Personal income tax: when, where and how to pay personal income tax to individuals

Who pays personal income tax at a rate of 35%?

Personal income tax occupies a leading place among direct taxes. The basis for its calculation is the total income for the year minus documented expenses and deductions. The tax is mandatory for those who stay and work for at least 183 days in Russia during the reporting period (year). All Russians and foreigners who receive income in the Russian Federation are subject to tax payment.

Personal income tax reporting is prepared and submitted by the employer by April 30 of the following reporting year. Tax rates are determined in Art. 224 Tax Code of the Russian Federation. The highest limit is 35% of income. Let's take a closer look at it.

Who is responsible for the transfer

Individuals who receive income act as personal income tax payers (Article 207 of the Tax Code of the Russian Federation). For employed persons, the tax agent is the employer, and he must find out where to pay personal income tax. Existing criteria for classifying individuals as taxpayers in relation to personal income tax:

• availability of income;
• the source of the material benefit is located on the territory of the Russian Federation.

The presence or absence of resident status for tax purposes does not matter. Depending on the type of income received, the tax liability can be calculated and paid by the taxpayer himself or by the tax agent making the payments. Legal relations regarding personal income tax, federal tax or regional tax, are regulated by Chapter 23 of the Tax Code of the Russian Federation.

The tax payment deadline from 2021 is different for income in the form of wages and for taxable amounts of benefits, vacation pay:

• when paying wages, the personal income tax liability must be paid on the day the money is issued to the employee or the next day after the person actually receives the income;
• when and where to pay personal income tax for LLC employees - the question is also relevant in cases with the issuance of vacation pay, temporary disability benefits, the tax must be paid no later than the last day in the month of making such payments (clause 6 of Article 226 of the Tax Code of the Russian Federation).

Who pays the highest tax rate?

The factor that determines the rate is not the status of the payer, but the source of his income. In other words, the rate will depend on how and from whom the income was received. 35% of their annual income is transferred to the budget of the Russian Federation by citizens who have received income of the following nature.

• Interest on bank deposits. If income is received in rubles and in a currency less than the refinancing rate of the Central Bank of the Russian Federation, then only the difference is taken as the tax base, and not the entire amount.
• Winnings and prizes. Cash prizes received through participation in sweepstakes, lotteries and similar events are also subject to personal income tax at the maximum rate. But, the amount of winnings exceeding 4,000 rubles is subject to taxation.
• Material benefit in the form of saved interest on loans and credits. We are talking about it when the exchange rate changes or early repayment of a loan agreement.
• Income from the use of shareholders' funds.

In addition to the obligation to pay tax at a higher rate, holders of the above income are required to submit an income tax return on time. All amounts reflected in it must have documentary evidence.

Other bets

35% is the maximum personal income tax rate. The minimum is 13%. It is paid by the vast majority of payers. This rate is used to calculate taxes on the receipt of wages and other types of income, including the rental of property, real estate or vehicles.

A rate of 15% is applied to the income of persons who are not tax residents of the Russian Federation if they receive income from a Russian organization.

9% is the old rate for personal income. But since December 1, 2015, it has risen from 9 to 13%. The 9% rate is now valid only for tax residents of the Russian Federation if they receive income in the form of dividends from investments in Russian companies, also for deposits made before 2015.

Vehicle rental

In this matter, things are the same as with renting real estate. If the tenant is a legal entity, then personal income tax will be withheld and paid by him (a similar position is in the letter of the Ministry of Finance of Russia dated May 29, 2007 No. 03-04-06-01/164). If the car is rented by an individual, then the lessor must file a declaration and pay 13% personal income tax to the budget on the income.

Of course, the object of personal income tax may also be income not listed above, since we have presented only the most common situations.
Do not forget that there is Art. 217 of the Tax Code of the Russian Federation, which contains a complete list of personal income tax-free income of individuals. You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

What income is subject to personal income tax?

Personal income tax is levied on all types of earnings. Their main types:

• Wage;
• Net income from business activities;
• Sale of real estate. The tax is subject to the sale of real estate that has been owned for less than 3 years;
• Renting out real estate or vehicles;
• Dividends, remuneration and other material receipts from other countries;
• Winnings and prizes;
• Other types of income.

You can avoid paying personal income tax on the above income if a number of conditions are met. For example, if you sell real estate after a 3-year period. Otherwise, the transaction is considered as resale for the purpose of enrichment. There is no need to pay personal income tax on inherited and donated property. Such guarantees are provided by the Family Code of the Russian Federation.

Payment of personal income tax in 2019-2020

Persons who have an object of taxation are required to transfer tax to the budget. But due to the fact that the provisions of Ch. 23 of the Tax Code of the Russian Federation applies to individuals and organizations performing the functions of a tax agent; when talking about the deadlines for paying personal income tax, it is also necessary to be guided by the payer’s belonging to one or another category.

In the material “Who are personal income tax taxpayers?” lists the conditions that allow you to determine in which case the obligation to pay tax arises.

