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manuir2001
16-01-2011, 18:56
Hello

I plan to move from Western Europe to Moscou a General Director to start up the Russian Subsidary of my current company. My company is going to deal with my Visa, Work permit,...

But I have some questions concerning my family/spouse :

1 - what VISA will they get ?

My spouse will continue to work for her company located in Western Europe. She will received her salary outside of Russia. She will required to travel quite often to international meetings :

2 - does she need a Work Permit even she is not employed in Russia ?
3 - does she need a Tax ID ?
4 - if yes, she will move to Moscou this summer so I guess she will pay 30% of tax in 2011 on the overseas income earned from July to December 2011 - and then 13% in 2012

Thanks !

tasel
16-01-2011, 23:10
She can get a spouse/family dependent visa under your visa. Talk to your company and its simple to do it by them.

ilya25
16-01-2011, 23:23
tax id - is voluntary
if you wife does not work in russia work permit is not needed visa will give her the right to legally stay in russia
tax rules for income tax - russian tax resident ones who spends in russia more then 183 days should pay russian tax on ww income at 13% rate
non resident is subject to 30% tax on only Russia sourced income (should be withheld by Russian tax agent mainly)
So if your wife will be travelling a lot she may not need to pay any taxes in Russia

DavidB
17-01-2011, 11:34
2 - does she need a Work Permit even she is not employed in Russia ?
3 - does she need a Tax ID ?
4 - if yes, she will move to Moscou this summer so I guess she will pay 30% of tax in 2011 on the overseas income earned from July to December 2011 - and then 13% in 2012

Agree with Ilya.

If there are no customers in Russia and your wife will not sign any contracts with Russian suppliers, then there is no need for a work permit.

If your wife will move to Moscow in Summer, and she will also travel a lot, she will probably not be in Russia for more than 183 days in 2011. So, she will not have to pay Russian tax or file a tax return in Russia for this year.

If you're living in Russia for the whole of 2012, then she will likely be in Russia for more than 183 days, and will therefore become tax resident. If that is the case, she will have to file a tax return by March 2013, and pay 13% tax on her worldwide income for year 2012. However, Russia and all major Western European countries have entered into tax treaties, which will reduce or eliminate the amount of income tax payable in Russia in your situation. You should talk to a tax advisor in Russia, who can help to fill out the 2-NDFL form and ensure that you're not over-paying your taxes.

manuir2001
17-01-2011, 13:55
Good Morning,

Thank you to the 3 of you for the swift answers.

My wife will not get employed by a Russian employeer but will do some work from Home + 3 or 4 travels a month for business reasons. Does it qualify as "not working in Russia" even she works from home for her employer located in France and therefore confirm the no need for a Work permit ?

I guess that Russia sourced income are only linked to Income coming from Russian Employers, so in that case yes she will not get any Russian sourced income and therefore no taxable income in 2011.

She will spend more than 183 days in Russia in 2012 so she will become a Tax Resident and pay probably the 13% tax rate.
I will anyway check the tax treaty between Russia and France.

Thanks,

SV1973a
17-01-2011, 14:29
Does it qualify as "not working in Russia" even she works from home for her employer located in France and therefore confirm the no need for a Work permit ?

Technically, she will be working in Russia, and her visa does not allow her to !
But then, who will find out about this if you don`t tell anybody???



She will spend more than 183 days in Russia in 2012 so she will become a Tax Resident and pay probably the 13% tax rate.
I will anyway check the tax treaty between Russia and France.

Then I suppose it would be the safest way to shut up, let her continue her activities in France, but do not declare an income for her. If she declares an income on which she will need to pay 13% tax, the authorities may wonder about her work permit.
On the other hand, I would prefer to pay my taxes in Russia instead of France.

DavidB
17-01-2011, 14:59
My wife will not get employed by a Russian employeer but will do some work from Home + 3 or 4 travels a month for business reasons. Does it qualify as "not working in Russia" even she works from home for her employer located in France and therefore confirm the no need for a Work permit ?

I don't think there is any legal requirement for a work permit, because the French company doesn't have any business here in Moscow.

If your wife did any of the following activities in Moscow, she could be considered an agent of the company in Russia. In that case, the company would be obliged to register its presence (branch or rep. office) and obtain a work permit for her:

sign contracts on behalf of the company
negotiate on behalf of the company
promote the company by way of advertisements, word of mouth, etc.
act as a director of the company
control the corporate bank accounts
make significant decisions about the direction of the company (mostly connected to being a director or board member)


Maybe you could tell us a about your wife's role in the company? We could then try to think of any activities which could be a problem.

