Taxes in Russia

There is a code enacted and adopted in three stages when it comes to the tax. As of 2019, taxes in Russia account for around 10.8% of the country’s GDP following a series of reforms over the previous decade.

When it comes to the foreigners, their residency status determines their tax position. It influences your income to tax and how much you pay.

In this guide we are going to tell you about this:

• the tax system in Russia;
• federal, regional, and local taxes in Russia;
• taxes on goods and services (VAT) in Russia;
• can you get a refund on VAT?;
• who pays taxes in Russia?;
• when do Russian taxes apply?;
• double taxation and treaties;
• Russian tax system and foreign pensions;
• income tax rates in Russia;
• tax rates for Russian residents;
• tax rates for non-residents in Russia;
• how to file your income tax return in Russia;
• Russian income tax deductions;
• property and wealth taxes in Russia;
• taxes in Russia on rental income;
• Russian capital gains tax;
• inheritance and gift tax rates in Russia;
• corporate tax rates in Russia;
• import and export tax rates in Russia;
• advice on tax rates in Russia.

The tax system in Russia

In Russia the Ministry of Finance is responsible for taxes.

The Russian tax year runs from 1 January to 31 December. You should send tax returns in a form called Tax Declaration  to the Federal Tax Service. Then you will get your returns on April, 30, and finally you can pay your taxes on July,15.

A website of the Federal Tax Service operates in Russian although sometimes you may read the info in English.

If you earn over 5 million rubles per year then you should pay a progressive tax with rate 13% or 15 %. But if you are non-resident you will have to pay 13-30% depending on their employment status and the source of their income.

Federal, regional, and local taxes in Russia

According to the Tax Code there are three levels of taxation like federal, regional, and local. Federal tax consistes of the next taxes:

• VAT;
• Mineral extraction tax;
• Individual income tax;
• unified social tax;
• corporate profits tax;
• excise taxes;
• special tax regimes.

Regional and local taxes are based on assets. Regional tax consists of:

– corporate property tax;

– vehicle tax;

– property tax;

– gambling tax.

Local tax consists of:

• land tax;

• individual property tax.

Taxes on goods and services (VAT) in Russia

Since 2019, VAT been levied at the benchmark rate of 20% when purchasing goods and services.

A lowered 10% VAT is used on:

• food;

• shoes;

• medical items;

• kid’s clothes.

0 VAT is used on:

• education;

• medical items;

• public housing;

• traditional financial products. VAT in Russia is included in the price.

Can you get a refund on VAT?

If you visit Russia for a short time you can get a refund of VAT. If you came from Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia you will not get a refund. To get refund on VAT, you should shop at selected retailers officially admitted by the Ministry of Industry and Trade.

The minimum purchase amount is 10,000 р. per retailer per day to get a refind:

• up to 20% on a wide variety of goods including fashion, technology, watches, and jewelry;

• up to 10% on other goods including food, medicine, and books.

You’ll need to ask the store for a VAT check or refund form. A customs officer must then stamp this at the airport or port you depart through. The officer will ask to see your ticket, purchase receipts, and may want to inspect the goods you’ve bought. These should ideally have their original tags or labels intact.

You can get VAT using a special form. Refunds come in cash and to your credit card. Agencies that refund VAT:

• Premier Tax Free;

• Global Blue;

• National Operator Tax-Free;

• Hi Sky.

Who pays taxes in Russia?

If you get an income in Russia then you should pay personal income tax in Russia. If you live in Russia for more than 183 days per year and have a Russian residency permit you will have to pay a lower tax.

Individual businesses like freelancers, contractors and consultants pay income tax on their business. When it comes to the international corporate organization, they need to pay 20% on profit and withholding tax.

When do Russian taxes apply?

Each person in Russia even if they get income from abroad should pay tax on their income. However, if an individual is non-resident remains so until the end of the tax period, they do not have to file a declaration and no taxes are due concerning income received outside Russia, even income received prior to obtaining non-resident status.

Russian taxes can apply in the following situations:

• registered individuals, such as freelancers and self-employed workers in Russia;

• notaries and lawyers in private practices must pay Russian tax on any income received for these activities;

• individuals who have received remuneration through civil contracts with other individuals who are not tax agents must declare that income. This includes income from contracts for rental or leasing agreements;

• those who have sold a private property must declare that income;
• workers who have received income without a tax agent, such as an employer withholding appropriate taxes, must declare the value of this income;

• all lottery winnings, or winnings from any other games of chance, must be declared, no matter the amount;

• income earned from ownership of intellectual property rights must be declared;
• individuals who have received gifts from private individuals who are not family members must declare their inheritance.

