How is the salary of employees - foreign citizens taxed?

What the law says

According to paragraph 2 of Art. 207 of the Tax Code of the Russian Federation, tax residents are persons who stay in Russia for more than 183 days within one year or receive income from sources in the Russian Federation. In this case, the days of entry and exit are not taken into account. In addition, this period is not interrupted:

• when traveling abroad for up to 6 months;
• undergoing treatment or training;
• carrying out work in offshore hydrocarbon fields.

As before, non-resident personal income tax in 2021 pays at a rate of 30%; this is stated in clause 3 of Art. 224 Tax Code of the Russian Federation. In some cases, the rate may differ. For example, participants in Russian companies contribute 15% on dividends. And foreigners who work under a patent or are highly qualified specialists pay personal income tax at a general rate of 13%. Similar amounts of payments are made by residents of countries that are members of the Eurasian Economic Union, as well as refugees.

As you can see, income tax in Russia is quite high for foreigners if there is no right to a preferential rate.

For more information, see “Personal Income Tax Rates”.

On providing deductions to foreigners with refugee status

Persons recognized as refugees on the territory of the Russian Federation must also pay income tax when receiving income from work. Today this issue is being resolved taking into account the directives of paragraph 3 of Art. 224 Tax Code (Federal Law No. 285 of October 4, 2014).

Thus, confirmed refugee status makes it possible to use a reduced rate of 13% and calculate the amount of tax payable based on it. This provision applies only to those legal relations that began on January 1, 2014.

As for deductions for this tax, this issue is explained in detail by the Federal Tax Service in letter No. BS-3-11 / [email protected] dated 10.30.2014. This document informs that deductions are applied as standard when a resident pays income tax, calculated on the basis of 13%. (Clause 1 of Article 224 of the Tax Code). The types of allowable deductions in this situation are indicated in Art. 218 - 221 NK. The benefit is provided taking into account the requirements specified in Chapter. 23 NK.

From the above it follows that refugees, non-residents of the Russian Federation who have income and pay personal income tax on it at a rate of 13% (in relation to paragraph 3 of Article 224 of the Tax Code) are not entitled to the deductions indicated in Art. 218 - 221 NK. This relief is available to those refugees who have become residents of the Russian Federation, work and pay personal income tax at 13% (clause 1 of Article 224 of the Tax Code).

The Federal Tax Service draws attention to the fact that in order to receive a deduction, an employee must present to his employer (tax agent) all the necessary documents certifying his right to benefits. For example, to receive a standard deduction you need to present a copy of:

• passports containing information about the child;
• child's birth certificate.

Submitted documents from foreign countries are subject to prior legalization. Only after this they will be recognized as valid on the territory of the Russian Federation and will be accepted for consideration.

Acting State Advisor of the Russian Federation, 2nd class S. L. Bondarchuk.

Calculation order

Income tax is determined on all funds received during the month (not on an accrual basis). The calculation is made separately for each amount.

The sequence of calculating personal income tax for foreign citizens in 2018 is as follows:

Also see “Confirmation of the status of a tax resident of the Russian Federation” - a new service of the website of the Federal Tax Service of Russia.”

Errors when withholding personal income tax from a foreign worker

Error 1. A number of ambiguous and controversial situations are associated with the calculation and transfer of an inflated amount of income tax.

It happens that a non-resident deliberately transfers more personal income tax to the budget than necessary. In this situation, these surpluses will not be returned to the foreigner, since these actions are not entirely correct. Taking into account the directives of paragraph 7 of Article 227 of the Tax Code, the excess amount of paid income tax is not considered an overstatement. Therefore, there is no need to return it.

Error 2. The following position is not entirely accurate. Persons granted temporary asylum in Russia pay 13% income tax on their income. However, they cannot claim a tax deduction.

The correct interpretation of the rights of this category of foreigners will be as follows. The same settings are provided for them as for refugees. This means that, being a non-resident, this person pays personal income tax at a preferential tax rate of 13% (clause 3 of Article 224 of the Tax Code), but he is not entitled to any relief in terms of deductions. They are applied upon acquisition of resident status, when tax payment is made using 13% under clause 1 of Art. 224 NK.

