Personal Income Tax in Russia

In Russia, Employers are required to execute an immediate withholding of taxes on the wages of their employees. What this means is that individuals whose only income is derived from their salary do not have to file an annual income tax return — with the exception of claiming a refund for certain itemized deductions.

All employers have a legal obligation to immediately withhold the proper amount of eligible taxes and insurance payments from all employee’s salaries. Those individuals whose entire income is derived from earned wages have no obligation to file an annual income tax return. All individuals who are classified as non-residents are required to pay taxes on any Russian-source income. All foreigners residing in Russia are only required to pay taxes on income earned in Russia.

Whereas married couples are allowed to file jointly in many countries, they are taxed separately in Russia.

Tax Due Date

For those individuals who are self-employed, they are required to make three advance tax payments each year: on the Jul. 15, Aug. 15 and Nov. 15. After filing the annual return, any balances that are due are to be paid on Jul. 15.

Tax Rates

In order to receive the 13 percent tax rate that is applied to residents, a person must reside inside the country for a minimum of 183 days during the calendar tax year. For those who are classified as non-resident, they will be taxed at a rate of 30 percent, which is most often withheld by the source. Non-residents are not eligible for allowances or deductions.

Deductions

The most prevalent deduction that is allowed is for the purchase of a home, and it can only be applied once during an individual’s lifetime. There are also deductions for medical expenses as well as education. Detailed documentation is required to claim any of the available deductions.

Capital Gains for Individuals

As mentioned earlier, the standard rate for residents in Russia is 13 percent while non-residents are taxed at a rate of 30 percent. Taxable gains are considered to be the gross revenue generated (the selling price) — not including deductions for any acquired expenses or acquisition costs. Any real estate or other assets that have been held in possession for three years or more will be exempt from taxation. The maximum deduction allowed is 1 million rubles.

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