Transferring wages to a non-resident to a bank card

Paying wages to a foreigner: in cash or by card?

Foreigners are one of the biggest challenges for the payroll and HR accountant. Because there are countless peculiarities regarding personal income tax, insurance premiums, benefits, registration.

Moreover, there are also features in the payment of wages that should not be forgotten, especially if your company traditionally pays wages in cash. We will talk about this in the article.

Transfer of salary to a foreign currency non-resident

Payment of wages to a foreigner is based on the following regulatory documents:

- Part 3 of Article 136 of the Labor Code - it states the employer’s obligation to pay wages;

- Federal Law of December 10, 2003 No. 173-FZ “On Currency Regulation and Currency Control” - this law defines the concepts of tax resident and tax non-resident that are important for us.

The employing organization is classified as a currency resident in accordance with clause “c”, clause 6, part 1, article 1 of Law No. 173-FZ.

A foreign citizen who temporarily resides in the Russian Federation and carries out labor activities at the same time is recognized as a foreign worker (paragraph 14, paragraph 1, article 2 of the law of July 25, 2002 No. 115-FZ).

Thus, a foreign worker does not belong to persons permanently residing in the Russian Federation on the basis of a residence permit, and therefore, for the purposes of currency legislation, he is recognized as a foreign currency non-resident (subclause “a”, clause 7, part 1, article 1 of Law No. 173-FZ ).

Please note: the concepts of “currency resident” and “tax resident” are not identical! Unlike tax residency, the concept of a currency resident is not related to the number of days a foreigner stays in the Russian Federation in a given year, but to the availability of a residence permit.

How is a foreigner's salary paid?

The transfer of wages to a non-resident - an individual who is not a permanent resident (who does not have a residence permit) is presented as a legal alienation of the currency of the Russian Federation by a resident in favor of a non-resident. This is a currency transaction (clause “b”, clause 9, part 1, article 1 of Law No. 173-FZ).

There is a rule for settlements on currency transactions: they are made by residents (in our situation, employers) only through bank accounts in authorized banks or by transfer of electronic funds (Part 2 of Article 14 of Law No. 173-FZ).

So what happens, it won’t be possible to pay from the cash register to an employee of a foreigner temporarily staying in the territory of the Russian Federation? Rosfinnadzor answered this question quite unequivocally in the Information as of 08/07/2014 “On the payment of wages to non-resident individuals”: the possibility of paying wages to foreign employees from the cash desk in cash is not provided for by currency legislation. The same point of view was expressed by the Ministry of Finance - Letter dated August 29, 2016 No. ZN-4-17/15799 and the Federal Tax Service - letter dated August 29, 2016 No. ZN-4-17/15799.

Thus, there are no options - the salary of a foreign currency non-resident is paid to the card . The employer is recommended to include in employment contracts with foreign workers a condition on the transfer of wages to a bank account, or to include this condition in the collective agreement (Part 3 of Article 136 of the Labor Code).

How will they be punished for paying wages to non-residents in cash?

What could threaten an organization that nevertheless paid a salary to a foreign worker from the cash register in cash? She faces serious fines - from three-quarters to one time the amount of the illegal currency transaction. The basis for an administrative fine is the implementation of currency transactions in violation of currency legislation (Part 1 of Article 15.25 of the Code of Administrative Offenses of the Russian Federation).

How can currency auditors find out about your “sins”? They do not come with checks and are not able to track your cash transactions. And at least from the representatives of the tax office who checked you, who, during the inspection, saw the payment of wages to foreigners in cash. Tax inspectors are authorized to draw up administrative protocols for these offenses.

However, the offense has a statute of limitations - 1 year from the moment of its commission (Part 1 of Article 4.5 of the Administrative Code; Clause 14 of the Resolution of the Plenum of the Supreme Court of March 24, 2005 No. 5).