Double taxation and treaties

Expat residents in Russia can claim a foreign tax credit against their Russian tax liabilities if they are covered by a relevant Double Taxation Treaty (DTT). Russia has signed DTTs with more than 80 countries. The credit may not exceed the amount of tax payable in Russia.

Countries are:

• Albania;

• India;

• Philippines;

• Algeria;

• Indonesia;

• Poland;

• Argentina;

• Iran;

• Portugal;

• Armenia;

• Ireland;

• Qatar;

• Australia;

• Israel;

• Romania;

• Austria;

• Italy;

• Saudi Arabia;

• Azerbaijan;

• Japan;

• Serbia and Montenegro (former Yugoslavia);

• Belarus;

• Kazakhstan;

• Singapore;

• Belgium;

• North Korea;

• Slovakia;

• Botswana;

• South Korea;

• Slovenia;

• Brazil;

• Kuwait;

• South Africa;

• Bulgaria;

• Kyrgyzstan;

• Spain;

• Canada;

• Latvia;

• Sri Lanka

• Chile;

• Lebanon;

• Sweden;

• China;

• Lithuania;

• Switzerland;

• Croatia;

• Luxembourg;

• Syria;
• Cuba;

• Macedonia;

• Tajikistan;

• Cyprus;

• Malaysia;

• Thailand;

• Czech Republic;

• Mali;

• Turkey;

• Denmark;

• Mexico;

• Turkmenistan;

• Egypt;

• Moldova;

• Ukraine;
• Finland;

• Mongolia;

• United Kingdom of Great Britain and Northern Ireland (UK);

• France;

• Morocco;

• United States of America (USA);

• Germany;

• Namibia;

• Uzbekistan;

• Greece;

• Netherlands;

• Venezuela;

• Hungary;

• New Zealand;

• Vietnam;

• Iceland;

• Norway.

In order to claim the tax credit, individuals will need to provide supporting documentation along with the tax declaration within three years after the reporting period.

In 2018, Russia became one of over 100 countries to implement the Automatic Exchange of Information (AEOI) system, which allows the country’s government to seek information on any bank account held anywhere by any Russian citizen or any holder of a Russian residency permit.

The countries are here:

– Andorra;

– Anguilla;

– Argentina;

– Aruba;

– Australia;

– Austria;

– Bahamas;

– Bahrain;

– Barbados;

– Belgium;

– Belize;

– Bermuda;

– Brazil;

– British Virgin Islands;

– Bulgaria;

– Canada;

– Cayman Islands;

– Chile;

– China;

– Colombia;

– Cook Islands;

– Costa Rica;

– Croatia;

– Curaçao;

– Cyprus;

– Czech Republic;

– Denmark;

– Estonia;

– Faroe Islands;

– Finland;

– France;

– Germany;

– Gibraltar;

– Greece;

– Greenland;

– Grenada;

– Guernsey;

– Hong Kong, China;

– Hungary;

– Iceland;

– India;

– Indonesia;

– Ireland;

– Isle of Man;

– Italy;

– Japan;

– Jersey;

– Korea;

– Latvia;

– Lebanon;

– Liechtenstein;

– Lithuania;

– Luxembourg;

– Macau (China);

– Malaysia;

– Malta;

– Mauritius;

– Mexico;

– Monaco;

– Nauru;

– Netherlands;

– New Zealand;

– Norway;

– Panama;

– Poland;

– Portugal;

– Romania;

– Saint Kitts and Nevis;

– Saint Lucia;

– Samoa;

– San Marino;

– Saudi Arabia;

– Seychelles;

– Singapore;

– Slovak Republic;

– Slovenia;

– South Africa;

– Spain;

– Sweden;

– Switzerland;

– Turks and Caicos Islands;

– United Arab Emirates;

– United Kingdom;

– Uruguay;

– Marshall Islands;

– Montserrat;

– Russia;

– Saint Vincent and the Grenadines;

– Antigua and Barbuda;

– Brunei Darussalam;

– Dominica;

– Israel;

– Niue;

– Qatar;

– Sint Maarten;

– Trinidad and Tobago;

– Turkey;

– Vanuatu.

Russian tax system and foreign pensions

There is no special bonuses for foreign pension income. Therefore tax residents must pay Russian income tax on their foreign pension but non-residents should not do that.

If you inherit a foreign pension or receive it by transfer you should not pay a tax.

Since there are no wealth and net worth taxes in Russia, no tax applies in cases where someone inherits a foreign pension or receives it by transfer. The Russian tax resident heir, however, would be subject to tax regarding income from a foreign pension scheme and potential profits of the pension vehicle.

