Peculiarities of taxation of foreign citizens in 2023
- Taxation of foreign individuals in accordance with the tax status
- Taxation of foreign individuals who are not residents
- Taxation of foreigners when buying property
- Transport tax for foreigners
- Taxation of foreigners in the sale of property
- Taxation of highly qualified foreign specialists in 2023
- Payment of insurance premiums for foreigners
- Personal income tax when changing the tax status of a foreigner
As part of the general approach, the determination of the personal income tax rate is greatly influenced by the tax status of an individual – whether a person is a tax resident or not. At the same time, there are a number of nuances for the taxation of foreigners in 2023.
In accordance with the generalized strategy for considering the amount of personal income tax, all earned material assets of employees are subject to personal income tax at a rate of 30%. The corresponding approach is implemented in relation to foreign citizens working in Russian companies until they become residents of the Russian Federation. However, exceptions are possible for citizens of the EAEU member states (for citizens of Armenia, Belarus, Kazakhstan, Kyrgyzstan, regardless of the length of stay, the tax rate should be set at 13%), highly qualified specialists, emigrants with refugee status and people involved in the resettlement program of compatriots.
The rules will be discussed in more detail in this article.
Taxation of foreign individuals in accordance with the tax status
According to standard practice, taxation of foreigners working in the territory of the Russian Federation is divided into tax residents and non-residents. In full compliance with Article 207 of the Tax Code of the Russian Federation, the decisive factor is the duration of an individual’s stay in Russia. To specify, it is necessary to say about the period of 183 calendar days, which is established with the condition of permanent residence in the country for 12 consecutive months. If foreigners do not fall under this criterion, then they cannot be considered as residents. In addition, the article assumes an established list of exceptions when traveling outside of Russia does not violate the law. These should include:
- Departure for up to 6 months for medical or educational purposes.
- Going abroad involves staying at offshore hydrocarbon deposits.
- Foreign business trips of military personnel, employees of state bodies and local self-government bodies.
Taxation of foreign individuals who are not residents
In accordance with paragraphs 2 and 3 of Article 224 of the Tax Code of the Russian Federation, a reduced rate of 13% is applied to the income of foreign individuals who are non-residents of the Russian Federation. Persons who fit the category can receive such a bid:
- Employment, if a foreign employee receives a patent from the migration authority.
- Conditions for a foreign citizen to be a highly qualified specialist.
- The labor activity of the participants of the state program is regulated by the Decree of the President of the Russian Federation No. 637 of 22.06.2006;
- The labor activity of the participants is associated with crews whose vessels sail under the state flag of the Russian Federation.
- Foreigners are officially recognized as refugees or persons under the political asylum program under Law No. 4528-I of 19.02.1993.
In addition, a reduced rate of 15% is intended for dividends from equity participation in organizations registered in Russia.
The following types of income are taxed at the rate of 13% personal income tax:
- Salary, which includes additional surcharges and allowances paid for additional work.
- Bonus payments based on the results of work and travel expenses.
- Vacation payment.
It is important that the income was received only from the exercise of labor activity. Otherwise, the bid may change.
What income of a foreigner is taxed at the rate of 30%:
- Additional payment for the next vacation.
- Compensation of the employee’s expenses for accommodation.
- The cost of gifts from the organization and financial assistance.
After a foreign employee receives the status of a tax resident of the Russian Federation, all his income received will be taxed at a rate of 13%.
Taxation of foreigners when buying property
When foreigners acquire real estate and its subsequent maintenance, it is necessary to pay tax regardless of the status of the taxable person. Even if a foreign citizen qualifies as a tax non-resident of the Russian Federation, he is in any case obliged to make tax payments in full.
the size of the tax rate directly depends on the specific type of real estate. For example, a tax rate of 0.1% of the cadastral value is used for apartments. If a foreigner owns elite real estate, the tax rate increases to 2% of the value of the real estate.
It is important to mention the additional rights of a foreigner within the framework of property tax benefits. The exemptions give foreign citizens the right not to make tax payments on one of the objects of property if its area is less than 50 square meters. Moreover, if the person in question is a tax resident of the Russian Federation and has taxable property, then he has the right to use a simplified scheme for obtaining deductions for expenses.