In the past, the courts sided with organizations

Courts often generally refuse to recognize the payment of wages to foreigners in cash as an offense and have given the following arguments:

1. Foreign exchange transactions between non-residents and residents are carried out without restrictions , with the exception of certain transactions that do not include the payment of wages in cash. This means that this operation is permitted by currency legislation. Currency transactions are carried out without restrictions, for which a special procedure is not established (Part 2, Article 5, Article 6 of Law No. 173-FZ).

2. The rules of the Labor Code also apply to foreign citizens. And if we turn to him, we will read that the salary is paid to the employee in rubles in the place where he performs the work or is transferred to the bank account specified by him, if this is provided for in the labor or collective agreement (Articles 11, 131, 136 of the Labor Code).

Those. The employer does not have the right to independently decide to transfer money to foreign employees. And he cannot open an account for an employee if an application has not been received from him.

3. Whether to open a bank account or not is a decision made by a non-resident employee , because he has the right, but not the responsibilities (Part 1, Article 13 of Law No. 173-FZ).

4. If the employee has not expressed a desire to receive money into a bank account, he must somehow be given a salary, because the employer is responsible for the delay in payment of wages (Article 142 of the Labor Code).

5. All irremovable doubts, contradictions and ambiguities in acts of currency legislation are interpreted in favor of residents and non-residents (Part 6, Article 4 of Law No. 173-FZ).

Payment of wages to foreigners - how is it now?

Thus, at the moment, transferring salary to a non-resident in cash is very risky. If you go to court and the decision is not in your favor, the fines are very high. Therefore, if you do not want to allow even the very possibility of such claims being brought against you, payment of wages to a foreigner should be made through bank cards.

Documents to the bank for transferring salary to a non-resident

transfers by a resident of the Russian Federation when making a payment in favor of a non-resident of the Russian Federation both in rubles and in foreign currency are carried out without restrictions;
transfers in foreign currency between residents of the Russian Federation are prohibited, with the exception of the operations listed in Article 9, Part 6 of Art. 12, parts 3 art. 14 of the Federal Law of December 10, 2003 No. 173-FZ “On currency regulation and currency control,” including between close relatives (Instruction of the Bank of Russia dated July 20, 2007 No. 1868-U “On the provision by resident individuals to authorized banks of documents related to individual currency transactions").
transfers by a resident of the Russian Federation from the Russian Federation in favor of other resident individuals to their accounts opened in banks located outside the territory of the Russian Federation cannot exceed the equivalent of 5,000 US dollars at the official rate established by the Central Bank of the Russian Federation on the date of debiting funds from the individual’s account – a resident of the Russian Federation on one transaction day.

Please note => Prohibition of Registration Actions on Mortgage Housing for Other Debt

When making settlements with non-residents of the Russian Federation - legal entities for an amount equal to or exceeding 600,000 rubles in ruble equivalent on the date of payment, it is necessary to provide documents justifying the transfer. Such documents can be: agreements (contracts); invoices (bills, invoices, etc.); correspondence with the payer by e-mail or on paper; other documents provided for in Article 23 of Federal Law No. 173-FZ, on the basis of which the currency transaction is carried out.

Any settlement with a non-resident of the Russian Federation is a currency transaction

The employing organization hired foreign citizens. Everything was in order with the registration, but the foreigners did not provide the organization with information about where they needed to transfer their wages. Therefore, it was issued in rubles at the enterprise’s cash desk; in total, about 3 million rubles were paid over 3 months. At the same time, the company's management was confident that it was not violating anything. Indeed, in the Federal Law of December 10, 2003 No. 173-FZ, there is no indication that employees are required to open bank accounts or use the organization’s existing salary project.

However, when an inspection came from the Federal Tax Service of Russia, the inspectors considered it a violation to issue cash to foreigners who did not have a residence permit in the Russian Federation. They indicated that the provisions of Law No. 173-FZ, in particular, provide for the following:

Non-residents are foreign citizens who cannot be classified as persons permanently residing in the Russian Federation on the basis of a residence permit.
Currency transactions - alienation by a resident in favor of a non-resident of the currency of the Russian Federation on legal grounds, as well as the use of the currency of the Russian Federation as a means of payment.
All settlements on foreign exchange transactions are made by resident legal entities through bank accounts in authorized banks, the procedure for opening and maintaining which is established by the Central Bank of the Russian Federation, as well as by electronic money transfers.