How to calculate personal income tax

EXAMPLE 1

accepted on March 12, 2021 for the position of A.N. Frolov, who came from Yerevan. An employee has been hired as a finishing foreman. At the time of signing the agreement, Frolov was on the territory of the Russian Federation. There is a migration card with a period of stay from March 1 to December 31, 2021. The tax base is 30,000 rubles/month. How to pay personal income tax from a foreigner in 2021?

Solution

Until March 1, 2021, Frolov was a non-resident, so income tax was withheld at a rate of 30%. The 183rd day of stay in Russia falls on August 28, 2021. This means that until this moment, income is taxed at a rate of 30%:

From August 29, 2021, Frolov’s income will be taxed at a rate of 13%. Then Stroymir LLC will retain:

EXAMPLE 2

The consulting company hired N.A. Golubev tax law consultant (qualified specialist from Munich). Salary 170,000 rub. Determine personal income tax for a foreign employee. Solution

Read also:  The Ministry of Labor explained the nuances of granting regular leave during a long-term business trip

Based on clause 3 of Art. 224 of the Tax Code of the Russian Federation and 207 of the Tax Code of the Russian Federation, foreigners with the status of a qualified specialist are taxed at a rate of 13%. It turns out that income tax is withheld from Golubeva in the amount of:

Also see “Rules for calculating income tax”.

Calculation example

Let's look at a specific example of how the system for calculating personal income tax with foreign citizens works. Let’s say a person transfers 1,000 rubles every month as an advance payment, and this amount is fixed and adjusted by regional coefficients, the value of which may change.

This year it amounted to 2.319, while the deflator for the same period of time stopped at 1.623.

Based on these values, a foreign citizen must pay:

1,000 x 2.319 x 1.623 = 3,763.74 rubles.

KBK

BCCs for foreign migrants are assigned taking into account the following categories:

• from profit;
• patent work;
• when calculating the rate at 13%
• at a rate of 30%;
• in order to avoid double taxation at non-resident rates.

From this video you will learn how personal income tax is correctly calculated and withheld from foreign citizens who work in the Russian Federation:

Compensation payments

This category includes incentive income accruals. They are an integral part of earnings and cannot be separated from it when calculating the amount that must be transferred as a tax deduction.

It should be understood that compensation cannot be remuneration for conscientious work and is therefore taxed at the highest rate.

How to fill out a 2-NDFL certificate

2-NDFL certificates for foreign workers in 2021 are filled out in the same way as for a Russian employee, but there are some nuances.

TIN

If a foreign worker is registered with the Russian tax office, fill out the “TIN in the Russian Federation”. When an enterprise has information about the TIN of the country of citizenship (nationality), then fill out the appropriate field.

FULL NAME.

Personal information is indicated as written in the identity document. It is acceptable to use Latin letters. If there is no middle name, the field is not filled in.

Status

When filling out personal income tax certificate 2 for foreigners, it is important to correctly indicate the status. For example, if a foreign worker is a qualified specialist of the highest category, in the column “Taxpayer Status” they put 3. If he is a non-resident, they put 2. If he is recognized as a tax resident in accordance with clause 2 of Art. 207 of the Tax Code of the Russian Federation, put 1.

Address

The place of permanent residence of the foreigner is determined. The address is written arbitrarily, in Latin letters.

Codes

When filling out the “Identity document code”, they usually put the number 10 in the passport of a foreign citizen.

In the “Country code” field indicate the code of the state in which the foreigner permanently resides. It is taken from the All-Russian Classifier of Countries of the World (Resolution of the State Standard of Russia dated December 14, 2001 No. 529-st).

The payer's income and deduction codes are also filled out in accordance with legal requirements. The Federal Tax Service order No. ММВ-7-11/485 dated October 30, 2015 provides details on filling out the 2-NDFL certificate.

So we have looked at the main points that need to be taken into account when withholding personal income tax from foreigners in 2021, as well as filling out the 2-NDFL certificate.

Also see “2-NDFL for a foreign worker”.

