In the previous publication about the self-employed, we found out who they are, what they can do, and how to register in this status. In this article we will figure out what tax should be paid by those who independently receive income without registering an individual entrepreneur.
What is professional income tax
The professional income tax is a new type of taxation that began as an experiment, but in 2021 it expanded throughout Russia. The regime is called preferential or special because it exempts individuals from paying personal income tax at a rate of 13%.
The concept of professional income is established in Article 2 of Law No. 422-FZ of November 27, 2018: “Income of individuals from activities in which they do not have an employer and do not attract employees under employment contracts, as well as income from the use of property.” NAP payers can be not only ordinary individuals, but also those who have registered individual entrepreneurs.
Separately, it is worth mentioning the reservation regarding employers. Payers of professional income tax can simultaneously work under an employment contract, but not in the type of activity for which they are recognized as self-employed. Moreover, the law states that the tax payer cannot provide services or perform work for a customer who was his employer less than two years ago. This was done specifically to prevent mass layoffs of hired workers and their transfer to NAP payers.
At its core, the tax on professional income is closest to the simplified tax system Income regime. Here, too, to calculate the tax base, only income received without expenses incurred is taken into account. However, compared to the simplified tax system, income restrictions in the regime for the self-employed are greater.
| USN Income | Professional income tax |
| Annual income – no more than 150 million rubles (*) | Annual income – no more than 2.4 million rubles |
| You can hire up to 100 workers under GPC and labor contracts (*) | Workers under employment contracts cannot be hired |
| You can engage in trade, production, services, works | You cannot engage in trade; the types of activities are services, work and the sale of goods of your own production. |
(*) From 2021, not only regular but also increased limits apply to the simplified tax system. However, in this case, the tax rates are higher: 8% for the “Income” object and 20% for the “Revenue minus expenses” object.
You can become self-employed with Sberbank right now. Leave a request in the service and receive all the advantages of the application from the Federal Tax Service, plus additional benefits from Sberbank.
Become self-employed with Sberbank
Self-employed citizens - who are they?
Let's take a closer look at who the self-employed population is.
The new law defines that these include individuals who have income from a certain type of activity and at the same time do not have a single concluded employment agreement and not a single employee.
That is, they must carry out their activities independently. Receiving income must be systematic.
There are two types of self-employed:
- Persons who operate privately without registration.
- Persons who provide personal services to other individuals. For example, these include tutors, nannies, cleaners, etc.
That is, all these citizens are not officially registered anywhere, but independently carry out activities and receive income. The law also determines that this benefit can be used by individual entrepreneurs who do not have mercenaries and have switched to a special regime.
Attention! Also, the self-employed include citizens of other countries. To start using this experimental system, you need to register with the tax authority.
Insurance premiums for NAP payers
Analyzing the reasons why millions of self-employed people have not yet registered individual entrepreneurs, tax officials found that one of them is the need to pay insurance premiums. Indeed, for those who have irregular income from providing services or performing work, this is a significant amount - in 2021, at least 40,874 rubles.
Moreover, an individual entrepreneur must pay contributions for himself, even if he is temporarily not engaged in business or does not receive a profit. And if additional activities bring in only 15-20 thousand rubles a month, then giving away 3-3.5 thousand of them is expensive.
The new taxation of the self-employed exempts them from paying insurance premiums, including individual entrepreneurs who have switched to NAP. However, this also has a downside - there are no contributions, and there is no insurance period to receive a pension.
To be eligible for an insurance pension rather than a social pension, self-employed people can pay pension contributions voluntarily. The amount of payments for OSP is the same as for individual entrepreneurs; in 2021 it is 32,448 rubles. Read more about how seniority is calculated for the self-employed here.
But with regard to medical care, NAP payers are insured persons, although they do not pay contributions for compulsory medical insurance separately. The fact is that part of the tax they pay will automatically go to the FFOMS budget.
NAP tax rate
Professional income is taxed at different rates, depending on to whom the services or work were provided:
- 4% when selling to ordinary individuals;
- 6% when selling to organizations and individual entrepreneurs.
The law guarantees that until the end of 2028 these rates will not increase, and the permissible income limit of 2.4 million rubles will decrease.
In addition, NAP payers are entitled to a tax deduction of up to 10,000 rubles. This means that the calculated tax can be reduced by this amount, but in a special manner:
- if the income is received from an individual, then instead of 4% you will have to pay only 3%;
- if the income is received from an organization or individual entrepreneur, then instead of 6% you will have to pay only 4%.
