Personal Income Tax in Russia: NDFL

If you are receiving any income from Russia, you'd have to pay tax on it in Russia. The personal income tax (NDFL in Russian — НДФЛ — налог на доход физических лиц) is 13% for tax residents and 30% for non-residents.

 

For the purposes of the Russian tax code you are considered to be a tax resident if you spent more than 183 (consecutive or nonconsecutive) days in Russia during the last 12 months. In that case your personal income tax rate is 13% (article 206 of the Russian tax code). Alternatively, if you spent less than 183 days in Russia you are a non-resident for the tax purposes (even if you have a residency permit or a Russian passport) and your personal income tax rate is 30%.

 

The tax on your income has to be usually paid by the organization that makes the payment to you (article 226 of the tax code). However, it is not always fully clear who has this obligation, so if you receive income in Russia you should check whether the tax has been paid on it. If not, usually it's the organization that should have paid the tax that is responsible (article 123 of the tax code). In case you have to pay the tax yourself (e.g. in case you've been paid by an organization in Russia and they did not pay the tax), you would have to file your own declaration in Russia (using the form NDFL-3) and pay the personal income tax (NDFL) at the correct rate (13% for residents and 30% for non-residents). Therefore, it's always better to make sure the organization that will be paying to you in Russia will pay all the taxes, so you don't have to file your own tax return in Russia. You can always consult a tax laywer in Russia to double-check your obligations.

 

Social Tax, Pension Tax and Medical Tax in Russia

Note, that if you are employed in Russia the organization that employs you also have to pay the pension tax, the medical tax and the social tax in Russia for you, which comes at 30% for the first 1 292 000 Rubles (€16000) per year and an extra 10% on any amount above this (see article 425 of the Russian tax code). In addition to the personal income tax at 13% the total tax burden in this case is 43% of the pay. This is why many people in Russia prefer to be contracted as an individual entrepreneur (see below) in which case the organization does not have to pay the taxes above, but then this has to be contract-based work and you cannot get paid regularly in this way — only for project-based or occasional freelance work.

 

If you are selling real-estate in Russia, you would also have to pay 13% if you were a tax resident and 30% if you were a non-resident. You would normally pay that price on the whole amount, however, in some cases you may be able to present a previous contract which shows the price you bought the real-estate for and only pay the tax on the difference, if the sale price is higher than the original purchase price. Also, if you owe the real-estate for longer than 3 years you don't have to pay the personal income tax when selling it.

 

If you receive dividends from a Russian company or on the Russian shares you own, you need to pay 15% tax on these dividends if you are non-resident.

 

If you receive inheritance from Russia (money, real-estate etc) the tax rate is very low: you would pay about 0.3% on the total amount.

 

If you are supposed to file your taxes and fail to do so, you might get fined at 20% of the total tax not paid (article 122 of the tax code) and if the amount of the unpaid tax was more than 900 000 (about €12000) during 3 years, you might get criminally persecuted (article 198 of the Russian criminal code).
 

...