Russian employers will no longer pay income tax for foreign distance employees

    The Ministry of Finance of the Russian Federation sent a proposal to the tax authorities to exempt employers from personal income tax with payments to remote foreign employees. The remote worker lives abroad, and therefore no deductions should be made from their wages. The agency stated these considerations in a letter signed by Olga Tsibizova, Deputy Director of the Department of Customs and Tax Tariff Policy of the Ministry of Finance of Russia.

    If foreign employees come to Russia for some time, then they should not live on the territory of the Russian Federation for more than 183 calendar days. Otherwise, they will be considered tax residents of the Russian Federation and the employer will have to pay deductions from their salaries. According to Tsibizova, employers in this situation are not recognized as tax agents and cannot be charged with calculating, withholding and paying personal income tax from the salaries of such remote workers.

    “Since in this case individuals perform work on the territory of a foreign state, the remuneration they receive for the performance of labor duties relates to income from sources outside the Russian Federation. Thus, in relation to the income of the organization’s employees in the form of wages received from sources outside the Russian Federation, the employing organization is not recognized as a tax agent. Such an organization cannot be assigned the duties stipulated for tax agents, ”explains Tsibizova.

    The press service of the Ministry of Finance clarifies that in this case, a foreign employee in his own country will have to "pay the national income tax, the rate of which is likely to be higher than the Russian one."

    “Earlier, there could be a misunderstanding with the determination of the source of income, if the salary is paid by a company registered and operating in the territory of the Russian Federation,” admits Diana Maklozyan , head of the legal department of Heads consulting company . Now the employer will get rid of the need to fill out 2-personal income tax certificates.

    However, the innovation cannot extend to all categories of citizens working abroad.
    “Regardless of the actual time spent in the Russian Federation, Russian military personnel serving abroad are recognized as tax residents of the Russian Federation, as well as employees of state authorities and local self-government bodies sent to work outside the Russian Federation. But in general, it turns out that hiring freelancers is more profitable for companies than for Russians, since they greatly simplify tax and accounting reporting, Anton Sonichev , lawyer for Business Fairway , told Izvestia .

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