Tax in Russia

Who is the tax authority in Russia?

The Federal Tax Service (Федеральная налоговая служба, ФНС) is the federal tax authority of the Russian Federation, operating under the Ministry of Finance. ФНС administers Personal Income Tax (НДФЛ — налог на доходы физических лиц), Corporate Profit Tax (налог на прибыль организаций), VAT (НДС — налог на добавленную стоимость), property taxes, transport tax, mineral extraction tax, and excise duties. The federal-level authority delegates regional administration to territorial inspections (Inspections of the Federal Tax Service, ИФНС) at the constituent-region level. The taxpayer-facing portal is the 'Personal Account for Taxpayers' (Личный кабинет налогоплательщика) at lkfl2.nalog.ru for individuals and lkul.nalog.ru for legal entities [SC1]. Audit and dispute-resolution proceedings are handled at the territorial inspection level with appeals to the regional FTS Office and the Federal Tax Service.

What is the Russian tax year and the filing deadline?

The Russian tax year for individuals is the calendar year (1 January to 31 December). The annual NDFL declaration (Form 3-NDFL) is filed by 30 April of the year following the tax year [SC1]. Tax payment is due by 15 July of the same year. Most employed individuals are not required to file an annual declaration because their employer (tax agent) withholds NDFL at source on monthly salary payments and remits to ФНС; only individuals with non-tax-agent income (rental income, capital gains, foreign-source income, etc.) or claiming property/social tax deductions need to file Form 3-NDFL.

Corporate profit tax follows monthly or quarterly advance-payment cadence depending on the taxpayer category, with annual settlement filing by 28 March of the year following the tax year [SC2]. VAT is filed quarterly (within 25 days after the quarter end). Late filing of any tax triggers daily penalties of 1/300 of the Central Bank refinancing rate per day on the unpaid amount; rate is recalculated periodically as Bank of Russia adjusts the key rate.

How is Russian tax residency determined?

Russian tax residency for individual income tax purposes follows a 183-day physical-presence test under Article 207 of the Tax Code [SC1]. An individual is a Russian tax resident for the year if physically present in Russia for at least 183 calendar days during any consecutive 12-month period (the test applies on a rolling basis but is finalised at year-end). Residents are taxed on worldwide income; non-residents are taxed only on Russia-source income (typically at higher rates: 30 percent on most income types, 15 percent on dividends).

Russia does not have a 'centre of vital interests' or 'habitual abode' override comparable to many OECD jurisdictions; the day-counting test is mechanical. Russian citizenship does not automatically confer tax residency — Russian citizens who relocate abroad and meet the foreign 183-day test cease to be Russian tax residents from the date the threshold is met. Tax residents who relocate abroad must continue Russian tax filing in the year of relocation if the 183-day threshold was met before departure.

Russia does not impose a general exit tax on unrealised capital gains. The 2025 reforms introduce limited additional reporting obligations on emigrating high-income citizens, but no general deemed-disposition mechanism comparable to Canada or Norway frameworks. Sanctioned individuals (those on EU/US/UK consolidated lists) face special scrutiny on offshore-asset declarations under Russian beneficial-owner-disclosure rules.

How does Russian personal income tax work?

The 2025 IIT reform (Federal Law No. 176-FZ of 12 July 2024, effective 1 January 2025) replaced the prior two-bracket 13/15 percent NDFL framework with a new five-bracket progressive system [SC2]. The new brackets for residents on Comprehensive Income (employment + most other categories): 13 percent on income up to RUB 2.4 million; 15 percent on RUB 2.4-5 million; 18 percent on RUB 5-20 million; 20 percent on RUB 20-50 million; 22 percent on income above RUB 50 million. The 22 percent top rate applies to taxable income above approximately USD 540,000 at current exchange rates [SC2]. The reform represented Russia's first material progressive-PIT shift since the 13 percent flat tax was introduced in 2001.

