What is included in the concept of “Mass registration address” and where is it used.

The procedure for attracting foreign HQS to work

If it is impossible to find a Russian worker with the required level of qualifications, there is a need to attract foreigners to work. Taxation of highly qualified foreign specialists in 2021 depends on the assignment of such status to employees. The HQS status is assigned if a foreigner has the appropriate skills, achievements and work experience in a certain activity. Compliance with qualifications is confirmed by documents indicating the presence of relevant skills and knowledge (diplomas, scientific works, etc.), work experience (employment contracts), and reviews from previous employers.

In addition, it is necessary to comply with Art. 13.2 of Federal Law 115-FZ of July 25, 2002 salary level.

Read more: We recruit highly qualified foreign specialists

Personal income tax

The Tax Code of the Russian Federation establishes a special personal income tax rate for highly qualified specialists in the amount of 13%. It does not depend on the presence or absence of tax resident status. But there are a number of tax features:

• A non-resident HQS pays personal income tax at a rate of 13% (and not 30%, like other non-residents). But such an employee is not entitled to receive tax deductions. Personal income tax is calculated in relation to each payment of income;
• a highly qualified resident specialist has the right to receive tax deductions. Income tax is calculated on an accrual basis from the beginning of the year;
• If a foreign HQS who is not a resident receives income not related to wages, then personal income tax is withheld from him at a rate of 30%.

Labor of foreign citizens in Russia

Russian legislation has given foreigners the right to freely apply for employment in our country. An adult specialist from abroad can look for work from home and come to Russia at the invitation of an employer (this especially applies to citizens from “visa” countries).

Another option is also possible: a foreigner comes to the Russian Federation with the intention of working, but begins searching for a vacancy upon arrival. Residents of the CIS and other countries with which a visa-free regime has been established have an advantage in this regard. It is enough for them to issue a labor patent and, by paying advance payments on personal income tax, extend its validity and their legal stay in Russia for up to a year, without visiting migration officials.

Details of the issuance of work visas, permits and patents, as well as a list of categories exempt from issuing any permits, are discussed in the topic on the labor activity of foreign citizens in the Russian Federation.

Insurance premiums

Foreigners working in the Russian Federation have the following status:

• temporarily staying highly qualified specialists;
• temporary or permanent residents.

How insurance premiums for a highly qualified foreign specialist are paid in 2020 also depends on the category of foreigner:

• from the remuneration of HQS who are citizens of countries included in the EAEU, insurance premiums are paid in accordance with the rules established for payments to citizens of the Russian Federation. An exception is payments to EAEU citizens temporarily staying in the Russian Federation. Payments to such employees do not include contributions to compulsory pension insurance;
• Insurance premiums for temporarily staying highly qualified specialists are paid only for injuries. Payments to such employees are not recognized as the tax base for insurance premiums, in accordance with paragraphs. 15 clause 1 art. 422 Tax Code of the Russian Federation;
• insurance premiums for occupational safety and health insurance, occupational safety and health, and injuries are paid based on the wages of temporary and permanently residing HQS. Compulsory medical insurance contributions are not paid.

Housing for a highly qualified foreign specialist

We believe that payment for housing to a foreign worker, including a highly qualified specialist, is not subject to personal income tax and insurance contributions. However, regarding personal income tax, officials take a different position. Let's see if it's worth getting into arguments with inspectors.

Personal income tax

When determining the tax base for personal income tax, all income of an individual received by him both in cash and in kind, or the right to dispose of which he has acquired, is taken into account (clause 1 of Article 210 of the Tax Code of the Russian Federation). The list of income not subject to taxation is given in Art. 217 Tax Code of the Russian Federation. These, in particular, include all types of compensation payments established by the current legislation of the Russian Federation related to the free provision of residential premises and utilities (clause 3 of Article 217 of the Tax Code of the Russian Federation).

Clause 5 of Art. 16 of Federal Law No. 115-FZ of July 25, 2002 “On the legal status of foreign citizens in the Russian Federation” stipulates that the inviting party is obliged to provide guarantees of material, medical and housing support for a foreign citizen during his stay in the Russian Federation. Such guarantees are letters of guarantee from the inviting party about the assumption of obligations to provide housing for a foreign citizen in accordance with the social norm for the area of ​​housing established by the government body of the relevant constituent entity of the Russian Federation (subclause “d”, paragraph 3 of the Regulations on the provision of guarantees of material, medical and housing support foreign citizens and stateless persons for the period of their stay in the Russian Federation, approved by Decree of the Government of the Russian Federation of March 24, 2003 No. 167).

It turns out that paying for housing to a foreign worker is a compensation payment established by law and is subject to exemption from personal income tax on the basis of clause 3 of Art. 217 Tax Code of the Russian Federation. This is precisely the position that arbitration courts adhere to (Determination of the Supreme Arbitration Court of the Russian Federation dated April 23, 2008 No. 4623/08, decisions of the Federal Antimonopoly Service of the Moscow District dated July 29, 2011 No. KA-A40/7917-11, Volga District dated May 15, 2009 in case No. A65-6772/2008 ).