This means that paying cash to foreign workers without a residence permit is a violation. The court to which the organization appealed confirmed this, citing in the judicial act the same legislative norms as the inspectors from the Federal Tax Service. The arbitrators also recalled that Part 2 of Article 14 of Law No. 173-FZ contains an exhaustive list of situations when organizations can make settlements with non-resident individuals in cash rubles. Salary payments are not on this list. By the way, the Federal Tax Service of Russia already reminded us of this in letter No. ZN-4-17/15799 dated August 29, 2016.

Documents to the bank for transferring salary to a non-resident

Transfer salaries to employees’ bank accounts at least every six months (Part 6, Article 136 of the Labor Code of the Russian Federation). Situation: is it possible to pay foreigners salaries in rubles from the organization’s cash desk (without using bank accounts)? The answer to this question depends on whether the payment of wages is recognized as a foreign exchange transaction or not. In addition, employees can get their own bank cards. In this case, the organization does not enter into any agreements with banks, but simply transfers employees’ salaries to their card accounts. The general procedure for concluding agreements for the issuance and servicing of bank cards is established by the Regulations of the Bank of Russia dated December 24, 2004. Therefore, when choosing an employee, wages can only be paid through banking institutions or post offices. The presence of foreign citizens on the company’s staff presupposes regulatory influence from the outside states in the most unexpected places. One of these pitfalls is the payment of remuneration to a foreign worker.

The size of the fine turned out to be significant

For violation by residents of established currency rules, administrative liability is established by Article 15.25 of the Administrative Code. The amount of the administrative fine, according to its sanctions, may be:

for an organization - from 3/4 to 1 of the amount of the illegal currency transaction;
for officials - from 20,000 to 30,000 rubles.

In the situation with the organizations, she was given a fine at the lower limit - 75% of the issued salary for the entire time. The result was about 2 million rubles. Paying wages in cash in rubles was very costly for the company.

How to pay a salary to a foreign worker in 2021

You can pay wages to an employee in two ways: cash or non-cash (by transferring to the employee’s card).
This is stated in Article 136 of the Labor Code of the Russian Federation. In this case, the employee can be either a citizen of the Russian Federation or a foreigner.

As soon as the matter concerns foreign individuals, it is necessary to refer to Law 173-FZ of December 10, 2003.

If the employee is a resident, then it is necessary to act in accordance with the Labor Code of the Russian Federation and wages can be paid both in cash and non-cash.

In Article 14, paragraph 2 of Federal Law No. 173 of December 10, 2003.

describes in what cases residents can pay non-residents without using bank accounts. Unfortunately, the law does not provide for the possibility of paying wages in cash, so wages must be paid only by bank transfer. A foreign employee who does not have a residence permit is working - you pay wages by bank transfer!

Article 15.25 of the Code of Administrative Offenses of the Russian Federation provides for the imposition of an administrative fine for non-compliance with currency legislation:

for a company or individual entrepreneur in the amount of 75% to the full amount of the illegal currency transaction for an individual entrepreneur or organization;
for an official from 20,000 to 30,000 rubles.

The tax inspectorate, when inspecting a company or individual entrepreneur, may well discover the fact of payment of wages in cash to foreign employees. The Russian Tax Service is vested with powers in the field of currency legislation and is a currency control body.

How to avoid a fine?

In order to avoid paying such large fines for payment of wages, it is necessary to provide for this aspect at the time of employment of a foreign citizen. It is enough to simply state in the employment contract with him that the method of payment of wages is a non-cash transfer to a bank account. The employee has the right to choose a bank that is convenient for him and will have to provide his account details. If he does not do this, the organization will not be punished for non-payment of wages. And there will also be no violations of the requirements of currency legislation.