Different rate schedules apply to specific categories: dividends from Russian companies are taxed under a separate two-bracket framework (13 percent up to RUB 2.4 million annual dividend income, 15 percent above); proceeds from sale of securities follow another schedule; deposit interest above the inflation-indexed exemption follows yet another. Standard tax deductions are limited compared to OECD norms — child deductions (RUB 1,400-3,000/month per child depending on circumstances), education deductions (up to RUB 110,000/year for own education, RUB 50,000 per child), medical expense deductions (up to RUB 110,000/year for ordinary medical, no cap for qualifying expensive treatment), and property deductions on home purchase and mortgage interest.

Non-resident individuals are taxed at 30 percent on Russia-source income with limited exceptions (15 percent on Russian-company dividends; 13 percent on certain qualifying employment categories under HQS — Highly Qualified Specialist programme).

How does Russian corporate profit tax work?

Corporate profit tax (налог на прибыль организаций) was raised from 20 percent to 25 percent effective 1 January 2025 under the same Federal Law 176-FZ [SC3]. The 25 percent rate splits between federal (8 percent in 2025-2030, then 7 percent from 2031) and regional (17 percent in 2025-2030) components. Regional governments retain authority to reduce the regional component for qualifying investment-favoured taxpayers within statutory floor limits.

Reduced rates and exemptions apply for several categories: 5 percent (federal) + 0 percent (regional) — total 5 percent — for IT companies meeting accreditation and revenue-share thresholds; 0 percent for qualifying agricultural producers; reduced rates in special economic zones (Free Economic Zones in Crimea + Kaliningrad + Vladivostok Free Port + Skolkovo Innovation Center). Russia did not implement OECD Pillar Two due to its OECD departure following the Ukraine invasion; the QDMTT framework adopted by most major economies does not apply in Russia. Multinational entities operating in Russia face standard Russian profit tax frameworks without minimum-tax overlay.

Permanent establishments of foreign companies are taxed on PE-attributable profits at 25 percent. Without PE, Russia-source income to non-residents is generally subject to 20 percent withholding (15 percent on dividends) — though the suspension of various Russian double-tax treaties (see below) means treaty-rate reductions are unavailable to many treaty partners.

How does indirect tax work in Russia?

VAT (НДС) is the principal indirect tax. The standard rate is 20 percent (raised from 18 percent on 1 January 2019); the reduced rate is 10 percent (food, children's products, books, periodicals, certain medical goods); and zero-rated supplies include exports, international transport, and certain qualifying categories [SC4]. VAT registration is mandatory; the simplified-tax-system option for SMEs (Упрощенная система налогообложения, УСН) replaces VAT plus profit tax with a 6 percent on revenue or 15 percent on revenue-minus-expenses framework.

The simplified tax system (USN) is widely used by Russian SMEs. As of the 2025 reforms, USN eligibility extended to include businesses with annual revenue up to RUB 450 million (raised from prior thresholds). USN-status businesses with revenue above RUB 60 million now must additionally pay VAT (5 or 7 percent reduced rate depending on revenue band, vs full 20 percent on standard regime) [SC4]. This represents a significant tightening of the prior small-business VAT exemption framework.

Excise duties apply to alcoholic beverages, tobacco, motor fuels, and certain luxury goods. The Tax-Free shopping refund framework allows non-resident tourists to recover VAT on qualifying purchases at participating retailers. Customs duties apply on imports per the Eurasian Economic Union Customs Code (Russia, Belarus, Kazakhstan, Armenia, Kyrgyzstan operating in customs union).

How is crypto taxed in Russia?

Russia adopted formal cryptocurrency taxation under Federal Law 259-FZ 'On Digital Financial Assets' (DFA Law), effective 1 January 2021 with subsequent expansions. Federal Law 418-FZ effective 1 January 2025 established a comprehensive crypto-tax framework [SC4]. Cryptocurrency is classified as 'property' (имущество) for civil-law purposes, not as currency. Mining income is taxed as ordinary income at progressive NDFL rates 13-22 percent (resident) or 30 percent (non-resident) on the difference between miner's electricity costs and FMV of mined cryptocurrency at receipt.