Russia does not provide tax relief for residents on contributions to a foreign pension scheme.

Income tax rates in Russia

In 2024 tax residents should pay 13 % of tax on an annual income up to 5 million rubles. If your annual income is higher that 5 million rubles then you should pay 15% taxes. If you are non-residents and get your income in Russia you will pay 30%. Self-employed persons pay 4-6% on turnover.

Tax rates for Russian residents

If you are a resident in Russia and should pay 13-15%  tax on your salary, dividend income, rental income from property, foreign exchange gains, and gains from exercising stock options. If you have a bank deposit more than 1 million rubles you should pay 13 % income tax on your interest irrespective of you are a resident or non-resident.

If you are working then your employer should deduct tax from your salary. Expats who receive some of their income in benefits pay tax based on the market value of the benefit as a rule.

Tax rates for non-residents in Russia

Basically, anyone who spends less than 182 days a year in Russia is a non-resident and must pay personal income taxes at the general flat rate of 30% on income generated in Russia. Such Russian source income includes remuneration for activities and services performed in Russia regardless of the location of the paying entity, remuneration of directors of Russian companies, interest, and income from property located in Russia. Dividend income from Russian companies is taxed at 15%.

Non-residents will be taxed in Russia at a rate of 30% for the first 183 days, even if you are on a 12-month contract. If you receive official residency or stay longer than 183 days, you can reduce your tax liability to the progressive Russian tax rate and recoup any over-payment in the interim period.

Some foreign non-residents may be eligible for the Russian progressive tax rate. This applies to nationals of EEU member countries working in Russia. The 13% or 15% rate also applies to nationals of other countries who are Highly Qualified Specialists. They typically have work experience, skills, or accomplishments in a specific field and receive a monthly salary of at least 167,000 p. (with certain exceptions).

How to file your income tax return in Russia

Ways to file a tax return in Russia:

• online;
• pay personally at the Russian tax office;
• pay through a Russian bank account.

You can also use an authorized company and pay an administration fee. Please keep copies of payment documents and tax-related documents up to 4 years. First of all, you need to submit a tax declaration and secondly you should contact the Russian tax authority to check the additional taxes, fees or fines there.

Please attach the following documents to your Russian tax declaration:

• copy of your passport;
• employer certificate for employee income received outside Russia with specific date of each payment;
• a notarized power of attorney if an individual is submitting the declaration through a legally authorized representative;
• all support documentation for deductions.

How to file accounting documentation and tax returns:

• online;
• at a tax office;
• at an authorized operator.

Only high-earning taxpayers are able to electronically file tax returns directly to the tax authority via special software. This is not available for use by the general public or small to medium-sized businesses.

According to Russian tax laws, relevant documents for the calculation and payment of taxes should be kept for at least four years.

Self-employed income tax rates in Russia

In 2024 Russia has about 4 million of people who are self-employed. So, if you are self-employed you will have to pay 13-15% income tax. Expats with permanent or temporary residence permit should be registered as an Individual Entrepreneur.

In 2022, Russia introduced a new experimental tax regime in Moscow, Kaluga Oblast, and the Republic of Tatarstan. Corporate and entrepreneurial taxpayers will be able to either be taxed at 8% on their income or 20% on their income minus expenses. The regime is expected to be trialled until 2027, and any business with less than 60 million p. taxable income and fewer than five employees may apply.

Russian income tax deductions

Official residents may use deductions and allowances to reduce their income taxes. So, these deductions are used to salaries with progressive Russian tax rate. But they can not be used to taxes you pay at any other rate. It allows you to file declarations at any time in a year.

Deductible expenses are available when:

• buying property in Russia;

• paying tuition fees;

• doing medical treatment;

• making payments to charity.

A widespread deduction from income taxes is up to the kids. You will not pay from 1,400 rubles for the first two children and goes up to 3,000 rubles for a third and each subsequent child. If you applying for this tax deduction there is no matter where your kid lives. Remember that to apply for a deduction of child tax, you must earn income of less than 350,000 rubles annually.

You can also deduct the costs of their own education in special institutions and for their kids education.

Donations to certain non-commercial organizations and charities are deductible from taxable income within the limit of 25% of all income subject to 13/15% tax rate.

When buying property in Russia, foreign tax residents can apply for a once-in-a-lifetime tax deduction of up to 2,000,000 p. plus the amount of interest of up to 3,000,000 p.