Read also

25.04.2018

Conditions for providing a tax deduction

To reduce the total amount of personal income tax by fixed advance payments, the employer must receive a notification from the tax authority at his place of residence confirming the right to a reduction. To do this, perform the following steps.

The employee (foreign citizen) writes to the employer a statement (in any form) about carrying out the specified recalculation. Documents confirming payment of fixed advance payments are attached to the application.

The employer submits an application to his tax office with a request to confirm the right to the above reduction in the amounts of accrued personal income tax. The recommended application form is given in Appendix 1 to Letter No. BS-4-11/2622 of the Federal Tax Service of Russia dated February 19, 2015.

The Tax Code does not provide for the submission of other documents. In this regard, the Federal Tax Service, in Letter No. BS-4-11/ [email protected] , indicated the inadmissibility of violating the provisions of the Tax Code of the Russian Federation in terms of requesting from tax agents the documents necessary for issuing a notification.

The tax authority, within a period not exceeding 10 days from the date of receipt of the application of the tax agent (employer), sends a notification confirming the right to reduce tax on the amount of fixed advance payments in the form approved by Order of the Federal Tax Service of Russia dated March 17, 2015 No. ММВ-7-11/ [email protected]

According to paragraph 6 of Art. 227.1 of the Tax Code of the Russian Federation, a notification is issued to a tax agent subject to the following conditions:

• availability in the tax authority of information received from the territorial body of the Ministry of Internal Affairs about the fact that the tax agent has concluded an employment contract with the taxpayer or a civil contract for the performance of work (rendering services) and the issuance of a patent to the taxpayer;
• Previously, in relation to the corresponding tax period, the tax authorities did not send a notification in relation to the specified taxpayer to tax agents.

Personal income tax for foreign citizens in 2018

Return to Foreign Citizens 2018
Not only our compatriots, but also citizens of other countries have the right to work in the Russian Federation, and therefore they have certain obligations to pay income tax on their earnings. The specifics of its payment and calculation are specified in the Tax Code of the Russian Federation. The amount of personal income tax withheld from foreigners in 2018, as before, is determined not by the country of citizenship, but by the tax status in the country.

The object of personal income tax is everyone who carries out labor activities in Russia.

In accordance with the Tax Code of the Russian Federation, tax residents include people who have been on its territory for more than 183 days over the past 12 months. If a foreigner has received this status, then taxes are withheld from him in the same amounts as from Russian citizens. Thus, personal income tax from a temporarily residing foreigner in 2021 is withheld in the same way as from a non-resident.

The taxation of foreigners in 2021 has remained virtually unchanged: if a foreigner is a resident of the Russian Federation, then he pays 13% deductions from income to the treasury. For non-residents this percentage is much higher and amounts to 30%.

However, it is worth considering that certain categories of migrant workers are not considered residents, but pay taxes under special conditions. This:

• highly qualified specialists;

• citizens of other countries working under a patent;

• an individual from the EAEU countries: Belarus, Armenia, Kazakhstan;

• refugees.

According to migration legislation, the status of a highly qualified specialist is determined by the criterion of income - this is a monthly salary in the range of 83,500-167,000 rubles or participation in Skolkovo projects.

A 13% tax is withheld from the labor income of such employees, but this rate applies only to salaries; If a specialist receives compensation, assistance or another monetary bonus, he will be charged 30% tax.

Confirmation of the status of a refugee - a person who left the country of residence due to emergency circumstances - is a special document. If available, 13% income tax is withheld from the migrant.

When employing foreign residents of countries that are members of the Eurasian Economic Union, in accordance with international treaties, personal income tax is withheld on a general basis, in the amount of 13%.

Citizens of countries with which the Russian Federation has a visa-free regime do not require a work permit: they receive a patent that allows them to work for both individuals and legal entities.

A patent is issued by a foreigner independently. However, here we must take into account that the document allows a non-resident to work only within one region - where it was issued.

Personal income tax from a foreigner working under a patent is withheld as follows: first, after the patent is issued, the employee pays a fixed advance, then the employer obtains a certificate from the fiscal authority confirming the possibility of reducing the tax by the amount of the advance paid. After confirmation - this takes no more than 10 days - the accountant who calculates the foreigner’s salary can safely reduce the amount of payment to the budget by the amount of the advance.

