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Tax in Russia

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If you have settled in Russia, you will probably have queries on its tax system. Here is an overview.

There are different types of taxes in Russia. These apply to residents as well as to non-residents according to some conditions. To be considered as a Russian resident, you must have stayed in the country for at least 183 calendar days. Otherwise, you will be considered as a non-resident. In both cases, you will have to pay income tax if you are working in the country, including on revenue which you are earning from another country.

As regards non-residents, they will pay income tax based on their salary in Russia. Hence, you will have to apply for a tax number with the Federal Tax Service. This number will be required for all your tax transactions.

Deduction

In general, income tax in Russia is deducted at source. This means that your income tax will be deducted from your salary by your employer. However, you will be eligible to refunds at your next payments in case of overpayment. But if your income tax is not deducted at source, you will have to pay it in cash at the nearest tax office to your place of residence on the 15th of July at the latest.

Tax declaration

You will have to fill in a tax declaration form, which is known as the Nalogovaya Declaratia, if your income tax is not deducted at source. You may collect the form at the nearest tax office to your place of residence or on the www.3-ndfl.info website (which is in Russian only). Hence, it is best to visit the nearest tax office if you are not comfortable with Russian. The Moscow and St Petersburg offices have English-speaking officers.

Rates

Russia has a flat tax rate which applies to tax residents. Hence, you qualify as a tax resident if you have spent at least 183 consecutive days in the country. A flat rate of 13% will be deducted from your income. As regards non-residents, that is foreigners spending less than 183 days in the country, they will have to pay income tax at a rate of 30% on all their Russian-source income.

Russian sources

Russian sources include the following:

  • earnings if you are under a working contract in Russia
  • income from sale of property in Russia
  • profit from another individual's property in Russia
  • rental income received from property located in Russia
  • dividends earned from Russian companies
  • interest received from Russian companies or individual entrepreneurs
  • dividends received from foreign companies Russian subsidiaries
  • any other type of salary received in Russia.

Deductions

If you are paying tax in Russia, you may also be eligible to certain deductions, namely if:

  • you have made donations to recognized institutions (up to 25% of your income)
  • you have had expenses related to a family member's education (capped)
  • you have a dependent family member (capped)
  • you are contributing to a complementary pension plan (capped)
  • you spent have spent RR 28,000 for medical care
  • you have purchased property (capped at 1 million RR per year).

Exemptions

Here is the list of tax-exempt transactions which, however, do not apply to expatriates:

  • If you have sold a home or property which you have held for more than 3 years
  • If you have received interest on deposits with Russian banks (under certain conditions), from the stock market, pension funds or any disability pensions.

Double taxation

Many countries have signed a treaty to prevent double taxation with Russia. You are advised to check with your country's tax authorities before moving to Russia.

 Useful links:

Federal Tax Service eng.nalog.ru
Federal Tax Service - Tax Office Locator eng.nalog.ru/sto
3-Ndfl.info - Information and forms www.3-ndfl.info
Information on the payment of taxes www.3-ndfl.net/3ndfl
KPMG – Russian Tax System www.kpmg.com

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