However, according to financiers, payment by the organization for employees of the cost of renting residential premises is carried out in their interests and on the basis of subclause. 1 item 2 art. 211 of the Tax Code of the Russian Federation is recognized as income in kind, subject to personal income tax. They explain this by the fact that the provisions providing for exemption from taxation of amounts reimbursed by an organization to its employees for the costs of renting residential premises, Art. 217 of the Tax Code of the Russian Federation does not contain (letter of the Ministry of Finance of Russia dated May 16, 2018 No. 03-04-06/32677).

And in a letter dated May 18, 2012 No. 03-03-06/1/255, the financiers indicated that the guarantee of housing provided by the inviting party in accordance with the requirements of the law to a foreign citizen for the period of his stay in the Russian Federation does not mean that such security should have gratuitous nature. The Federal Tax Service of Russia adheres to a similar point of view (letter dated January 10, 2017 No. BS-4-11/ [email protected] ).

In addition, financial department specialists believe that in the situation under consideration, taxation of the income of a highly qualified foreign specialist should be carried out at a rate of 30%. Let us recall that in general, the income of individuals who are not tax residents of the Russian Federation is subject to personal income tax at a rate of 30% (clause 3 of Article 224 of the Tax Code of the Russian Federation). Tax residents are individuals who are actually in the Russian Federation for at least 183 calendar days over the next 12 consecutive months (clause 2 of Article 207 of the Tax Code of the Russian Federation). However, an exception has been made for highly qualified foreign specialists. Their income from work in the Russian Federation is subject to personal income tax at a rate of 13% (clause 3 of Article 224 of the Tax Code of the Russian Federation).

In letters dated 01/24/2018 No. 03-04-05/3543, dated 03/17/2015 No. 03-04-06/14003, dated 06/08/2012 No. 03-04-06/6-158, the financiers noted that payment of rental housing for a highly qualified foreign specialist does not count towards income from working in the Russian Federation. Therefore, such income of a highly qualified foreign non-resident specialist is subject to personal income tax at a rate of 30%.

However, the courts believe that payment for services provided to a highly qualified foreign specialist in accordance with the terms of the employment contract concluded with him/her is considered income from employment in the Russian Federation. Thus, the Ninth AAS, in its resolution dated August 18, 2015 No. 09AP-29534/2015 in case No. A40-1148/15, considered a situation where a company hired a highly qualified foreign specialist to work as a general director. According to the terms of the employment contract, he was provided with a car with a driver. The company subjected this income in kind to personal income tax at a rate of 13%. However, the tax authorities considered that a rate of 30% should have been applied, since this income is not income from employment.

The trial court stated the following. Since the provision of a car with a driver is provided for in the employment contract, such income is directly related to the foreign worker’s work activities in the Russian Federation. And, accordingly, must be subject to personal income tax at a rate of 13%. And the appeal court additionally noted that the main condition for applying the 13% rate is not the composition (list) of income, but compliance with the conditions for recognizing a foreign citizen as a highly qualified specialist.

In our opinion, the conclusions made by the court also apply to the situation with rental housing. After all, the condition for providing housing to a highly qualified foreign specialist is also provided for in the employment contract.

So, if a company is not afraid of disputes with inspectors, it may not impose personal income tax on the payment of rent to a highly qualified foreign specialist. But she will have to defend this position in court. If the company does not want litigation, payment for housing must be subject to personal income tax at a rate of 30%.

Insurance premiums

The object of taxation with insurance contributions is payments and other remuneration in favor of individuals subject to compulsory social insurance in accordance with federal laws on specific types of compulsory social insurance, made, in particular, within the framework of labor relations (clause 1 of Article 420 of the Tax Code of the Russian Federation). Thus, in order to determine whether payments and remuneration of a highly qualified foreign specialist should be subject to insurance premiums, it is necessary to determine whether he is recognized as an insured person or not.

Highly qualified foreign specialists temporarily staying in Russia and working under an employment contract are not insured persons under compulsory pension insurance, compulsory medical insurance and social insurance in case of temporary disability and in connection with maternity. This is expressly provided for by the provisions:

- clause 1 art. 7 of the Federal Law of December 15, 2001 No. 167-FZ “On Compulsory Pension Insurance in the Russian Federation”;

- Art. 10 of the Federal Law of November 29, 2010 No. 326-FZ “On Compulsory Health Insurance in the Russian Federation”;

- clause 1 art. 2 of Federal Law No. 255-FZ of December 29, 2006 “On compulsory social insurance in case of temporary disability and in connection with maternity.”