Sample payment order for the transfer of wages to a non-resident

Payment orders for transferring wages to a card can be submitted to the bank either “on paper” or electronically. Let us explain what to indicate in some fields of a payment order for the transfer of wages to the cards of several employees: Here is a sample payment order for the transfer of wages to a card in 2021 based on the register: If the salary is transferred to the account of one employee, then in the payment

Payment of wages for a limited list of transactions that resident organizations can carry out in cash in the interests of non-resident individuals, in Part 2 of Art. 14 is not named. Moreover, the Federal Tax Service confirmed that wages to a non-resident employee can only be paid in non-cash form (Letter of the Federal Tax Service dated August 29, 2021 No. ZN-4-17/15799)

How to determine the residence of an employee

Contrary to popular belief, an employee's residency status does not depend on his citizenship or nationality. Non-residents of the Russian Federation can be both citizens of the Russian Federation and foreigners or stateless persons.

The only criterion for establishing residency is the period of stay of a citizen on the territory of the Russian Federation. According to the norms of current legislation, a resident of the Russian Federation is a person who has been in Russia for at least 183 days during a calendar year.

The specified period of stay in the Russian Federation can be either continuous or consist of several time periods.

Let's look at an example. Citizen of Tajikistan Aliyev was in the Russian Federation in 2021 from 01/01/2019 to 02/28/2019 (59 days) and from 05/01/2019 to 10/01/2019 (154 days). The rest of the time Aliyev lived in Tajikistan.

Since Aliyev’s total stay in the Russian Federation exceeds 183 calendar days, he is recognized as a resident of the Russian Federation. Citizenship of Tajikistan and the absence of citizenship of the Russian Federation do not affect the assignment of Aliyev to the status of a resident of the Russian Federation.

How can an employee confirm his resident status?

An employee's resident status is confirmed in one of the following ways:

There are no facts that refute the stay of a citizen in the Russian Federation for a period of more than 183 days . For example, citizen Petrov is a full-time employee of the Russian enterprise Alfa. Petrov’s place of work is Saratov. During 2021, Petrov performed official duties in accordance with the established schedule, and also stayed on vacation for a period of 28 calendar days in Crimea. Thus, we can conclude that Petrov was constantly on the territory of the Russian Federation, which means he has resident status.
There are facts confirming the citizen’s stay in Russia for more than 183 days . Let’s say citizen Suleymanov permanently resides in Azerbaijan, while working in Russia. In 2021, Suleymanov was in Russia from 04/01/2019 to 10/01/2019 (184 days), the rest of the time he lived in his homeland, Azerbaijan. Since Suleymanov’s stay exceeds 183 calendar days during the year, he is recognized as a resident of the Russian Federation. Documentary confirmation of status are border crossing marks.

★ Best-selling book “Accounting from scratch” for dummies (understand how to do accounting in 72 hours) > 8,000 books purchased

Non-resident employee: salary, personal income tax, insurance contributions

An employer with non-resident employees should be aware of the special procedure for calculating wages for such employees. In particular, non-residents are subject to an increased personal income tax rate, as well as special insurance premium rates.

We will describe below the procedure for calculating and paying wages to a non-resident employee.

The procedure for establishing and calculating salaries

The amount of monthly remuneration for a non-resident employee is determined in accordance with the general procedure.

When hiring an employee, an employment agreement is drawn up, which reflects the specific amount of monetary remuneration (in a fixed amount) or contains a reference to a local act regulating the procedure for establishing remuneration (for example, the Procedure for remuneration).

The monthly remuneration of a non-resident employee may consist of:

fixed part - official salary in a fixed amount, fixed tariff rate per working day/hour/shift;
variable part - bonuses, allowances, additional payments, bonuses, compensation.

The amounts of the fixed and variable parts of the salary of a non-resident employee, as well as the procedure for their calculation, are established by the employment contract, local regulations (Regulations, Procedures), and the staffing table.

Let us remind you that according to the Labor Code of the Russian Federation, payment of remuneration to an employee is carried out exclusively in the national currency - rubles. The employer does not have the right to set the amount of wages in foreign currency (including for a non-resident employee).