View Full Version : Unified Social Tax

Akila Pils
25-05-2004, 01:33
One problem:

1. We are still looking for best rewardment formula.
(Split pay roll / detachment / Russian contract...)

Three assumptions:

1. I'm EU citizen
2. I come to work in Moscow for Russian affiliate of EU company.
3. Place of residence is flexible

One question:

1. If take a Russian contract and I pay social tax on my wage: is this wasting my money, or do I get real social benefits?

and 3 more:

2. How could I avoid to pay this social tax?
3. Labor permit. Is it necessary?
4. Can I work on permanent basis in Russia, but being on payroll of foreign company, therefor avoiding social + income tax?

:o i am walking in a desert

25-05-2004, 09:32
Akila, I know a bit about this, but not everything....and I'm trying to figure some of it out myself.

The social tax is like payroll tax. Your employer should pay it, not you. It should not affect your paycheck. If you are paid in an EU country, then your employer would also be paying a (probably hefty) "social tax"....The social tax here is that it starts at 36.5 (or 35.6?) percent of the salary up to a certain level, and then decreases as salary increases. So, if you officially receive $500/month, your employer is paying the full 35.6% but if you are receiving $2000/month, then your employer is paying around 25% (very rough guess just for illustration).

Labor permits are very nice. They make you totally legal here - you don't even have to leave the country to re-register or get a new visa. If you will be paying income taxes in Russia, it is probably more advantageous to have a work permit.

I think that being on a payroll of a foreign company (foreign office) without a work permit means that you are officially here on a business trip (komandirovka) and don't have to pay the social tax in Russia (that is, your employer doesn't have to pay). If you are in Russia for more than 180 days per year, however, you are obliged to pay income tax. I have a feeling that compliance with that rule is low.....

This may be wrong, but as far as I understand, with a work permit, you owe 13% income tax and your employer pays the Russian social tax. Without a work permit, you owe 30% income tax and your employer pays the payroll tax wherever you are officially employed.

Would love to hear any more info that people have - I will soon be in a similar situation.

25-05-2004, 10:54
Oh, and regarding real social benefits that you would get from paying taxes in Russia: mmmm....none whatsoever?

25-05-2004, 12:59
You get the right to be pulled over by the GAI for no reasons whatsoever, and questioned thoroughly until you give 200 rubles for his family.

Oh, and you get the right to have your hot water turned off for 3 weeks.

Akila Pils
25-05-2004, 20:30
:o The deal that I negociated with my company is not a wage but the total budget the company will spend on me.

The less the company pays to the government, the more I will get. So I am interested of course in lowest social tax possible.

Let me sum up:

As apparently Russian social benefits do not exist, I need to get either private insurance, OR, get the contract 100% with my EU employer, and base myself on the social benefits of my country.

Option 1

At home I get a Private insurance. Besides this, I get my salary fully in Russia.

I pay 13% income tax (IF I stay over 183 days + work permit ?)

I pay about 10-15% social tax (average depends on wage)

Is this correct? Or could I ditch one of these taxes?

Option 2

100% on the payroll of EU mother company.

I pay taxes at home.

On plus there is no double tax treaty and I pay 30% income tax if I have no work permit and 13% if I have a work permit. No social tax in this situation though.

So I'd go for first option. But one question though: What do Russians do when they are sick and cannot work? They really don't get anything? Even in Congo it ain't that bad.