This will continue until the tax savings reach 10,000 rubles. The self-employed themselves do not need to worry about this; the deduction will be automatically taken into account when issuing a tax notice.
If the entire deduction amount is not received in one year, the balance will be carried over to the next year. In fact, taking into account this deduction, if the clients of a self-employed person are only individuals, then on the first million rubles of professional income he will pay tax at a rate of 3%.
Let's sum it up
So, the tax that self-employed people pay is officially called occupational activity tax (OPT). It amounts to 4-6% of the income received by the self-employed for the sale of their goods or provision of services. The NPT is calculated automatically by the tax service based on the results of the past calendar month, based on the amount of checks generated by the self-employed in the “My Tax” application. Upon registration, a newly minted self-employed person is given a tax deduction in the amount of 10,000 rubles, which compensates for part of the tax and actually reduces the tax amount to 3-4%. After the deduction is exhausted, you will need to pay the entire amount accrued by the Federal Tax Service.
(Visited 470 times, 3 visits today)
Self-employed in the Russian Federation
Self-employedv.rf is an information portal for self-employed people. Relevant and interesting information, answers to important questions and solutions to non-standard problems of the self-employed.
How to pay tax on professional income
The NPT payer does not need to calculate his tax on his own. The calculation is generated automatically through the “My Tax” application. As soon as a self-employed person issues a check through this application, the amount of income goes into the tax base.
At the end of each month, no later than the 12th day of the month following the reporting month, the self-employed will receive a tax payment notice indicating the details. For convenience, you can link a bank card to the application, then the tax is debited automatically.
The deadline for paying tax on professional income is until the 25th day of the month following the reporting month. For violation of the payment deadline, a fine of 20% of the arrears is imposed. If the tax amount is less than 100 rubles, you do not need to pay it yet; it will be added to the tax for the next period. And if there is no income in the reporting month, there will be no tax to pay; there is no obligatory fixed amount here.
If a self-employed person receives an income of more than 2.4 million rubles in a calendar year, then he loses the right to pay NAP. What to do if you exceed the established income limit? There is only one way out here - to register the business in the usual manner with the tax office.
But if the payer of the NAP was already a registered individual entrepreneur, then he has 20 days to switch from this regime to another preferential one (USN, Unified Agricultural Tax, PSN). Otherwise, further income of individual entrepreneurs will be taxed within the framework of the general system with the payment of personal income tax and VAT.
Peculiarities of work between self-employed individuals and individual entrepreneurs and organizations
For organizations and individual entrepreneurs, working with the self-employed is more profitable than hiring workers under an employment contract or civil servants' agreement. The fact is that when an LLC or individual entrepreneur orders services or work from ordinary individuals, they are required to pay insurance premiums for them, as well as withhold and transfer personal income tax.
But if services or work are performed by a self-employed person, then he himself is responsible for his income to the state. The customer does not pay insurance premiums for the tax payer and is not his tax agent.
In fact, the formalization of relations with a self-employed person will occur as with an individual entrepreneur. To account for expenses in transactions with self-employed people, it is worth concluding an agreement and accepting services and work according to the act. Although an electronic check generated by the My Tax application may well be sufficient. But while there is no practice in working with NAP payers, it is better to play it safe and draw up all the primary documents.
Last news
In Russia there is a category of citizens who do not work for hire, but also do not register as individual entrepreneurs, although they have an income. These could be tutors, nannies, seamstresses, designers. And these individuals have long been of interest to officials, senators and even the president due to the fact that they do not pay taxes and insurance premiums.
Rosstat has calculated that in total there are about 13.5 million people in the Russian Federation who work “in the shadows” and have no intention of leaving. Officials figured out how much money was going past the budget and decided to return such illegal entrepreneurs to legal taxation by any means possible.
They even came up with a special name - “self-employed citizens”, although only in everyday life. Neither such a legal status nor even a definition has yet been enshrined in legislation. Lawmakers are working to correct this omission. It is possible that a special tax on self-employed citizens will be added to the Tax Code of the Russian Federation in 2021.
Discussions on what this tax on the self-employed should be have not subsided for three years. Russian President Vladimir Putin, Speaker of the Federation Council Valentina Matvienko, the ministers of labor and finance, the head of the Federal Tax Service, as well as the defender of the interests of entrepreneurs Boris Titov have already had their say on this issue.
So far the concept of the Federal Tax Service of Russia and the Ministry of Finance is winning. The new tax may be introduced as early as January 1, 2021.
