Working in Moscow?
Moscow: Work Permits and Social Security
Priorities: Work Permits
Getting the necessary work permit for Russia is a complex and time-consuming procedure. The country has a quota regulation for foreign workers. Companies wishing to employ foreign staff have to submit an application a year ahead of the date of hire.
If a potential employer’s request to hire foreign employees is granted, job vacancies have to be registered with the authorities. If no local candidate has been found within a month, the company receives a corporate permit. Now, the application for an individual work permit can be filed. This involves translated evidence of qualifications and a health certificate. In a best-case scenario, this process takes three months.
Originally, exceptions from the quota regulation were confined to very few categories, such as senior executive posts and IT specialists. A 2010 law, however, introduced a new category: highly qualified specialists. These are foreign specialists in a particular field who earn at least 2 million RUB per year. Then a work permit can be issued for up to three years. There is no more quota restriction, and authorities must consider applications within 14 days.
Everything You Need to Know about Taxation
All expats working in Moscow are liable to pay Russian income tax. Non-residents are taxed only on their income from Russian sources. In this case, the tax rate for all types of income is 30%.
If you live in Russia for at least 183 days during a 12-month period, you are considered a resident under Russian taxation law. Tax residents are taxed on all their income, including income from non-Russian sources. Since the tax reform of 2001, there is a flat income tax rate of 13% for most types of incomes.
One exception is the abovementioned highly qualified specialist immigration category. Expats who have entered the country in this category are eligible for the standard personal income tax rate of 13%, even before officially becoming a Russian tax resident. Additionally, Russia has signed double taxation treaties with a number of countries, although benefits from these may sometimes be hard to push through.
The Social Security System in Moscow
As of January 2010, Russia no longer has its Unified Social Tax which covered all areas of social security. It has been replaced by four separate funds:
- State Pension Fund
- Social Insurance Fund
- Federal Obligatory Medical Insurance Fund
- Local Obligatory Medical Insurance Fund
Contributions to these funds have to be made for every person under an employment or civil contract. In Russia, however, the responsibility for paying the contributions falls wholly on the employer.
Social Security Contributions
The contributions are calculated separately for each employee. In 2012, the contributions for all four funds combined were 30% of an employee’s gross annual income. There is a cap to the maximum annual income subject to the contributions, which is adjusted annually by the government. In 2014, the cap was established at 624,000 RUB. A number of changes to the system were announced at the beginning of 2012, an overview of which can be seen on the KPMG homepage.
In addition to the abovementioned funds, employers have to make contributions to an obligatory accident insurance fund for each employee. Here, rates vary between 0.2% and 8.5% of gross income, depending on the occupation’s risk level.
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