For calculation wages and other payments, the employer needs to have information regarding the employee’s residency status. In this article we will tell you how to determine whether a person is a resident or a non-resident and how to establish the status of an employee.
Resident status for tax purposes
Companies with employees are required to have information about the residence status of their employees. This need is explained by the following: depending on the status of the employee (resident or non-resident), the employer calculates the amount of personal income tax to be accrued and withheld. In particular, for non-residents of the Russian Federation it is provided increased rate tax (30%), while residents pay personal income tax at the rate of 13% of the amount of income.
According to current legislation, the right to a tax deduction is granted only to residents of the Russian Federation. Therefore, when assigning and calculating the amount of tax compensation, the employer must have comprehensive information about the employee’s residence status.
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How to determine residency
Contrary to popular belief, residency status does not directly depend on the presence or absence of Russian citizenship. That is, a citizen of another country and a stateless person (with dual citizenship) can be a resident of the Russian Federation, and vice versa, a citizen of the Russian Federation can have non-resident status.
Criteria for establishing resident status
The main criterion for establishing residency status is the period of stay of a person on the territory of the Russian Federation. A person is considered a resident if during the year he was in the customs territory of the Russian Federation for at least 183 calendar days.
The procedure for determining the reporting period (calendar year) depends on the specific situation. For example, if an employee was hired in March 2017, and at the end of the month he is paid a salary, then in this case The reporting period for determining residency will be April 2016 - March 2017. If during the period 04/01/16 - 03/31/17 an employee was in the territory of the Russian Federation for 183 days or more, then he is considered a resident, which means he can claim a tax deduction and calculate personal income tax at the rate 13%.
Calculation of time spent in the Russian Federation
To confirm residency, an employee must stay in the Russian Federation for 183 days, and the period of stay must be continuous. When a citizen crosses customs border, the calculation of the number of days is interrupted. The date of departure from Russia and the day of return are considered days of stay on the territory of the Russian Federation.
Example 1. 09/01/17 accepted into company “A” new employee, citizen of Moldova. On 10/01/17 the employee received his salary for September. To determine residency, the accountant determines the billing period - 09/01/16 - 09/30/17. During the specified period, the employee:
- was continuously on the territory of Moldova – 09/01/16 – 03/31/17;
- was on the territory of the Russian Federation - from 04/01/17 to the present (10/01/17);
- during his stay in Russia, he visited Moldova - from 05/01/17 to 05/08/17 (8 days).
Thus, during the billing period, the employee stayed in the Russian Federation for 183 days (from 04/01/17 to 10/01/17). However, this period cannot be considered continuous, since the employee crossed the border of the Russian Federation and visited Moldova. In this case, the employee should calculate the tax at a rate of 30%, since he is considered a non-resident of the Russian Federation.
Documents for establishing status
The fact of continuous stay on the territory of the Russian Federation, as well as the facts of border crossing, which must be established to determine residence status, must be documented. The current legislation does not provide a list of documents according to which the employer (or other persons or organizations) can determine the status of an employee (resident/non-resident).
In this regard, you can use any documents on the basis of which you can confirm the fact of a citizen’s presence on the territory of the Russian Federation, as well as the period of his stay.
Practice shows that in such situations, employers most often use foreign passports. The period of stay is determined based on the marks of the Russian border service. The mechanism for confirming residency is as follows:
- The employer requests a foreign passport from the employee and checks all border crossing marks for the billing period ( calendar year, preceding the moment of payment of income).
- If, based on the results of the calculation, the employee continuously stayed in the territory of the Russian Federation for 183 days, then he is recognized as a resident, with the right to receive deductions and accrual of personal income tax at a rate of 13%. If continuous stay is not confirmed by a foreign passport, the employee is paid a salary based on personal income tax of 30%, without the right to deductions.
In addition to the international passport, in order to establish residency, the employer can check:
- service passport;
- migration card;
- seafarer's identity card;
- refugee travel document, etc.
Special cases of definition
The general mechanism for determining the residence of a person is described above. At the same time, the current legislation provides for special cases of determining the period of stay, which we will discuss in more detail below.
Traveling abroad for treatment and training
If a citizen needs to travel abroad for treatment, the period of stay abroad is included in the calculation of the 183 days required to acquire resident status. In other words, days spent on treatment abroad are equivalent to days spent on the territory of the Russian Federation. A similar rule applies to cases when a person leaves the Russian Federation to undergo training.
In the above cases, the following should be taken into account:
- the period of training/treatment should be short-term (no more than six months);
- the reason for being abroad must be documented (agreement with a medical institution/educational institution, payment documents, etc.).
In case of violation of the above conditions, the period of stay abroad is not taken into account in the calculation of 183 days.
Foreign business trips for new employees
Currently, many companies send their employees on business trips abroad. How, in this case, can we determine the period of an employee’s stay in the Russian Federation and establish residency status? If during the billing period an employee stayed abroad for the purpose of a business trip, then his residence is determined in accordance with the general procedure. That is, marks about crossing the border during a business trip are considered grounds for interrupting the period of stay on the territory of the Russian Federation.
