International law makes extensive use of the term "tax resident" in its work. The Tax Code of the Russian Federation contains a fairly complete explanation of this term. The provisions also set forth the rights and obligations for this category. Further in the article we will analyze in more detail what a tax resident of the Russian Federation is.
Terminology
Tax residents of the Russian Federation are individuals or legal entities registered on its territory. This concept is also enshrined in the laws governing currency transactions, in a number of international agreements. According to each of the normative acts regulating the activities of the persons under consideration, they indicate that tax residents of the Russian Federation are entities endowed with certain duties and rights. However, in some cases, the definition differs significantly from its scope.
Classification
The payment of established payments to the budget of each country is carried out within the framework of internal documents in the field of relevant legislation. Tax residents of the Russian Federation are, first of all, individuals living on its territory most of the calendar year (more than 6 months). The legislation uses a separate justification for people whose financial or vital interests are inextricably linked with the territory of the country. There are also a number of other criteria (exceptions) that do not contradict state regulations, within which a citizen can obtain the status of a tax resident of the Russian Federation. Separately defined conditions for legal entities. The taxation of small businesses in determining the category takes into account the place of registration or occurrence of the business, the location of the main management office and other criteria. A person (physical or legal) is obliged to make payments to the budget from all his income coming from both internal and external sources. The rate and procedure for payment are determined by the legislative acts of the state. Non-residents pay tax on income received from sources located in the country.
International law
As a result of the discrepancy in different countries of the main criteria according to which a resident or non-resident is determined, a contentious situation is often observed. In this case, an individual or legal entity is simultaneously recognized as obliged to make payments to the budget of different countries. A person recognized as a resident in several states has to resolve disputes arising in the process of simultaneous double (triple and so on) taxation of their income within the framework of the laws of these countries. Rates and conditions are regulated in accordance with the laws of each country. The definition of the term "resident" used in tax legislation does not always coincide in meaning with the concepts used in other types of law (commercial, civil, and currency).
Tax residents in the Russian Federation
This concept currently provides for permanent residence in the state for at least 183 days for 12 months following one after another. At the same time, the period of an individual’s stay in the country is not interrupted for the period of his departure outside the country for training or treatment (up to 6 months). The assignment to each taxpayer of a status of a resident (not a resident) establishes his obligation to pay tax to the budget from his income, affects the types and methods of deductions.
Bid Types
Payments of 13% per annum in accordance with article 224 of the domestic Tax Code apply to all residents (individuals) - citizens of the country - when calculating payments from total income. For those who do not belong to this category, the amount of deduction is 30%. There are a number of exceptions to the general rules. For example, when concluding a labor contract for a period of more than 183 days, a rate of 13% may be applied to a citizen of a foreign state. However, in cases where the employee leaves before the expiration of the specified period, and payments for the elapsed time amounted to the same percentage, the calculation is recognized as incorrect. In this case, a penalty is imposed on the employer.
Income payments for foreign migrants
According to the Tax Code of the Russian Federation, any profit made by residents or non-residents in the country is subject to mandatory taxation at the appropriate rate. Migrants who came to the territory of the state from another country, according to part 23 of article 207 of the Code, are automatically non-residents. They belong to this category for a period of up to 6 months inclusive from the moment of entry. A similar status is assigned to citizens of the Russian Federation, whose place of permanent residence is located outside the borders of the state. In this case, they are considered foreigners. Persons who, due to special circumstances, obtained the citizenship of the Russian Federation within 3 months, also remain non-residents under the law. They belong to this category until their stay in the country exceeds 183 days. In this case, for all of the above groups, regardless of their Russian citizenship, a tax rate of 30% of total income will apply .
Individual rates on profit of foreign citizens
An exception is the following types of income of non-residents, not taxed at 30%:
- Dividends received from participation on the basis of a share in the work of a Russian organization. They are calculated at a rate of 15%.
- Labor activities taxed at 13%.
- Work requiring high qualifications. Under the Federal Law of July 25, 2002, which regulates the legal status of foreign citizens residing in the territory of the Russian Federation, such activities are taxed at a special rate of 13%.
For all those who have moved to the country and have income here, payment of 30% of the profit is charged. This condition is valid until they achieve the status of a resident of the Russian Federation. According to regulatory enactments, on the 184th day of a citizen’s stay in the territory of the state, the relevant authority must mandatory recalculate the rate for the current period.
Refund of overpayment on deductions on personal income
Upon obtaining the resident status of the Russian Federation, the calculated tax is recalculated for the current period. In this case, a refund of excessively paid to the budget of the country funds. Until December 31, 2010, this obligation lay with the employer. From January 1, 2011, this function was transferred to the tax authority, in which the person is registered at the place of his actual residence. Recalculation and refund is based on the declaration submitted by the citizen. In addition, a tax resident certificate must be provided. It confirms the transition of a person to this category.
Papers required for recalculation
The main document that tax residents of the Russian Federation must submit is a declaration drawn up in the form of 3-NDFL. To carry out a recalculation, a person provides information confirming his transfer to another category. A set of documents is submitted to the tax office at the place of registration.
Confirmation of tax resident status of the Russian Federation
In practice, the employer does not have the opportunity to check which category his employee belongs to. Having no special capabilities, it is almost impossible to establish the duration of a person’s residence in the state over the past 12 months. The employer may ask the employee to write a statement stating that he can be considered a tax resident of the Russian Federation. At the same time, the document indicates that he lived, in accordance with domestic law, six months in the country from the last 12. In this case, the employer declines all responsibility to the tax authorities for the possible provision of low-quality information, based on which the amount of deduction from income is calculated . Thus, the employee confirms and is responsible for the accuracy of the information provided. In case of fraud, a citizen may be subject to serious penalties.
Currently, the tax authorities, customs and migration control services are developing a common unified database for all persons crossing the border of the Russian Federation and further tracking their residence in the state. However, it is difficult for an ordinary employer to access such data, so he is forced to focus only on the statements of the employee.