If a citizen of another state works in several organizations at once, the deduction from personal income tax will be carried out by the employer who first sends a request to the tax office.

The tax status of a foreigner has changed at the end of the year

The LLC's staff includes foreigners whose tax status changed in 2018 from non-residents to residents of the Russian Federation. Is it necessary to “split” the total amount of calculated personal income tax in 2-personal income tax certificates based on rates of 13% and 30%?

Before talking about the rules for generating 2-NDFL certificates in the described situation, we will consider the features of taxation of income of tax non-residents and residents of the Russian Federation.

As is known, for personal income tax purposes, tax residents of the Russian Federation are individuals who are actually in Russia for at least 183 calendar days over the next 12 consecutive months. The period of stay in the Russian Federation is not interrupted by a short-term (for a period of less than 6 months) departure for treatment or training (clause 2 of Article 207 of the Tax Code of the Russian Federation).

The tax agent calculates the tax status of an individual each time on the date that is recognized as the date of actual receipt of income on the basis of Article 223 of the Tax Code of the Russian Federation. This will be pre-tax status. It influences the choice of the current personal income tax rate at which the tax is calculated and actually withheld.

At the end of the year, the final tax status of an individual is determined based on the number of days spent in the Russian Federation for the period from January 1 to December 31. If the status changes, this is the basis for recalculating the entire personal income tax, which was levied on the employee’s income at the rate selected on the basis of the preliminary tax status (clause 3.2 of the resolution of the Constitutional Court of the Russian Federation dated June 25, 2015 No. 16-P, letter from the Ministry of Finance of Russia dated July 14, 2011 No. 03-04-06/6-170 and the Federal Tax Service of Russia dated August 30, 2012 No. OA-3-13/ [email protected] ).

Note that this rule applies in both directions: both personal income tax, which was withheld at a rate of 30% (if the individual has become a resident of the Russian Federation), and personal income tax, which was withheld at a rate of 13% (if the individual has become a non-resident of the Russian Federation), are subject to recalculation.

Now let’s look at how to draw up a 2-NDFL certificate in case of a change in the tax status of an individual.

According to clause 1.19 of the Procedure for filling out the new form 2-NDFL, sections 1, 2 and 3 (if necessary), as well as the appendix to the certificate, are filled out separately for each personal income tax rate only if the individual received income during the tax period, taxed at different tax rates. In relation to the situation under consideration, the following question may arise: should the tax agent draw up the indicated sections and an appendix to the certificate separately for the rate of 13% and for the rate of 30%?

In the described case, foreign workers became tax residents of the Russian Federation at the end of 2021. This means that all income they received during 2021 must be subject to personal income tax at the rate of 13% established by paragraph 1 of Article 224 of the Tax Code of the Russian Federation. Consequently, the employer has no reason to fill out sections 1, 2 and 3, as well as the annex to the certificate for a tax rate of 30%. All income received by these employees in 2021 must be reflected in the 2-NDFL certificate at a rate of 13%. (Unless, of course, the individual received income from the same employer, for which paragraph 2 of Article 224 of the Tax Code of the Russian Federation established a rate of 35%, for example, financial benefits from savings on interest on a loan).

Please note: if, as a result of the recalculation of tax liabilities, an amount of personal income tax is formed that is excessively withheld by the tax agent, then it must be indicated in the field “Tax amount excessively withheld by the tax agent” in Section 2 of the certificate. Accordingly, in the “Calculated tax amount” field, enter the personal income tax amount determined at a rate of 13% (i.e., taking into account recalculation). At the same time, the fields “Tax amount withheld” and “Tax amount transferred” display the amount of tax actually withheld and transferred during the year (i.e., taking into account the tax withheld and transferred during the year at a rate of 30%).

We also remind you that the tax agent does not have the right to return tax that was excessively withheld due to a change in the tax status of the employee. Such a return is carried out by the Federal Tax Service on the basis of a declaration that an individual must submit independently (clause 1.1 of Article 231 of the Tax Code of the Russian Federation).