Tax and Currency Compliance
ALPINE GROUP helps clients prepare reports in accordance with the tax and currency legislation of the Russian Federation.
1
Tax residents of the Russian Federation
Declaring and paying personal income tax on income from sources in the Russian Federation and from sources outside the Russian Federation.
Nontax residents of the Russian Federation
Declaring and paying personal income tax only on income from sources in the Russian Federation.
Declaration of Income
What income must be declared?
An individual is exempt from filing a personal income tax return in cases where the tax amount is calculated by a tax agent (e.g., a broker, bank, employer in the Russian Federation).
However, for some types of income, it is necessary to submit a declaration independently, for example:
However, for some types of income, it is necessary to submit a declaration independently, for example:
- Income from sources outside the Russian Federation (income from foreign accounts);
- Income under a civil-law contract or from a person who is not a tax agent;
- Income from rent;
- Income from the sale of property, property rights;
- Income in the form of profit of a controlled foreign company (CFC);
- Income in kind;
- Lottery winnings;
- Income received as an heir, successor;
- Application for benefits and tax deductions.
A civil law contract is an agreement between two parties, under which the contractor undertakes to perform a certain job or provide a service, and the customer undertakes to pay for it. A civil law contract is drawn up for a certain period and does not mean official employment.
Personal income tax is the main type of direct tax. It is calculated as a percentage of the total income of individuals minus documented expenses, in accordance with current legislation.
Tax residents are individuals who are in the Russian Federation for at least 183 calendar days during 12 consecutive months. The period of stay is not interrupted by periods of travel outside the territory of the Russian Federation for short-term (less than 6 months) treatment or training, as well as for the performance of labour or other duties related to the performance of work (provision of services) at offshore hydrocarbon deposits.
The tax return must be submitted no later than April 30 of the year following the expired tax period.
The tax is paid no later than July 15 of the year following the end of the tax period.
1) Failure to submit a declaration on time - a fine of 5% of the unpaid tax amount for each full or incomplete month from the date set for its submission, but no more than 30% of the specified amount and no less than 1,000 rubles.
2) Failure to pay or an incomplete tax payment as a result of underestimation of the tax base:
2) Failure to pay or an incomplete tax payment as a result of underestimation of the tax base:
- A fine of 20% to 40% of the total unpaid tax;
- For each day of delay in tax payment, a penalty is charged at 1/300 of the key rate of the Central Bank of the Russian Federation in effect at that time from the unpaid tax.
1) Information on income received for the reporting period (e.g. bank statements, 2-NDFL certificates, sales contracts, etc.):
4) In case of offsetting tax withheld in a foreign country – documents confirming the amount of income received in a foreign country and the tax paid on this income.
- Source of income payment;
- Date of receipt of income;
- Amount and currency of income.
- Date of incurrence of expenses;
- Amount and currency of expenses.
4) In case of offsetting tax withheld in a foreign country – documents confirming the amount of income received in a foreign country and the tax paid on this income.
- When declaring expenses on securities, it is necessary to demonstrate documented and actual incurred expenses by the taxpayer, in particular expenses for the acquisition of securities.
- In the case of declaring tax deductions, contracts/documents confirming the right to apply the deduction, receipts/cheques for payment.
- In the case of offsetting taxes withheld in a foreign country, documents confirming the amount of income received in a foreign country and the tax paid on this income, or a copy of the tax declaration submitted in a foreign country.
The declaration is sent to the tax authority at the place of registration of the taxpayer in one of the following ways:
1) On paper:
1) On paper:
- Submit to the tax authority in person or through a representative with a notarized power of attorney;
- Submit to the MFC (Multifunctional center for the provision of state and municipal services) in person or through a representative with a notarized power of attorney;
- Send by registered mail with a list of attachments.
- Send through State Services (https://www.gosuslugi.ru/);
- Send through the taxpayer's personal account (https://nalog.ru).
- FTS (Federal Tax Service) personal account: payment via the website (https://nalog.ru).
- Internet bank: payment via online banking.
- Gosuslugi: payment via the portal (https://gosuslugi.ru).
- ATMs and terminals: payment via terminals that support taxes.
- Bank branches: payment via the bank cash desk.
- Russian Post: payment via the post office.
- Determination of tax residency status based on the results of the tax period (calculation of days of stay in the territory of the Russian Federation).
- Income structure analysis: we conduct a detailed analysis of income sources to determine the optimal tax burden and the possibility of applying tax deductions.
- Preparation and submission of the 3-NDFL declaration: we ensure the correct completion and timely submission of the 3-NDFL declaration, support for the desk audit of the declaration, including tax refunds, obtaining tax deductions.
- Consultations on the taxation procedure in the Russian Federation and possible ways to optimize the tax burden.
- Preparation of translation of documents into Russian.
2
Declaration of foreign accounts
The currency obligations specified below do not apply to special currency residents - individuals whose period of stay outside the territory of the Russian Federation is more than 183 days during a calendar year.