Crypto disposals (sale for fiat or other digital assets) are taxed as property-disposal income under Article 217 of the Tax Code. Resident NDFL applies at progressive 13-22 percent rates; non-residents at 30 percent. FIFO basis-tracking is the default. Loss-set-off restricted within crypto category. Mandatory annual disclosure requirement: all Russian residents holding cryptocurrency must report holdings to ФНС annually; failure to report is an administrative offence.

Russia introduced a distinct framework for licensed Crypto Mining operations: registered miners can sell mined crypto under a parallel framework with industry-specific rules, with disposal proceeds taxed at 25 percent (standard profit-tax rate) for legal entities. The cryptocurrency framework is still developing rapidly under sanctions-driven cross-border-payment policy considerations; periodic regulatory adjustments expected.

How does Russia handle tax treaties?

Russia historically maintained a network of approximately 80 bilateral income tax treaties [SC5]. Following the Ukraine invasion and subsequent sanctions response, Russia has suspended significant portions of its treaty network. Presidential Decree 585 of 8 August 2023 suspended major substantive provisions (including reduced withholding rates on dividends, interest, and royalties) of 38 tax treaties with 'unfriendly' jurisdictions including the United States, United Kingdom, Germany, France, Japan, all EU member states, Canada, Australia, and others [SC5]. The administrative-cooperation provisions (information exchange, MAP) of these treaties remain partially active.

Russia ratified the Multilateral Instrument (MLI) in 2019, with entry into force 1 October 2019. The MLI's Principal Purpose Test applies to Russia's covered treaties — though the practical relevance is reduced given the suspended substantive provisions. Treaties with 'friendly' jurisdictions (CIS member states, BRICS partners excluding India, Southeast Asian partners) remain fully operative. The Russia-China treaty (renegotiated 2014) provides 5/10 percent dividend withholding, 0 percent interest withholding (most categories), and 6 percent royalty withholding, and remains a major cross-border framework.

Residency-certificate procedures: Form Справка о подтверждении статуса налогового резидента issued by ФНС for treaty-rate application by foreign withholding agents. Application via the Personal Account portal or paper submission to territorial inspection.

What are the common penalties and pitfalls for foreigners?

Late filing of tax declarations triggers a fine of 5 percent of unpaid tax per month (capped at 30 percent of total liability and floor of RUB 1,000). Late payment of tax triggers daily penalties at 1/300 of the Central Bank refinancing rate (currently approximately 21 percent annualised given the elevated key rate environment). Tax evasion under Articles 198-199 of the Criminal Code is a criminal offence; thresholds vary by amount and intent.

Common pitfalls for foreigners and inbound assignees: failing to track 183-day residency status carefully (the rolling 12-month test means residency can be established mid-year and persist); missing the annual Form 3-NDFL declaration even if employer withholds correctly (required if other income exists); failing to declare offshore accounts under the Federal Law 79-FZ on Foreign Bank Account Disclosure; treating Russian-citizen status as automatic Russian tax residency (it is not — physical presence is the test); and underestimating the 30 percent non-resident NDFL rate on Russia-source income that exceeds the HQS Highly Qualified Specialist threshold.

Foreigners working in Russia should also note: HQS programme provides 13 percent NDFL rate (rather than 30 percent non-resident rate) for qualifying foreign professionals with Russia-source employment income above approximately RUB 2 million annually; HQS status requires migration-service work-permit registration and is not automatic. Sanctions-related restrictions on Russian-citizen access to offshore banking + dual-citizenship disclosure obligations have intensified since 2022 — practitioners advise close coordination of Russian + foreign-jurisdiction filings to avoid compliance gaps.