Tax deductions

Deductions help significantly reduce the taxable portion of your income. They are available to all citizens whose income is currently subject to a 13% rate. That is, for those who work officially. The bottom line is that if during the reporting period a citizen spent money on education, treatment, purchase or renovation of housing, then he has the right to return the amount of personal income tax that he himself had previously paid. Tax legislation provides for several deductions - property, social, standard, professional or investment.

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Calculation of personal income tax from interest

When receiving interest on bank deposits, including time pension deposits. This calculation applies to both individuals and individual entrepreneurs.

– for ruble deposits – in terms of the excess of the amount of interest on the deposit over the Central Bank refinancing rate, increased by 5%. In this case, the refinancing rate is taken for the entire period of interest accrual. If the refinancing rate has changed, then the new rate must be applied from the moment it was adopted.

— on deposits in foreign currency in terms of income exceeding 9% per annum.

Calculation of personal income tax from material benefits

When receiving income in the form of material benefits from savings on interest for the use of credit (borrowed) funds. In this case, the amount of income subject to taxation is calculated as follows:

- for ruble loans - based on the interest on the loan (loan) is more than 2/3 of the Central Bank refinancing rate in effect at the time of interest repayment.

- for foreign currency loans - if the interest on the loan is more than 9% per annum at the time of interest payment.

For shareholders of a credit consumer cooperative or an agricultural credit consumer cooperative upon receipt of the following income:

— income in the form of fees for the use by the consumer cooperative of funds contributed by shareholders;

— interest on the use by an agricultural credit consumer cooperative of funds raised from shareholders in the form of loans.

Personal income tax must be calculated on the portion of the excess of the indicated income over the amount of interest calculated on the basis of the refinancing rate of the Central Bank of the Russian Federation, increased by 5% (clause 2 of Article 224 of the Tax Code of the Russian Federation)

Please note that no tax deductions apply to income taxed at 35%.

The obligation to withhold and pay personal income tax is assigned to the tax agent (the organization in which you received income or material benefit)

Features of calculation and payment of personal income tax

The personal income tax tax period is a calendar year, for which an individual is required to submit a declaration to the tax authority at the place of registration.

The tax is transferred by the employer no later than the day following the payment of income to the employee. At the end of the reporting year, employers submit a report to the tax authority at the place of registration in the form of $2$-NDFL for each employee by April 1 of the following year.

Since 2016, for employers - agents of personal income tax payers, a period has been established - a quarter. A new form of calculation of $6$-personal income tax has also been introduced. This form reflects information about employee income, accrued and withheld personal income tax amounts for the reporting period. This calculation must be submitted no later than the last day of the month following the previous quarter.

Note 1

When determining the tax base of a taxpayer, all income that he received, both in cash and in kind, or the right to dispose of which he acquired, is taken into account, as well as income in the form of material benefits.

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For taxation at the basic rate – $13\%$ there is a list of types of income (Fig. 1):

Figure 1. Types of income subject to personal income tax

The personal income tax rate in Russia is $13\%$ of income. But for certain types of income the rate is different.

Personal income tax 35 percent in what cases

Tax rates for the purpose of calculating personal income tax are established in Art. 224 Tax Code of the Russian Federation.

Note

According to Art. 43 of the Tax Code of the Russian Federation, a dividend is any income received by a shareholder (participant) from an organization during the distribution of profits remaining after taxation (including in the form of interest on preferred shares) on shares (stakes) owned by the shareholder (participant) in proportion to the shares of shareholders (participants) in the authorized (share) capital of this organization.

In accordance with paragraph 5 of Art. 224 of the Tax Code of the Russian Federation, a tax rate of 9% is established for income:

— received in the form of interest on mortgage-backed bonds issued before January 1, 2007;

— founders of trust management of mortgage coverage obtained on the basis of the acquisition of mortgage participation certificates issued by the mortgage coverage manager before January 1, 2007.

Central requirements

What is stated in the code

In the tax code of the Russian Federation, a separate article is devoted to personal income tax.

It contains five points:

1. The basic personal income tax rate is 13 percent, except for the cases listed in the second paragraph.
2. The personal income tax rate is 35% for the following types of income:
   a sum of money received as a result of winning somewhere (lotteries, advertising promotions, various sponsorship events, etc.);
3. interest received on deposits in the bank, if their amount exceeds that specified in the second paragraph of Article 214 of the Tax Code of the Russian Federation;
4. sums of money received as a result of savings on interest;
5. income received as a result of the use of finances by persons included in a credit-type consumer cooperative.
6. Personal income tax of 30% is levied on the income of persons who are not residents of our state, with the exception of the following types:
   income in the form of dividends received as a result of the participation of non-residents in the activities of domestic organizations, companies, enterprises, etc. (a tax of 15 percent is charged);
7. profit received as a result of conducting activities, the types of which are indicated in the first paragraph of Article 227 of the Tax Code of the Russian Federation;
8. income received by a non-resident who is a highly qualified specialist on the basis of Federal Law 115-F3 (the tax rate is 13%);
9. sums of money received as a result of participation in the state program for the resettlement of compatriots living abroad (the rate is 13 percent).
10. 9% - this tax rate is established in relation to income received through equity participation in the activities of companies in the form of dividends.
11. A personal income tax rate of 9 percent is levied on income received in the form of interest on transactions with bonds, mortgage loans, as well as on profits received by the founders of trust management as a result of the acquisition of mortgage certificates.

