that authority with a written delegation matrix. It sets out which decisions the local director can take alone, which need approval from the participant or a group officer, and what thresholds apply to payments and contracts. Powers of attorney for bank access, HR and tax should be specific and time-limited rather than broad.
Compliance teams also look at how the entity will be run when no one from HQ is in Minsk, which is the normal situation for most groups. Our guide to managing a Belarusian subsidiary remotely sets out a typical split of roles and a reporting calendar that HQ can adopt as is.
The agreements between the parent and the Belarusian company are where legal, tax and compliance concerns meet. Most R&D structures need at least:
Most software and R&D companies apply for Hi-Tech Park residency, which replaces several standard taxes with a lighter regime in exchange for meeting activity and reporting conditions. HQ should know whether residency is part of the plan, what happens to the cost base if it is refused or later lost, and who will monitor ongoing compliance with HTP conditions.
Belarus applies transfer pricing rules to controlled transactions with related foreign parties. A captive R&D centre is commonly remunerated on a cost-plus basis, with a mark-up supported by a benchmarking study. Group tax will want the Belarusian policy to sit inside the group’s existing framework, and most groups base it on the OECD Transfer Pricing Guidelines so that both sides of the transaction can be defended with the same analysis.
Under a government resolution adopted in July 2025, a Belarusian company may pay dividends to participants from unfriendly states only with permission from the local executive committee. The criteria depend on the amount paid in the year, and the company must have no overdue tax, loan or wage debts. The restriction currently runs until 31 December 2026, so groups approving a structure now should assume it may be extended and plan accordingly.
Withholding tax adds another layer. Since 2024 Belarus has applied a higher rate to certain income paid to organisations from unfriendly states that have no permanent establishment in the country. It has also suspended the dividend and interest provisions of its tax treaties with many European countries, the UK and the US. These measures also expire at the end of 2026 unless renewed.
The practical effect is that most captive R&D centres plan to return value mainly through service fees rather than dividends. That only works if the transfer pricing is sound and the bookkeeping holds up, which is why HQ often asks who will keep the statutory books and how they will reconcile to group reporting. Firms that handle accounting for foreign-owned companies in Belarus can produce both local filings and group reporting packs.
Belarus’s Law on Personal Data Protection, in force since November 2021, has turned data into a full section of the memo.
The law follows many GDPR principles: a legal basis for each processing purpose, data minimisation, a published processing policy and internal controls. It is supervised by the National Personal Data Protection Center. For a group structure, the key issue is cross-border transfer. Personal data can move freely to countries the regulator recognises as providing adequate protection. For other destinations, the transfer needs a separate basis, such as the data subject’s consent or a permit from the Center.
In an R&D set-up, personal data crosses the border constantly. Employee records go into a group HRIS. Developers appear in global identity systems, ticketing tools and code repositories. Each of these flows should be mapped, and the legal basis for each one documented, before the first employee is hired.
Information security will also ask: which group systems will Belarusian staff access, and under what controls? How will access be removed if sanctions rules change or an employee leaves? EU-based groups also need to consider their own GDPR obligations whenever Belarusian staff can access EU personal data, since the EU has no adequacy decision for Belarus and such access counts as a transfer.
Belarusian employment is governed by the Labour Code, and most practical questions for HQ concern contract form, working time, termination and the IP clauses mentioned above. HR teams also ask how group policies such as equity plans, bonus schemes and remote work rules will fit local law.
Some groups do not want to hire through a new entity at all in the first months. An Employer of Record arrangement lets the first engineers start while the company is registered and, if relevant, while HTP residency is pending.
The choice of Belarusian bank matters for sanctions reasons, as noted above, and for practical ones: which correspondent banks it uses, how quickly it processes incoming foreign currency, and what supporting documents it asks for. On the group side, the paying bank in the EU, UK or US may hold transfers to Belarus for review unless the purpose and contract are clear.
Treasury will want to see the expected payment flows, the currencies involved and a plan for documenting each payment. Getting a corporate bank account in Belarus opened with the right bank, and agreeing the document package in advance, usually removes most of the friction. Belarusian currency legislation also sets rules for foreign currency operations and export contracts, so the services agreement with the parent should be drafted with those requirements in mind.
For Belarus, most HQ legal teams now insist on an exit plan, for two reasons. First, as described above, an owner from an unfriendly state cannot simply sell its shares or reorganise the company without government permission. Second, sanctions can change quickly, and the board wants to know what it would do if continuing became impossible.
A useful exit section covers four scenarios:
What HQ wants is evidence that the business has thought about them, knows which ones require approvals, and has budgeted realistically for the cost of leaving.
The table below pulls the points together. It reflects what HQ reviewers most often ask for, and the evidence that usually settles each question.
| Area | What Head Office Asks | Supporting Documents |
| Sanctions | Which regimes apply, and are any counterparties restricted? | Sanctions memo, screening results, equipment and services list |
| Ownership | Who holds the shares, and what do Belarusian countermeasures mean for us? | Structure chart, rationale for any holding company |
| Beneficial owners | Who are they, and who keeps the data current? | UBO list, process for updates |
| Governance | Who signs, and how is their authority limited? | Delegation matrix, draft powers of attorney, reporting calendar |
| Intra-group | Do the agreements match reality? | Draft services, IP and data processing agreements |
| Tax | What regime, what profit level, how does cash return? | HTP plan, TP policy, dividend and withholding analysis |
| Data | How does personal data move, and on what basis? | Data flow map, legal basis per flow, processing policy |
| People | How will we hire, and on what terms? | Employment contract template, EOR plan if used |
| Banking | Which bank, and how will payments be documented? | Bank choice rationale, payment flow plan |
| Exit | How would we leave, and at what cost? | Exit scenarios with permissions and timeline |
Yes, as long as the subsidiary, its counterparties and its activities do not breach the sanctions that apply to the parent. The key is documented screening and a clear view of what goods, software and services move into the country.
In our experience, a group with an established compliance function needs four to eight weeks if the business case arrives with the evidence listed above. Missing pieces, especially on sanctions and tax, are what stretch the timeline to several months.
Only when the holding company has a genuine business purpose. A holding added mainly to avoid either set of rules tends to raise questions rather than settle them.
Currently only with permission from the local executive committee, and subject to conditions such as having no overdue tax or wage debts. The rule runs until 31 December 2026. Most captive R&D centres return value mainly through cost-plus service fees instead.
It often makes sense for the first few hires, or while the entity and HTP residency are being set up. Once the team grows or the group wants to own IP and contracts locally, an entity usually becomes the better option.
Belarus still works for plenty of groups that need a solid engineering team without London or Berlin salaries. The difference now is how much homework HQ wants to see before anyone signs.
In our experience, the proposals that go through quickly are the ones where the sanctions screening, ownership chart, draft intra-group agreements, tax and cash plan and exit options are ready before the first meeting. The ones that drag on usually left one of these for later.
If you are putting together a Belarus proposal and want to test it before it reaches the board, get in touch with our team. We can walk through the structure, the numbers and the local compliance side with you.
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