30 April 2014 and 15 July 2014: the fatal deadlines!
Two fatal deadlines are coming up soon: 30 April 2014 for filing your Russian personal income tax declaration and 15 July 2014 for paying the tax. Being too late means paying penalties. Not every foreigner (or Russian) should file a declaration though.
The conventional wisdom is that you are taxable on your worldwide income if you have stayed in Russia for 183 days or more during the past year. This is true in most cases but it may not be true if your family still lives in your home country.
Your worldwide income includes any income received anywhere in the world, also material benefits (the company paying for your apartment for example). If you have spent less than 183 days in Russia, you may still be taxable but only on income earned in Russia. The applicable rate then increases from 13% to 30%. Special attention for those who own a house abroad: the difference between actual interest paid on a mortgage and the “benchmark” rate of 9% is considered taxable income and taxed at 35%.
If all of your income has been paid by a Russian based employer who can issue you a confirmation of income and tax paid (“Справка 2 НДФЛ”) all the Russian tax due on your salary has already been paid on your behalf. But if you were paid by the head office, or were seconded to a Russian company, or have spent a few months on a business visa because your work permit did not get through, not all Russian tax due has been withheld from your salary and therefore you need to file a declaration.
At that point, one very substantial question will start nagging you: should I declare any income at all because nobody is paying taxes here and if you will declare your income “they” will be all over you, and could I get away with not filing?
First of all, yes you should pay your taxes, because hey, it’s the law. Secondly, paying tax in Russia means you can usually claim a deduction, exemption or even a refund from tax paid in your home country. With a tax rate of only 13% on most types on income, Russia has one of the mildest tax regimes in the world.
And finally, Moscow being the billionaire capital of the world, the tax inspector will likely not even blink when seeing your just six digit income. The bulk of the tax declarations just gets checked for internal consistency. But do not expect any mercy if you should have paid but did not.
Filling out the declaration can get a little cumbersome. You are supposed to declare not only your total amount of taxable income received, but with respect to every single payment received the source (so who paid it), date of payment and currency. A free download to help you completing this tedious task is available from the website of the tax authorities (www.nalog.ru). Filing the tax declaration is done preferably by registered mail with a description of the contents (заказным письмом c уведомлением и описью вложения).
Payment must be done by 15 Julyand you are not going to get a tax assessment first. You have to make the payment yourself and from a Russian bank account. Communicating through regular mail in Russia is not very fast and often mail gets lost. This is why it pays off to appoint a representative who can prepare and file the declaration on your behalf, make sure your declaration is in the system of the tax authorities and that your tax payment gets allocated correctly.