The fact that highly qualified foreigners are not insured persons is confirmed by letters from the Ministry of Finance of Russia dated December 19, 2017 No. 03-15-06/84898, dated November 13, 2017 No. 03-15-06/74702, dated May 15, 2017 No. 03-15 -06/291787. Previously, the Ministry of Labor of Russia agreed with this conclusion (letter dated December 22, 2014 No. 17-3/B-622).

Thus, pension, medical and temporary disability contributions do not need to be accrued from payments in favor of a highly qualified foreign specialist (including payment for housing costs).

Now let's look at insurance premiums for compulsory social insurance against industrial accidents and occupational diseases. Clause 1 of Art. 5 of Federal Law No. 125-FZ of July 24, 1998 stipulates that individuals performing work on the basis of an employment contract are subject to compulsory insurance. This norm does not contain any exceptions for highly qualified foreign specialists. Consequently, payments in their favor within the framework of the employment relationship are subject to injury contributions.

However, in Determination No. 310-KG17-22296 dated February 12, 2018, the Supreme Court supported the conclusion of the lower courts that the amounts that a company pays for renting housing for a highly qualified foreign specialist are not subject to insurance premiums for injuries. The following situation was considered in this case. The company hired a highly qualified foreign specialist to work. In order to provide him with housing, the company entered into a lease agreement for the apartment and paid it directly to the landlord.

The courts of three instances found that the company should not charge injury insurance premiums for these amounts. They explained it as follows.

The obligation to provide a foreign worker with housing is provided for by law. Consequently, rental housing is determined by the production needs of the company, and not by the personal needs of the employee. The apartment was provided by the landlord for rent to the company, and not to a highly qualified foreign specialist. The company made payments for housing directly to the landlord on the basis of concluded rental agreements for residential premises between it and the landlord. Based on this, the courts came to the conclusion that payment of rental housing for a highly qualified specialist is not subject to insurance premiums for injuries, since it represents a company’s production expense due to legal requirements.

The Supreme Court judge supported this conclusion and refused to transfer the case to the Judicial Collegium for Economic Disputes.

So, insurance premiums are not charged on housing payments for a highly qualified foreign specialist.

Responsibility for non-payment of taxes

If an employer fails to pay personal income tax or insurance premiums for a highly qualified foreign specialist in 2021, penalties will be applied to him.

Firstly, for each day of delay in payment, penalties will be withheld based on:

• 1/300 of the refinancing rate - for the first 30 days;
• 1/150 of the refinancing rate - starting from 31 days.

Secondly, if the tax base is understated, a fine of 20% of the uncalculated and unpaid tax is applied. In case of deliberate underestimation, the fine increases to 40%.

Thirdly, if personal income tax on highly qualified foreign specialists is not paid on time, a fine of 20% of the unpaid tax is applied. This fine can only be avoided if the tax authority discovers the error earlier, submits the 6-NDFL with the tax calculated correctly, and pays the tax and penalties to the budget.

The moment of calculating personal income tax on housing rental payments

For those who are not ready to defend their position in court, the question arises: at what point should personal income tax be calculated in the case when the employer himself negotiates and pays off with the landlord? After all, apartment rent is often paid in advance, sometimes even several months in advance. Let us turn to subparagraph 2 of paragraph 1 of Article 223 of the Tax Code of the Russian Federation, which states that the date of actual receipt of income is the day of transfer of income in kind.

At the time of payment of the advance payment, in the author’s opinion, it is impossible to talk about the employee having income subject to personal income tax. After all, firstly, the employee has not yet used the rental service, which means it cannot be said that the payment was specifically for it. There is only prepayment, and these are different concepts. Secondly, the lease agreement can be terminated, and then the unused advance is returned to the tenant (employer). Obviously, in this case, the employee will not have “natural” income until he receives the rental service. Income arises only after the employee has used the material benefit, that is, lived in the apartment for some time. This means that the company must withhold personal income tax when paying wages for the month in which the employee used the rented apartment.

EXAMPLE In January 2021, the company paid rent in advance for February, March and April 2021. Accordingly, starting in February, the employee has “in-kind” income. And when paying the February salary (in March), the organization will have to withhold personal income tax for renting an apartment in February.

It should be noted that officials have a different opinion on this matter. One of the letters from the Ministry of Finance of Russia (letter of the Ministry of Finance of Russia dated August 26, 2013 No. 03-04-06/34883) states that “the date of receipt of income in the case under consideration is determined as the date of payment for renting an apartment, including advance payments.”

Read more: How to get a financial personal account for a residential premises

Also, do not forget that the employer will have to act as a tax agent for personal income tax in relation to the person who provided his residential premises for rent (unless, of course, the landlord is registered as an individual entrepreneur). Indeed, in this case, the employer is the source of payment of income (letters of the Ministry of Finance of Russia dated 09/07/2012 No. 03-04-06/8-272, dated 10/07/2009 No. 03-04-06-01/259).