Property and wealth taxes in Russia

Russians and foreign nationals alike do not need to pay taxes when buying real estate or other assets. A foreign national can buy an apartment, a country house, a garage, and even land (for private housing or private subsidiary farming) except in border areas, regions with special regimes, forests, nature reserves, and closed administrative areas.

Russian property tax

Russian property tax is paid by the owners at a maximum rate of 2% of the value of the property, depending on the value of the property as determined on 1 January:

• lower than 300,000 p: 0.1%;
• 300,000–500,000 p: 0.1 to 0.3%;
• 500,000 p+: 0.3% to 2%.

In general, you pay Russian property tax annually as part of your tax return application. You can find more information on Russian property tax at the Russian tax authority.

However, there is a slight difference when it comes to land tax rates in Russia. Any owner of land and the property located on it pays the Russian tax rate set by local authorities. This rate is generally 0.3% of the land value regardless of whether the land is for housing or agricultural purposes. For land uses other than agricultural, residential, or utilities infrastructure, a tax rate of 1.5% can apply. The payment process is similar to that for property tax.

Taxes in Russia on rental income

Rental income gained by residents is taxed at the progressive rate, while non-residents are subject to a tax rate of 30%, which is typically withheld at the source. If such rental income is received by an international legal entity that does not have a permanent organization in Russia, such an entity is also subject to holding income tax on gross rentals at 30%.

Russian capital gains tax

There is no separate capital gains tax in Russia. Instead, gains from the disposal of property and assets are subject to income tax at the progressive rate.

Tax residents may be exempted from all property sold during a calendar year. The exemption is limited to 1 million p. in the case of real estate and 250,000 p. for other property. No matter you are resident or not , proceeds from the sale of real estate are excluded from taxation if the property is owned for more than five years. If you keep shares in Russian or foreign companies for more than five years you will be exempt from taxation.

Taxable profits are the gross income or selling price without prior subtractions for purchase costs or other expenses.

Inheritance and gift tax rates in Russia

As of January 2006, there is no inheritance or gift tax in Russia. In case of death, heirs do not have to pay personal income tax for the deceased. Salaries owing to resident employees must be transferred to their heirs without taxes being withheld.

However, gifts of real estate, shares, and vehicles by non-family members are subject to personal income taxes in Russia of 13% or 15%, payable by the recipient. Gifts from immediate family – spouses, parents, grandparents, children, grandchildren, siblings, and half-siblings – are exempt.

Gifts to non-residents are taxed at 30%.

Corporate tax rates in Russia

The benchmark rate of Russian corporate tax on profits is 20%. Companies are also taxed 13% on dividend profits. However, corporate taxes in Russia and allowable expenses vary depending on the company structure.

In the case of self-employed persons, note that individual entrepreneurs do not pay profit tax and are subject to personal income tax on their business profit.

Import and export tax rates in Russia

Import taxes in Russia apply to most goods valued at over 5,000 rubles. Since formally joining the WTO in 2012, Russia has committed to all WTO provisions, including an average tariff of 6.1% on goods. Imports subject to a higher tariff include finished goods (15%), food (20%) and agricultural products.

For countries with special Most Favoured Nation (MFN) status, only the basic rates apply. Special exemptions also apply to some countries of the Commonwealth of Independent States. In addition to customs duties, import excise duties of between 20% and 570% may be applied to limited categories of goods (e.g. luxury goods, alcohol and tobacco products, cars, diesel and motor oil, and other petroleum products).

More than 154 commodity items are subject to export duties in Russia, the rates of which can reach 50%. This mainly concerns energy products, ferrous and non-ferrous metal ores, hides and timber. Russia does not impose import or export duties on certain goods, such as transit goods, cultural values ​​and humanitarian aid.

All goods passing through Russian customs are subject to a processing fee at a fixed rate depending on value and quantity.

Fuel taxes

As an oil producer, Russia has some of the lowest-priced fuel in the world. Taxes on petrol and diesel, however, are levied at between 55–65%, although this can vary.

Airline taxes

There are no exit taxes in Russia. However, several other taxes and fees are included in the price of a flight. The total amount varies depending on fluctuations in oil prices and government policies. To find out how much you might pay, check each airline’s website, as is the case with Aeroflot.

Departure taxes

If your contract ends or you leave in the middle of the Russian tax year, you can file an exit tax return at least one month before you leave the country permanently. You must pay your personal Russian income tax within 15 days of filing your tax return.

Advice on tax rates in Russia

Although taxes in Russia appear simple, there are a number of exemptions and deductions available to both resident and non-resident taxpayers. The tax system is flexible, and many legal requirements may not be applicable in practice due to additional exemptions.