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View Full Version : 30% TAX RATE for Non-Residents?????



Muchka
17-09-2008, 17:14
Has anyone come across dealing with the 30% tax rate for non-residents at their company? Apparently, your tax bracket of the lovely and low 13% does not kick in until you have been a resident of Russia for 183 days... Can I say ouch? Is there anyway to get around this?

MissAnnElk
17-09-2008, 17:18
Yes. That was our experience, too.

The answer is to spend as much time in Russia as quickly as possible. It is not 183 consecutive days . . . just 183 days.

Now, I may be wrong, but I believe it is possible then to be reimbursed for the difference between the two percentages. It is not a quick process, but your employer should be able to deal with that (I think . . .).

Muchka
17-09-2008, 17:24
The problem, however, is that the 183 days is calculated from the 12 month period of arrival, not the calendar 12 month period. But the rate is reduced from the calendar period. I think... My senior accountant is having issues with this.

MissAnnElk
17-09-2008, 17:28
The problem, however, is that the 183 days is calculated from the 12 month period of arrival, not the calendar 12 month period. But the rate is reduced from the calendar period. I think... My senior accountant is having issues with this.

I am not the family breadwinner, and it is also possible things have changed, but I thought it was based on the 12-month period starting when you arrive in Russia. It seemed to go quickly because my husband was able to count days he spent here in 2007, although we did not all move her for good until early December 2007. Seemed that by the end of 1Q08 we were done with that.

Maybe someone else on the forum can confirm?

kruno
17-09-2008, 18:36
I am not the family breadwinner, and it is also possible things have changed, but I thought it was based on the 12-month period starting when you arrive in Russia. It seemed to go quickly because my husband was able to count days he spent here in 2007, although we did not all move her for good until early December 2007. Seemed that by the end of 1Q08 we were done with that.

Maybe someone else on the forum can confirm?

I am also told that it is based on 12 month period from arrival date. From several sources. :whisper: After 183 days it is 13%.

If anyone has different info, please correct me. It is hard to get precise info around here.

schmidtskatze
17-09-2008, 23:28
I am also told that it is based on 12 month period from arrival date. From several sources. :whisper: After 183 days it is 13%.

If anyone has different info, please correct me. It is hard to get precise info around here.

My employer advances only 13% for me from day 1, i.e. the day you start working on the contract. The main argument was that the working contract is with a Russian entity and last longer than 6 months in a row (the famous 183 day threshold which is usually agreed in double tax treaties with the country you may have worked before / you were taxed in before). So effectively is your employer deducts more you should get it back once you declare tax with the authorities. However, experience I would say is not very good as it can take ages to get the money back. So better convince the accountant that it would not be deducted from day 1!

Check whether your origin has a double tax treaty and then check in there what it says about where an individual is taxed depending on its source of income and its residence status. That should clarify the issue. Note that many DTTs are with the USSR but are applied also to the Russian Federation!

Mirka
18-09-2008, 09:07
I am not the family breadwinner, and it is also possible things have changed, but I thought it was based on the 12-month period starting when you arrive in Russia. It seemed to go quickly because my husband was able to count days he spent here in 2007, although we did not all move her for good until early December 2007. Seemed that by the end of 1Q08 we were done with that.

Maybe someone else on the forum can confirm?

I confirm. There is one problem though. Or was at least in my case. The company I work for said that I cannot get money back for the year in which I didnt spend all 183 days but only for the year in period when I reached 183 days. Which means in practice that I didnt get reimbursement for my days in year 2007 but only for days I spend here in 2008. The company compensate it of course but that was a part of the contract. Dont know if it is usual practice or not but I was told that this is the law. Also all interuption of days spent in Russia do not count so all business trips outside of Russia will be excluded. Hope helped.

Muchka
18-09-2008, 12:24
Thanks for all the posts. Mirka, I am basically in the same situation...I arrived in August 2008, so I don't technically reach my 183 days until February 2009. However, my accountant is starting to count the 13% tax rate from January 2009.

There must be some way to get around this...

Schmidt, can you offer more info on the DTT and precisely the way you get around this 30% bullocks? Btw, my country of citizenship is the US.

Many thanks to all again.

schmidtskatze
20-09-2008, 14:48
Thanks for all the posts. Mirka, I am basically in the same situation...I arrived in August 2008, so I don't technically reach my 183 days until February 2009. However, my accountant is starting to count the 13% tax rate from January 2009.

There must be some way to get around this...

Schmidt, can you offer more info on the DTT and precisely the way you get around this 30% bullocks? Btw, my country of citizenship is the US.

Many thanks to all again.

Hm - in theory (don't remind me that we are in Russia, that's what I know :) ), so in theory the tax status changes even within the year. I.e. if you stood 183 days in Russia, normally DTTs say that you are taxable here with your "global" income. Having said this, the administration may request 30% to be advanced (checked it with our accountant) until you declare your income in the annual tax declaration. This is as they of cannot be sure that you actually will become taxable here. Check the DTT between US and Russia on where you are taxed (should be downloadable from the US tax authorities I would hope if there is one).

Our accounts worked around it laying down the situation with the authorities in charge for my employer. I.e. they provided work contract, visa and work permit and argued that I will easily reach the hurdle rate and it only causes more work to pay now 30% and then get reimbursed later for the difference (in theory this would be in 2009, paid out in 2010, in your case (i.e. 2008: taxable as non resident, 2009: fully taxable as resident, reimbursement for the tax advanced from your employer in 2008). Not sure you wish to stay that long here - so I'd urge your accountants to lay it down like this if the case matches.

Do you have flat, working contract etc. stating you will be here longer than 1 year? That should help to support it!