Example 2. An employee of company B went on business trips to Prague three times during 2017:
- 12 days – 04/10/17 – 04/21/17;
- 10 days – 06/05/17 – 06/14/17;
- 5 days – 11/20/17 – 11/24/17.
Apart from business trips, the employee did not cross the border. The accountant of company B calculated the period of continuous stay of the employee in the Russian Federation as follows:
- from 01/01/17 to 04/09/17 – 99 days;
- from 04/22/17 to 06/04/17 – 42 days;
- from 06/15/17 to 11/19/17 – 156 days;
- from 11/25/17 to 12/31/17 – 36 days.
Calculation of the period of stay for special categories of citizens
Clause 3 art. 207 of the Tax Code of the Russian Federation defines special categories of citizens whose period of stay on the territory of the Russian Federation does not affect their residence status. According to the document, diplomatic workers and civil servants sent to work outside the Russian Federation are considered residents, regardless of how long they stay in the Russian Federation and how many times they cross the border. This rule also applies to military personnel whose service takes place outside the Russian Federation.
The article brings clarity to the concept of “non-resident” from the point of view of tax and currency legislation. The criteria for classifying an entity as a non-resident in accordance with the Tax Code are determined, and the characteristics of a currency non-resident are also listed.
Why is there often debate about who is considered a “non-resident”?
Quite often there are discrepancies regarding the circumstances under which the concept of “non-resident” can be applied to a subject. For example, it is surprising to observe when a non-resident bank account is opened for a foreign citizen, but at the same time income tax is withheld at the resident rate.
Or another example that introduces ambiguity: a person who has a passport as a citizen of the Russian Federation is suddenly registered in tax return as a "non-resident". This ambiguity arises due to the different criteria for determining “non-resident” in tax and currency legislation.
Who is a tax non-resident?
Within the framework of the Tax Code, a non-resident is a subject who has stayed in Russia for less than 183 days over 12 consecutive months. As we see, when establishing the status of a tax resident, the citizenship of the subject is not the determining criterion.
A citizen of the Russian Federation may lose his resident status if he has been abroad for more than six months in total within a 12-month period. Then he will pay taxes only on income received in Russia, whereas previously tax obligations also arose on foreign income. For example, the Russian budget suffers significant losses when local oligarchs travel abroad for a significant period of time, as a result of which they lose their resident status, and with it part of their tax liability.
It should be understood that foreign citizens will be considered non-residents by default. This is unprofitable for them, since the non-resident personal income tax rate is significantly higher (30%, not 13%). To confirm resident status, a foreigner must provide the inspectorate with proof of his stay in the country for more than 183 days. As a rule, this is a copy of the passport page, where customs marks are affixed, and a migration card form. It turns out that you need to extremely carefully monitor the status of a foreigner, determine each time when calculating tax and check whether the person has accumulated the period of stay in the country required quantity days or not.
Peculiarities of calculating non-resident tax
As already noted, higher tax requirements are imposed on non-residents compared to residents. The generally applicable tax rate on non-resident income is 30%. However, as always, there are exceptions to all rules that allow the reduced rate of 13% to apply. These exceptions include the following:
- A non-resident has the status of a highly qualified specialist.
- A non-resident has a patent for employment.
- The non-resident’s income is derived from activities on ships flying the Russian flag.
- A non-resident is a refugee, a person who has received political asylum, a participant in a certain government program.
- A non-resident is a citizen of an EAEU country.
A separate rate is provided for the income of a non-resident in the case when he is the founder of an enterprise. If a non-resident receives dividends from the company's profits, then the non-resident tax will be higher than the usual resident rate of 13% and will be 15%.
Who is a foreign currency non-resident?
Along with the existing tax concept, there is another definition of a non-resident, which follows from the provisions of currency legislation. According to the principles of currency regulation, residents include citizens of the Russian Federation, except for those who have citizenship or a residence permit in another state or stay abroad for at least one year, working or studying with an appropriate visa; foreign citizens with a residence permit. Consequently, a non-resident is an entity that does not meet the above requirements.
What will be important here is not the fact of permanent residence, but rather the type of documents presented. For example, when opening an account, a bank employee will a priori consider a person who presents a Russian passport to be a resident. Even if a given client meets the criteria of a non-resident, for example, has a residence permit in another country, it will still be difficult for the bank to determine this without providing additional documents that the client may not show.
Peculiarities of bank requirements for foreign currency non-residents
Foreign exchange non-residents have significant privileges over residents when performing foreign exchange transactions.
An undeniable advantage that a non-resident has is the absence of the obligation to submit reports to the tax authorities on the opening of a foreign account and cash flow in this account. Also, non-residents have no restrictions on the amount of credit to foreign accounts.
In addition, unlike a resident, a foreign exchange non-resident can make currency transfers to a resident (as well as to a non-resident) without restrictions on the territory and outside the Russian Federation.