DavidB
17-01-2011, 15:16
The tax treaty will help to reduce Russian tax in year 2012, but only if your wife also pays French tax in that year.

For example, if she pays 30% income tax in France, there should be no Russian income tax on the same income.

However, something else that you may wish to think about is that your wife may not have to be considered a tax resident in France in 2012. She could then become a "contractor" instead of an employee under French law, if the company would allow it. That may avoid the need for French taxes and social payments.

manuir2001
17-01-2011, 19:04
Hello DavidB and SV1973a,

Today my wife and I are not living in France but in another EU Country. She has the same activity working from Home for our French employer (activity she would to continue from Moscou). She does not pay any Personal Income taxes in France but in our current host country.

She is an European Quality Auditor so visiting the different European sites of the company. So she will not get any commercial or business development activity in Moscou. But her company has a subsidaty/branch in Moscou so she may visit and audit them from time to time.

Back to the Visa question, would my family get a Multy Entry Visa ?

thanks,

DavidB
17-01-2011, 19:22
I think your wife will be safe as far as work permissions are concerned. Quality audit work can be performed on a business visa, so there is no reason why a work permit would be required.

Work visas are usually issued as 90-day single entry visas in the Russian embassy in your country of residence. When you arrive in Moscow, your employer will take your family passports to the FMS office, and they will give you a new 1-year multi-entry visas.

If you are using the new highly-qualified specialist visa regime, I think the visa will be valid for 3 years instead of 1 year.

ilya25
17-01-2011, 20:03
The tax treaty will help to reduce Russian tax in year 2012, but only if your wife also pays French tax in that year.

For example, if she pays 30% income tax in France, there should be no Russian income tax on the same income.

However, something else that you may wish to think about is that your wife may not have to be considered a tax resident in France in 2012. She could then become a "contractor" instead of an employee under French law, if the company would allow it. That may avoid the need for French taxes and social payments.

DavidB, do you have any successful stories how double tax treates were used in Russia? I heard that it is next to impossible. Will be interesting to hear about others' experience

ilya25
17-01-2011, 20:09
I think your wife will be safe as far as work permissions are concerned. Quality audit work can be performed on a business visa, so there is no reason why a work permit would be required.

Work visas are usually issued as 90-day single entry visas in the Russian embassy in your country of residence. When you arrive in Moscow, your employer will take your family passports to the FMS office, and they will give you a new 1-year multi-entry visas.

If you are using the new highly-qualified specialist visa regime, I think the visa will be valid for 3 years instead of 1 year.

I fully agree with DavidB's comments. I also don't think there any risks in terms of immigartion law compliance in Russia for your wife in the current set-up

But her employer should look at the tax situation for her. maybe all will be better off if your wife is transferred to the Russian branch of her employer?

Usually tax advising is usually a part of standard relo package- I'd suggest to check with tax advisers what can be the most benefitial set-up for both you and your wife. BTY what is your employer's policy in terms of tax equalisation? Will they cover your extra taxes in Russia?

manuir2001
17-01-2011, 23:13
Good evening,

A 1 or 3 years multientry Visa will be perfect. Then for her taxation I may discuss it with the company who is going to handled my tax calculation in Moscow.

Ilya, my employer expat tax policy is what we call "Hypotax". So they pay all the expats tax in their host country while the expats pay back to the company the tax they would have paid with a similar income in their home country. This is for the canditates for expatration to avoid to take their decision based on a favorable/unfavorable tax system in the host country.
On top of that, most expat allowances such as housing, cost of living differential taxes are paid the employer.

DavidB
18-01-2011, 01:37
DavidB, do you have any successful stories how double tax treates were used in Russia? I heard that it is next to impossible. Will be interesting to hear about others' experience

I've also heard that it's difficult to apply treaty rates for interest/dividends/royalties. I was considering using the reduced dividend rate for my tax optimisation structure. In the end, the advisor told me that risk of having a legal case with the tax department was too high.

It's easier to use the treaty in relation to personal taxation of foreign sourced income. In that case, the foreign tax department will usually provide a statement about the income tax paid for the previous year. As it's a single document, it's easy have it apostilled and translated. It can then be submitted to nalogovaya in Russia as proof that the income has already been taxed higher than 13% and shouldn't be double-taxed as per the treaty.