Established period by law

A tax period is a calendar year or another period of time applicable to certain types of taxes, until the end of which the tax base is determined and the amount of tax payable is established.

In Article 216 of the Tax Code of the Russian Federation, the personal income tax tax period is from January 1 to December 31. If the company was registered during the tax period, then its period begins to count from the date of its creation.

The fifth paragraph of Article 55 of the Tax Code of the Russian Federation contains information on the principle of calculating the tax period in the event of liquidation of an organization. It is counted from January 1, to the day of complete liquidation of the company.

If an organization is opened and closed within one calendar year, the tax period is counted from the date of registration to the day of liquidation.

Features and bases

In the process of determining the tax base of each individual, all of his income is taken into account, regardless of the form of receipt. In the event that only those deductions are made from the income of an individual on the basis of a court or other authorized bodies that will not affect the size of the tax base. The size of the tax base is determined for each type of income. Depending on the size of the rate used, the size of the tax base is determined according to certain principles.

Briefly, their contents are as follows:

• if a standard rate of 13% is used, then the tax base is determined in the form of the monetary value of income that is subject to taxation, reduced by the amount of tax deductions in accordance with Articles 218-221 of the Tax Code of the Russian Federation;
• if the amount of tax deductions exceeds the actual amount of income received, then a zero tax base is applied to this tax period, the difference is not carried forward to the next period;
• when applying rates other than the main one, the tax base is the monetary value of all income on which tax is levied, and tax deductions are not used;
• all income that is applied to the deduction, expressed in foreign currency, is recalculated into rubles according to the rate established by the Central Bank of Russia.

Is a declaration necessary?

Individuals who received the following types of income must file a personal income tax return:

• remuneration from individuals or legal entities who are not tax agents;
• profit received from the sale of property that was owned for less than three years;
• profit received from sources of various types located outside our state;
• any types of income from which personal income tax was not withheld by tax agents;
• remuneration received as an heir;
• profit in the form of vehicles, shares, real estate, shares, shares donated by someone.

In addition to individuals, tax returns are also submitted by individual entrepreneurs, notaries and individuals who claim a refund of personal income tax paid.

How is the object of personal income tax taxation determined?

Whether an individual has additional tax to pay for the past year is checked by the tax office based on the documents received. It also returns the overpayment if there is excess tax withheld. Tax agents (in other words, sources of income) report to the Federal Tax Service by annually submitting 2-NDFL certificates for each individual who received income. Declarations in form 3-NDFL are submitted by personal income tax taxpayers themselves.

The object of personal income tax taxation changes depending on the status obtained:

• for residents - this is income received from any sources, both in Russia and abroad;
• for non-residents – income from Russian organizations and individual entrepreneurs.

Article 209 of the Tax Code delimits the definition of an object depending on the status assigned to the taxpayer.

Clarifications in calculations

Standard deductions

Article 218 of the Tax Code of the Russian Federation lists four standard deductions:

In addition to the four standard deductions described, there are also social, property and professional deductions. They are described in detail in articles 219 to 221 of the Tax Code of the Russian Federation, respectively.

Loan interest

Relations under a loan agreement between a credit organization and an individual are regulated by Article 42 of the Civil Code. The provisions do not contain any restrictions on the drafting of the contract. Consequently, when taking into account the rate for the temporary use of credit funds during the term of the loan agreement, no debt will arise upon repayment (if the corresponding clause is indicated in the agreement).

While the employee is on sick leave, certain payments are accrued. Amounts transferred to a person are considered his income. Therefore, income tax is charged on sick leave.

You can find out when there will be tax holidays for the self-employed in 2021.

The procedure for receiving and returning funds does not depend on the type of person who issued the loan. The repaid loan is not considered profit, since profit is interest received.

The amount will be subject to personal income tax at different rates, depending on whether the individual is a resident or not. Tax payment is carried out at the place of registration of tax agents in authorized structures, in accordance with the seventh paragraph of Article 226.

Withdrawal from foreigners

Representatives of other states carrying out their labor activities (visa-free) on the territory of the Russian Federation are required to pay a tax in the amount of 1216 rubles every calendar month.

Citizens working for an individual determine the amount of personal income tax based on the profit earned. The transferred advances for the current tax period are subtracted from the amount received.

On the profits of citizens of other countries working in the territory of our state for a legal entity or individual entrepreneur, tax is paid from the assets of the employer. In turn, advance payments are deducted from wages. They are calculated during the tax calculation process. Those amounts that cannot be offset are not considered an overpayment and therefore are not subject to refund.

Personal income tax payers

Who is obliged to pay income tax is stated in Art. 207 NK. Payers can be:

• Russian citizens;
• foreigners or stateless persons.

During a calendar year, the status of a taxpayer (resident or non-resident) may change several times, and therefore personal income tax may be withheld at different rates. If this is a one-time payment, the tax agent, when paying income, checks the status on the day of payment. If accrual is carried out throughout the year and payments are made regularly, then the status is determined as of December 31 of the reporting year.