You just need to remember about the additional requirements for the list of documents for opening an account. If individual- a foreigner, then you need to provide, in addition to your passport, its notarized translation, a visa or temporary residence permit, a migration card, a statement that the account will not be used for entrepreneurial activity. If an account is opened for a non-resident entrepreneur, then you will additionally need a certificate of registration, an extract from the state register, and a sample signature of the owner.
Conclusions
There is an established opinion that a non-resident is a person who has a passport of a foreign citizen, and all Russians are considered residents. However, Russian legislation, of course, did not take these definitions so lightly, established additional criteria, and, moreover, even delimited the application of the concept. Before deciding what status an individual has, you should understand for what purposes you need to know this. If it is for tax purposes, then the definition is taken from the Tax Code, and the decisive factor will be the length of the period of stay on the territory of the Russian Federation. If determination of status is needed to open a bank account and regulate foreign exchange transactions, then you should refer to the foreign exchange legislation, which imposes its own requirements for residency.
International law and tax legislation operate with the concept of “resident”. This status is acquired by individuals and legal entities located permanently or temporarily in the country. It is important for foreigners to understand what this concept is in order to exercise their rights in a foreign country and avoid trouble with the law.
The essence of residency
The main feature is submission to Russian laws and conduct economic activity according to the norms of Russian law. Individuals must register with pension fund, you need registration at your place of residence, inclusion in the registers of major bodies executive branch, availability of a general passport of a Russian citizen. For legal entity the importance of residence is determined primarily by registration with the tax authorities and the ability to conduct currency transactions.
Non-residents
Non-residents will be all those who perform certain functions on the territory of the Russian Federation, but are responsible before the law of their native state. These may be foreign citizens who came for study, treatment and recreation. Legal entities include firms, branches, and trade missions of foreign companies.
How to become residents and non-residents
Obtaining statuses is done by the following actions:
- stay on the territory of the Russian Federation for the required time;
- regular presence with the possibility of short trips;
- obtaining documents such as a residence permit, work visa, patent, etc., allowing guests from abroad to live and work;
- other fixed points in the legislation of the host country.
Currency and tax laws
According to the act “On Currency Regulation and Currency Control,” residents are:
- All citizens of the Russian Federation, as well as those who have not been absent from another country for more than 1 year.
- Foreigners without citizenship of another state who wish to obtain a residence permit in Russia.
Compatriots living for more than 1 year in another state cease to enjoy certain tax benefits.
More preferential conditions for currency transactions are prescribed for residents than for non-residents.
A resident in tax legislation is:
- Citizens and persons living in Russia 183 days a year with possible breaks for vacation, treatment and study.
- Russian military and civil servants sent on business trips abroad.
Staying in the Russian Federation for less than 6 months means that paying taxes will be higher than resident rates. To avoid huge tax deductions, it is enough to obtain a work or study annual visa.
Resident is legal or physical a person registered in a given country, to whom national law fully applies.
Non-resident- This legal, individual, acting in one state, but permanently registered and residing in another.
These can also be organizations and organizations that are not legal entities. persons created in accordance with the laws of foreign states, or foreign diplomatic and other official missions located in the country, as well as international organizations, their branches and representative offices.
As a rule, the term is used in relation to the rights and obligations of persons in financial and tax legal relations.
In some states residents only foreign citizens and foreign organizations that have full rights and obligations within their country of residence are named.
Residents of Russia include:
Individuals who are citizens Russia, with the exception of citizens Russia recognized as permanent residents of a foreign state in accordance with the legislation of that state;
foreign citizens and stateless persons permanently residing in Russia on the basis of a residence permit provided for by Russian legislation;
Legal entities created in accordance with Russian legislation;
branches, representative offices and other divisions located outside the territory of Russia legal persons created in accordance with Russian legislation;
diplomatic missions, consular offices of Russia and other official missions of Russia located outside the territory of Russia, as well as permanent missions of Russia at interstate or intergovernmental organizations;
itself, constituent entities of Russia, Russian municipalities.
Non-residents include:
Individuals permanently residing outside Russian Federation, incl. temporarily located on its territory;
Legal entities created in accordance with the laws of foreign states and with a location outside the Russian Federation;
Enterprises and organizations that are not legal entities, created in accordance with the laws of foreign states and with a location outside the Russian Federation;
diplomatic and other missions located in the Russian Federation;
branches and representative offices of non-residents located in the Russian Federation.
An economic entity is a resident of the country where its main place of residence is located, regardless of its citizenship. Residence companies determined by the place of registration and location, and not the place of operations.
Sources
Wikipedia - The Free Encyclopedia, WikiPedia
mabico.ru - Mabico
inventech.ru - Library
Investor Encyclopedia. 2013 .
See what “Resident and non-resident” are in other dictionaries:
NON-RESIDENT- [English] non resident not permanently residing in a given place] legal entity. 1) a legal entity registered in another country; 2) an individual permanently residing in another country; regime of taxation and legislative regulation for n.... ... Dictionary foreign words Russian language
NON-RESIDENT- 1) a legal entity operating in a given country, but registered in another; 2) an individual operating in one country but permanently residing in another. Special tax rules may be established for non-residents. See also... Economic dictionary