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Thread: Highly Skilled/Paid - Work/Visa Permit Questions

  1. #1
    manuir2001 Guest

    Highly Skilled/Paid - Work/Visa Permit Questions

    Good Morning,

    This morning I had a call with the company in charge of facilating my relocation to Moscow.

    They told me that to benefit from the speical Highly Skilled/Paid work/visa permit process one of the requirement is to have at least 2 000 000 RUB of Annual Income paid in Russia (so on the host country payroll).

    The basic of an assignment is to keep his payroll in the home country so I am a bit surprised.

    Have you also heard about this requirement ?

    Else I can go to the standard process, but the disavantage is that I will get only a 1 year work permit and visa, so the whole family will have to go through it again next year.

    Thanks

  2. #2
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    Obviously, Russia is looking for some tax benefits, which is why they make it easier to hire a high-skilled (or, rather, well-paid) foreign worker, but on the condition that taxes are paid in Russia. I'd say that this is going to become the "standard procedure".

    Of course, a payroll change is not always attractive, especially for multi-nationals, but the benefit is the 3 year WP and easier immigration for the family.

    Yes, lots of us have heard about these new requirements and they have been discussed a lot. See, e.g., http://expat.ru/forum/showthread.php?t=285134
    We, the willing, led by the unknowing, are doing the impossible for the ungrateful. We have done so much, for so long, with so little, that we are now qualified to do anything with nothing.

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    If you're in Russia for more than 183 days of the year, you have to declare your foreign income and pay taxes on it. It doesn't make a difference if you're paid by a local or foreign company, or which country your bank account is in.

    So if you work in Russia and your salary is paid on a foreign payroll, it's probably due to an illegal scheme. That's why they introduced a simplified procedure for people who declare their income and pay the tax in Russia.

  4. #4
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    It is possible to be on a foreign payroll and pay foreign taxes as an individual if:
    - there's a tax treaty with Russia, and
    - your employer doesn't have a branch office in Russia

    However, in most scenarios, if you are working here for a foreign company, they probably have some representation office here, meaning that you need to be on a Russian payroll.

    Quote Originally Posted by DavidB View Post
    If you're in Russia for more than 183 days of the year, you have to declare your foreign income and pay taxes on it. It doesn't make a difference if you're paid by a local or foreign company, or which country your bank account is in.

    So if you work in Russia and your salary is paid on a foreign payroll, it's probably due to an illegal scheme. That's why they introduced a simplified procedure for people who declare their income and pay the tax in Russia.
    We, the willing, led by the unknowing, are doing the impossible for the ungrateful. We have done so much, for so long, with so little, that we are now qualified to do anything with nothing.

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    That's true, but the problem is that if you're working in Russia (rendering services) you have to get a work visa to stay legal, and to do that your company would have to register a branch.

    It does work for some people, eg. IT consultants, fund managers, etc. Those people usually live in Russia but have no Russian suppliers or customers.

    They could pay you on a foreign payroll for work that has no relation to Russia, but any work you do in Russia should be paid through the Russian payroll.

    Another option is that you could be a member of a representative office, but the uses for that kind of entity are limited.

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    Also, if you work for a rep office, you cannot qualify for the skilled foreign worker visa, no matter where you are paid or how much you earn.

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    Quote Originally Posted by AstarD View Post
    Also, if you work for a rep office, you cannot qualify for the skilled foreign worker visa, no matter where you are paid or how much you earn.
    Right, and I am still trying to figure out the logic behind that.

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    Quote Originally Posted by SV1973a View Post
    Right, and I am still trying to figure out the logic behind that.
    Don't try to find a logic in Russian laws

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    Quote Originally Posted by manuir2001 View Post
    Good Morning,

    This morning I had a call with the company in charge of facilating my relocation to Moscow.

    They told me that to benefit from the speical Highly Skilled/Paid work/visa permit process one of the requirement is to have at least 2 000 000 RUB of Annual Income paid in Russia (so on the host country payroll).

    The basic of an assignment is to keep his payroll in the home country so I am a bit surprised.

