How can an Umbrella Company Help with Contracting in Russia?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Russia. Even better, most are experts in Russian and expat tax law, meaning they’ll also help you optimise your earnings in Russia.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Russia.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Russia, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Russia and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Russia
One of the most consistently challenging aspects of contracting in Russia is complying with the country’s tax system. As well as paying tax in Russia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Russia
If you’re working in Russia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Russia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Russia, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Russia through PAYE is left with the prospect doing everything themselves.
Do you know much about Russian Tax Law? Does Russia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Russia can range from 13 to 30 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Russia
|When Do You Need to Lodge Your Tax Return?||30 April|
|Tax Filing Deadline||30 April|
|Can you file it online?||Yes, https://www.gnivc.ru/software/|
How to File Taxes in Russia as a Contractor
Do you need to file taxes?
You are not required to file taxes if you only receive employment income, unless you intend to claim a refund for itemised deductions. Your employer is required to withhold and file taxes for you.
You can file taxes online or at your local tax office.
Step 1: Install a Tax Filing Program
Every year, the Russian tax authority provides taxpayers with a free tax filing program, on which forms 3-NDFL and 4-NDFL can be filled. You can find this program here(link is external).
Download and install the program for the relevant tax year on your computer
Step 2: Fill in the Relevant Sheets
Fill in the forms which correspond to the types of income you have received. Samples can be found here(link is external).
Forms are in Russian and it is recommended that you consult a translator.
Tax Figures in Russia
|Currency||Russian Rouble (RUB)|
|Tax-free Threshold in Russia||None|
|Income Tax Rates|
Flat rates: Residents are taxed at a flat rate of 13% for all types of income (except for interest income and income derived from prizes and awards which are taxed at 35%). Non-residents are taxed at a flat rate of 30% for all types of income (except for dividend income which is taxed at 15%).
Highly Qualified Specialists (HQS): Employment income earned by non-resident individuals with HQS status is taxed at 13% (instead of 30%). A HQS is a foreign national with work experience, skills or accomplishments in a specific field who is employed in Russia and receives a monthly salary of RUB167,000 or more.
Tax Residency in Russia
When do you become a tax resident in Russia
You become a tax resident in Russia when:
- You spend at least 183 days in Russia within the relevant calendar year.
Note: Both the day of arrival in Russia and day of departure from Russia should be considered as days spent in Russia.
Does the 183 day rule apply in Russia
Am I taxed on my global income in Russia
Residents are taxed on their worldwide income. Non-residents are taxed on their Russia-sourced income only.
Can you set up your own Limited Company in Russia?
|How long does it take to set up||11 days|
|How much does it cost||RUB5,700 – RUB6,500 (+ RUB200 per signature)|
|Is it easy?||Starting a Business Rank: 28/190 (Source: World Bank)|
Tax Calculator in Russia
If you are a contractor and want a calculation on your tax and net retention in Russia, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Russia
Contractors in Russia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Russian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Russian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Russian tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Russia
We work with numerous umbrella companies in Russia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Russia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Russian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Russia but without the overhead of directly dealing with the Russian tax authorities. Get in touch with us today for some reliable advice on tax in Russia!
A Contractor’s Guide to Work Permits in Russia
Immigration is one of the primary concerns for any contractor hoping to start working in Russia. Permanent employees will find it easy to get their Russian work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Russian work permit, known more commonly as the Russian Work Visa, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Russia is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Russia (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Russia. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Russia and match contractors with the right company for them. If you’ve already secured a contract in Russia, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).