Transport tax for foreigners
If there is an official registration of a vehicle in the Russian Federation, the foreign owner of the car is obliged to make transport tax payments. The amount of these taxes directly depends on the capacity. But in this case there is a group of exceptions. Foreigners have the right not to pay transport tax in cases where they fall into a preferential group.
Taxation of foreigners in the sale of property
A citizen of a foreign state can arrange the sale of property in his possession. In this case, the tax from the sale of the property must be paid first. At the same time, the foreign owner is exempt from tax payments when selling real estate if it has been in possession for more than 5 years and more than 3 years, respectively, if the reason for receiving it was a gift. On the contrary, if the property was owned for less than the minimum period of ownership, the non-resident will be forced to pay a tax of 30%.
It is important to note that the reduction of income from the sale of actual expenses for a non-resident of the Russian Federation is not provided. The procedure can be implemented only for tax residents of the Russian Federation.
Taxation of highly qualified foreign specialists in 2023
The income of highly qualified specialists associated with the performance of work duties is taxed at a rate of 13% (or 15%). Other income – at the rate of non-residents of 30%. Also, the income of a highly qualified foreign specialist is taxed at a rate of 30% if he is not considered a tax resident of the Russian Federation and has dual citizenship.
Payment of insurance premiums for foreigners
In accordance with Article 420 of the Tax Code of the Russian Federation, payments in respect of individuals who fall under the terms of compulsory insurance are recognized as the object of taxation of insurance premiums that can be considered as remuneration. Other laws establish a fixed list of categories of persons recognized as insured under these insurance classes.
Regulation of contributions related to injuries occurs on the basis of Law No. 125-FL of 24.07.1998. At the same time, pension and compulsory types of medical insurance do not depend on its tax status. However, medical insurance is directly proportional to the legal status of a particular person on the territory of the Russian Federation. Such persons include:
- Those who have received temporary asylum in the Russian Federation.
- Citizens of the EAEU member state.
- Permanently residing in the Russian Federation.
- Temporarily residing in the Russian Federation.
- Temporarily staying in the Russian Federation.
- Highly qualified specialists.
For these foreign workers, contributions from payments are accrued, limited in 2023 to the amount of 1,917,000 rubles at a tax rate of 30%. At the same time, only injury contributions are charged for payments to highly qualified specialists. In accordance with the law of 24.07.1998 No. 125-FL, foreigners, along with citizens of the Russian Federation, are subject to insurance against injuries at work. Accident insurance premiums (contributions paid to the FSS) are charged at the same rates as payments to employees who are citizens of the Russian Federation.
Personal income tax when changing the tax status of a foreigner
If a non-resident becomes a resident if all the necessary conditions are met, standard, property and social deductions for income should be applied to this foreign citizen. In addition, the tax base and tax must be recalculated starting in January, and the overpayment of personal income tax must be additionally offset against the payment of subsequent personal income tax from the employee’s future income.
Question and answer
To do this, it is necessary to collect and provide the employer with the following set of documents:
• A copy of the passport, where there are marks of customs officers about crossing the border.
• Migration card.
• A certificate from the previous place of work, with dates of employment.
• Tickets and other travel documents proving the fact of entry into the country.
• Other necessary documents.
Such persons, as a rule, enter Russia on a visa-free basis and receive a patent for employment. As with highly qualified employees, the tax agent withholds 13% (15%) from the income of a foreigner, regardless of the status of tax residence. In addition, the amount of the calculated tax can be reduced by the amount of fixed advance payments that a foreigner pays for a patent. Fixed payments for a patent amount to 1200 rubles per month.
It is possible to reduce the calculated amount of personal income tax by the amount of fixed advance payments only after receiving a notification from the Federal Tax Service. It is possible to reduce the amount of tax only on fixed advance payments that were paid in this tax period. The remainder of the patent value for deduction is not transferred to the next tax period.
A special procedure for calculating personal income tax is provided for such persons. Their income received under an employment contract is subject to personal income tax at tax rates of 13% (15%). However, if at the end of the tax period they do not receive the status of tax residents of the Russian Federation, the tax rate will increase to 30%. An additional amount of tax will also be withheld when paying income. In the latter case, it is important to know that the amount to be withheld cannot be more than 20% of the accrued monthly amount.
If a foreigner from the EAEU terminates an employment contract before the end of the 12-month period, the employer should not establish his status at the end of the tax period. This means that there are no recalculations of the tax amounts withheld at the rate of 13% (15%).