A guide to Russian income tax and rates
Russian income tax is applied to all Russian-based earnings. This guide explains who pays income tax in Russia, Russian income tax rates for residents and non-residents, plus Russian income tax deductions.
Russian income tax is payable on any earnings based in Russia, although Russian income tax rates differ for residents and non-residents. Typically non-residents are subject to pay higher income tax in Russia and are not eligible to claim income tax deductions and allowances.
Russia’s tax system is somewhat complex, however, with several exemptions allowed for certain categories of non-residents to claim the lower, resident Russian income tax rate.
This guide explains who is liable to pay Russian income tax, and the applicable Russian income tax rate, depending on your situation. It also provides details on the Russian income tax system, such as when your income taxes in Russia are due and how to file a tax return.
Income tax is managed by the Russian tax authority (Federal Tax Service of Russia), which is governed under the guidance of the Ministry of Finance.
Who pays Russian income tax?
Anyone that receives a personal income while living in Russia, either from a Russian company or from any other foreign source, is liable to pay Personal Income Tax (PIT) in Russia during their stay.
Russian income tax is generally deducted automatically by your employer from your monthly pay packet. However, if you receive additional income, for example from a salary abroad, rental income or dividends, you will also have to file a tax return form independently.
The percentage of payable income tax in Russia depends on how long you stay in the country, whether you are classed as an official resident or non-resident, and the amount of income you earn.
Foreigners who have legal Russian residency and stay in the country for 183 or more days within a 12-month period, and have a monthly income from a company or a service operating in Russia, are liable to pay Russian income tax as resident.
If you earn a living whilst in Russia for less than 183 days throughout the tax year, but do not have a permanent residency visa, you are considered as a non-resident.
Individual businesses such as freelancers, consultants and contractors pay personal income tax on their business earnings, but are entitled to various tax deductions in accordance with profit tax or a special tax regime.
Russian income tax rates
As a general rule, residents pay a flat Russian income tax rate of 13 percent and non-residents pay income tax at 30 percent. The rates of payable tax can differ for high-income earners and secondary incomes; for example, non-resident taxpayers who earn more than RUB 167,000 as a highly skilled worker can claim the Russian income tax rate of 13 percent, instead of the typical 30 percent.
In addition, residents pay Russian income tax on dividends at 9 percent, while non-residents are subject to a Russian income tax rate of 15 percent.
However, there are some exceptions from the typical Russian income tax rates for resident and non-residents:
- Foreigners, even non-residents, who are hired on a highly skilled work visa pay 13 percent Russian income tax
- Foreigner workers who do not require a visa to live in Russia and are employed under a special licence to work from home pay 13 percent.
- Dividend profits for tax residents from local and foreign companies is paid at 13 percent.
- Dividend profits for non-tax residents from local companies is paid at 15 percent.
- Foreign nationals entering under visa-free regimes are taxed at 13 percent, and in some cases non-residents from CIS and EEU countries.
It should be noted that companies are required to deduct Russian income tax from an employer's salary at 30 percent until you are awarded an official visa. This can take more than a year to obtain.
Once you are classified as a resident, your Russian income tax rate is reduced to 13 percent and the overpayment is returned to the employee by the company on behalf of Federal Tax Service payments. Overpayment starts on day 184 of your residency in Russia. It is advised to clarify everything in detail before signing the contract with your employer.
The only exception to the above is for foreigners with status to work as a qualified specialist. In such circumstances, you will be taxed at 13 percent regardless of the amount of time you stay in the country. However, expats are only awarded the position of a highly qualified specialist after successful filing of the appropriate work permit, which can take a considerable amount of time.
The benchmark rate of Russian corporate tax on profits is 20 percent. Companies are also taxed 9 percent on dividend profits.
Paying income tax in Russia
To pay income tax in Russia, you can submit your tax declaration form either online or at the Russian tax office. If you fail to file the document by the due date, you are liable to pay a further 5 percent of the income tax amount for each month you are late.
You can pay your income tax in Russia from a Russian bank account. It is also possible to hire a tax expert, who can ensure the forms are filled out correctly and the correct amount of Russian income tax is calculated and paid on time.
The Russian tax year runs from 1 January until 31 December, while tax returns are due by 30 April. The final period to pay your taxes is 15 July. If you miss this date you will receive a penalty.
English information can be found on the website of the Russian tax authority.
Russian income tax deductions
Official residents can reduce their Russian income tax bill via deductions and allowances, which are typically not available to non-residents. Some examples of when deductible expenses are offered include buying property in Russia, paying tuition fees, medical treatment or payments to charity.
The main deduction from Russian income tax is offered for children. The amount starts from RUB 1,400 and goes up to RUB 3,000 a month, depending on the number of children. It does not matter where the children live when applying for this tax deduction. However, to qualify for a deduction of child tax, you must be earning an annual income of no less than RUB 280,000. The maximum salary for a deduction is RUB 120,000 a year.
When buying property in Russia, foreign residents can apply for a tax deduction of up to RUB 2 million, excluding interest rates on a special loan spent on real estate.
If you leave Russia permanently in the middle of the Russian tax year, you can file for a departure tax return at least one month before your departure, while your personal Russian income tax should be paid during the 15 days after filing the tax return form.
How to filing your Russian income tax return
Accounting documentations and tax returns can be filed online, at a tax office or via authorised operators. It should be noted that only high-earning taxpayers are able to electronically file tax returns directly to the ax authority via special software. This is not available for use by the general public or small to medium sized businesses.
Keeping income tax records
According to Russian tax laws, relevant documents for the calculation and payment of taxes should be kept for at least four years.
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