The period required to obtain tax residency in Russia has been halved to 90 days: What do Russians living in the UK need to know

There is one month left until the end of the 2020 tax year in Russia.

Due to the Covid-19 coronavirus pandemic, many taxpayers who live permanently in the UK have returned to Russia for a long period or, conversely, have not been able to return to Russia by the required date due to cancelled flights, quarantines, etc.

We kindly remind you that on July 31 2020, the President of the Russian Federation signed a new law, according to which individuals who were in the territory of the Russian Federation in 2020 for between 90 to 182 days inclusive, received the right to recognize themselves as tax residents of the Russian Federation in 2020 on the basis of the application filed with the tax authorities. The application is made in an arbitrary form, and must contain the name and INN of the individual in question. It must be submitted to the tax authority in the place of residence (stay) in the period no later than April 30, 2021.

By way of reminder, under the general rules, tax residents of the Russian Federation are recognized as individuals who reside in Russia for at least the aggregate 183 calendar days within any period of twelve consecutive months.

This change can be beneficial for those Russian taxpayers who have also retained tax residency in the UK in the 2020/21 tax year.

If a Certificate of Residence in Russia is obtained from the local tax office, individuals will be able to pay tax on personal income (NDFL) received from foreign and Russian sources, at a rate of 13%, which is considered to be the lowest in Europe (for comparison in the UK rates range from 20% to 45%). In contrast, the tax rate for non-residents of Russia stands at 30%.

This can potentially minimise their tax bill on employment income they received from the UK employer in the 2020/21 tax year in the UK whilst working remotely.

For more information about the questions listed in this brief, please get in touch with your regular Schoolgate Accounting Services Ltd contact or email us at info@schoolgateaccounting.co.uk

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