Who is required to report foreign accounts in the Russian Federation?
If you are a currency resident of the Russian Federation and the owner of accounts (deposits) opened in banks and other financial organisations located outside the territory of the Russian Federation, you have several responsibilities:
- Notification of opening/closing and changes in the details of accounts (deposits) in banks and other financial organisations located outside the territory of the Russian Federation;
- Reporting the movement of funds and other financial assets held in accounts (deposits) in banks and other financial market organisations located outside the territory of the Russian Federation;
- Monitoring of currency transactions.
Currency residents of the Russian Federation are:
- Individuals - citizens of the Russian Federation,
- Foreign citizens and stateless persons permanently residing in the Russian Federation based on a residence permit.
Notification of opening/closing and changing details of accounts (deposits) held in banks and other financial organisations located outside the territory of the Russian Federation.
Notification of opening/closing and changes in account details must be submitted no later than one (1) month from the date of opening/closing or changes in account details.
- Submission of a notification after the established deadline and/or not in the established form - a fine of 1,000 to 1,500 rubles.
- Failure to submit a notification (notification not submitted, the tax authority discovered this fact) - a fine of 4,000 to 5,000 rubles.
A letter regarding the opening/closing or changing of account details, containing the following information:
- Name of the bank or other financial organisation;
- SWIFT code or BIC;
- Address of the bank or other financial organisation;
- Date and number of the agreement for opening an account (if any);
- Information about changes in the account details.
There is no need to attach supporting documents, however tax authorities may request them separately as part of an audit.
The notification should be sent to the tax authority at the place of registration of the taxpayer in one of the following ways.
On paper:
On paper:
- Submit to the tax authority yourself or through a representative with a notarized power of attorney;
- Send by registered mail with a list of attachments.
- Send through the taxpayer's personal account (https://nalog.ru).
- An analysis of the personal situation, identifying obligations to declare accounts, risk assessments and potential penalties (if applicable).
- Preparation and submission of notifications to the tax authorities.
Statements of cash flows and other financial assets held in accounts (deposits) in banks and other financial organisations located outside the territory of the Russian Federation
- You must submit a report by June 1 of the year following the reporting period (previous calendar year).
1) For a failure to submit a report or a violation of the submission forms.
- Violation of the established procedure for submitting a report - a fine of 2,000 to 3,000 rubles.
- Repeated violation of the established procedure for submitting a report - a fine of 20,000 rubles.
- Violation of the established deadlines for submitting a report by no more than 10 days - a fine of 300 to 500 rubles.
- Violation of the established deadlines for submitting a report by more than 10, but no more than 30 days - a fine of 1,000 to 1,500 rubles.
- Violation of the established deadlines for submitting a report by more than 30 days - a fine of 2,500 to 3,000 rubles.
- Repeated violation of the established deadlines for submitting a report – a fine of 10,000 rubles.
- Bank/brokerage statements reflecting information on cash flows and the value of financial assets in the account (credits, write-offs) for the reporting period.
It is not necessary to attach supporting documents, however tax authorities may request them separately as part of an audit.
The report is sent to the tax authority at the place of registration of the taxpayer in one of the following ways.
On paper:
On paper:
- Submit to the tax authority in person or through a representative with a notarized power of attorney;
- Send by registered mail with a list of attachments.
- Send through the taxpayer's personal account (https://nalog.ru).
You are not required to file a report if all the following conditions from the following points are met simultaneously:
- Either 1 and 2,
- Either 1 and 3.
1) A bank or other financial organisation is located on the territory of the EAEU member state (Republic of Armenia, Republic of Belarus, Republic of Kazakhstan, Kyrgyz Republic) or on the territory of a foreign state (territory) with which automatic exchange of financial information is carried out (Order of the Federal Tax Service of Russia dated 30.10.2024 N ED-7-17/916@). | |
2) The total amount of funds credited to the specified account/deposit (debited from the specified account/deposit for the reporting year) does not exceed 600,000 rubles or the amount in foreign currency equivalent to 600,000 rubles. | 3) The balance of funds on the specified deposit account as of the end of the reporting year does not exceed 600,000 rubles (or the equivalent amount to 600,000 rubles in foreign currency), if during the reporting year the funds were not credited to the specified account/deposit. |
- Analysis of your personal situation for identifying reporting obligations, risk assessment and potential penalties (if applicable).
- Preparation and submission of the report to the tax authorities.
Monitoring of currency transactions
Federal Law of 10.12.2003 N 173-FZ "On Currency Regulation and Currency Control" allows individual residents to freely transfer funds from non-residents to accounts in banks abroad, if the banks are located in the EAEU countries (Armenia, Belarus, Kazakhstan, Kyrgyzstan) or in countries with which an automatic exchange of financial information is implemented.