    Have you also heard about this requirement ?

    Else I can go to the standard process, but the disavantage is that I will get only a 1 year work permit and visa, so the whole family will have to go through it again next year.

    Thanks
    The home payroll scheme does not work for assignees coming to russia due to
    a) immigration requirements- to work in Russia legally you need a work visa- the prerequsite for obtaining the visa is a local emplyment contract with a Russian employer . The essential part of employment contract is a compensation
    b) labor law requirements- even if you are employed via rep office of a foreign company in Russia your employment contract should meet the requirements of Russian labor code (eg. salary should be paid only in RUR)
    c) tax requirements - your income from employment in Russia is subject to Russian income tax that your company has to deduct from your salary . Company cannot pay the tax for you

    Conclusion. In order to be complient you need a local employment contract and to be on Russian payroll . And of course in this case if you income allows you'd better use highly qualified scheme

  10. #10
    manuir2001 Guest
    Thank you for your answers.

    So if I understand well, all expatriates coming from Western Europe or other countries, have moved their Home country income to a Russian local payroll.

    I will get some expatriates allowances paid locally in RUB, so I was thinking about make a local employment contract to get those allances paid in Moscow, and keep my remaing income (compensation) still paid in my host country.

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    That's correct, but you will have to file a tax return personally each year, and try to claim a credit for any tax owing, due to the tax being already paid in your home country.

    In my mind, that arrangement is still illegal, because the income originates from services/work performed on Russian territory.

    Are you sure you don't want to pay tax in Russia? I think the taxes in Russia would be much lower than in France.

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    Quote Originally Posted by DavidB View Post
    That's correct, but you will have to file a tax return personally each year, and try to claim a credit for any tax owing, due to the tax being already paid in your home country.

    In my mind, that arrangement is still illegal, because the income originates from services/work performed on Russian territory.
    If there is indeed a local payroll in Russia, the arrangement will be illegal indeed. Especially the fact that some compensation is already going to be paid out locally, it is not recommended to try and hide income by having it being paid out in France.

    Quote Originally Posted by DavidB View Post
    Are you sure you don't want to pay tax in Russia? I think the taxes in Russia would be much lower than in France.
    Totally agree.
    We, the willing, led by the unknowing, are doing the impossible for the ungrateful. We have done so much, for so long, with so little, that we are now qualified to do anything with nothing.

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    Quote Originally Posted by manuir2001 View Post
    Thank you for your answers.

    So if I understand well, all expatriates coming from Western Europe or other countries, have moved their Home country income to a Russian local payroll.

    I will get some expatriates allowances paid locally in RUB, so I was thinking about make a local employment contract to get those allances paid in Moscow, and keep my remaing income (compensation) still paid in my host country.
    This a workable solution. But again you will have to report a foreign income in Russia and possibly to deal with double taxation

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    Quote Originally Posted by DavidB View Post
    That's correct, but you will have to file a tax return personally each year, and try to claim a credit for any tax owing, due to the tax being already paid in your home country.

    In my mind, that arrangement is still illegal, because the income originates from services/work performed on Russian territory.

    Are you sure you don't want to pay tax in Russia? I think the taxes in Russia would be much lower than in France.
    I disagree that it is illigal, especially if a foreign income is fully reported and taxes are paid in Russia . People may have several employment contracts.

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    Quote Originally Posted by manuir2001 View Post
    Thank you for your answers.

    So if I understand well, all expatriates coming from Western Europe or other countries, have moved their Home country income to a Russian local payroll.
    That's pretty much the way it is if you want to make it legally.

    When I came to Russia for the first time it was for an assignment and we had to figure out a way how to do it as well.

    The solution was to put my contract at home on unpaid leave while I'd be on a local Russian contract during the assignment and also get my salary paid out locally in Russia.

    The main problem still was social security back home. The workaround was that my employer kept on paying for me at home and I had to pay back the difference at the end of the year. At the same time my Russian salary was increased by this amount.

    In the end it was a zero-sum game. But to figure out the logistics and tax implications was tough.
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