For countries that are not members of the EAEU and do not participate in the exchange of financial information, there are restrictions (e.g., it is prohibited to transfer investment income: dividends, coupons, income from the sale of shares, redemption of bonds). Funds can be transferred to such accounts only within the legally defined closed list.
For countries that are not members of the EAEU and do not participate in the exchange of financial information, there are restrictions (e.g., it is prohibited to transfer investment income: dividends, coupons, income from the sale of shares, redemption of bonds). Funds can be transferred to such accounts only within the legally defined closed list.
- Transfer from your accounts in a Russian bank or from your accounts in a foreign bank (transfers/deposits in foreign currency and the currency of the Russian Federation are permitted);
- Crediting of interest on the balance of funds in the account (deposit);
- Crediting of funds in the form of a minimum contribution required by the rules of the relevant bank when opening an account (deposit);
- Deposit of cash into an account (deposit);
- Funds received as a result of conversion transactions at the expense of funds credited to such accounts (deposits);
- Amounts of taxes that are returned by the relevant authorities of the state of residence of the resident;
- Transfer of Russian currency from the account of one resident in a Russian bank to the account of another resident opened in a foreign bank;
- Transfer of Russian currency from the account of one resident in a foreign bank to the account of another resident in a foreign bank;
- Crediting foreign currency from the account of one resident in a Russian bank to the account of another resident in a foreign bank in the amount of no more than 5,000 US dollars at the official exchange rate set by the Central Bank of the Russian Federation on the date of debiting;
- Crediting foreign currency from the account of one resident in a Russian bank to the account of another resident (close relative) in a Russian or foreign bank (without restrictions on the amount);
- Credits for transactions undertaken outside the territory of the Russian Federation between individual residents, the period of stay in the territory of the Russian Federation of each of whom is less than 183 days during the calendar year;
- Payments in the form of wages and other payments related to the performance by individuals - residents outside the territory of the Russian Federation of their labour duties under labour agreements (contracts) concluded by them with non-residents (including reimbursement of expenses related to business trips), (similarly, transactions are permitted for the payment of wages and other payments to individuals - residents in foreign currency outside the territory of the Russian Federation under labour agreements concluded by them with legal entities - residents, providing for the performance by such individuals - residents of their labour duties outside the territory of the Russian Federation);
- Transactions related to the receipt by inheritance of foreign currency assets (foreign currency, foreign securities) and the transfer of foreign currency assets by an inheritance fund to the beneficiaries of the inheritance fund;
- Crediting of funds for transactions of gifting currency assets (foreign currency, foreign securities) between currency residents of the Russian Federation who are spouses or close relatives (relatives in a direct ascending and descending line (parents and children, grandfather, grandmother and grandchildren), full and half (having a common father or mother) brothers and sisters, adoptive parents and adopted children);
- Crediting of payments in accordance with decisions of courts of foreign states, with the exception of decisions of international commercial arbitration;
- Crediting in the form of pensions, scholarships, alimony, and other social payments;
- Crediting in the form of insurance payments made by non-resident insurers;
- Crediting in the form of a refund of previously paid funds by resident individuals, including the return of erroneously transferred funds, a refund of funds for goods previously purchased from such non-resident, or a service paid for by such non-resident, returned by a resident individual to a non-resident;
- Crediting in the form of funds paid in accordance with the requirements of the legislation of a foreign state, bypassing accounts in authorized banks, in the form of income from the sale of precious metals recorded in the accounts of residents opened in banks located outside the territory of the Russian Federation.
Illegal currency transactions entail the imposition of an administrative fine on citizens in the amount of 20% to 40% of the amount of the illegal currency transaction.
Please note:
Please note:
- The fine does not apply if the funds were debited from such a foreign account and fully credited to the account of an individual - resident in a Russian bank no later than 45 days from the date of crediting them to the foreign account (note 7 to Article 15.25 of the Code of Administrative Offenses of the Russian Federation).
- Since March 2022, simultaneously with the Federal Law of 10.12.2003 N 173-FZ, new currency restrictions have been in effect, introduced by Decrees of the President of the Russian Federation and other regulatory legal acts supplementing these Decrees, which apply, among other things, to special currency residents of the Russian Federation (whose period of stay outside the territory of the Russian Federation is more than 183 days during the calendar year).
- Consulting on planned transactions for compliance with currency legislations, and recommendations for conducting such transactions.
- Analysis of previously completed transactions to identify potential risks (and the possibility to reduce such risk).
3
Declaration of foreign companies
The following obligations apply to the tax residents of the Russian Federation:
1.Notification of participation in foreign companies;
2.Notification of controlled foreign companies (CFC).
2.Notification of controlled foreign companies (CFC).
Individuals who actually stay in the Russian Federation for at least 183 calendar days during 12 consecutive months are recognised as tax residents. The period of stay is not interrupted by periods of departure from the territory of the Russian Federation for short-term (less than 6 months) medical treatment or training, as well as for the performance of labour or other duties related to the performance of work (provision of services) at offshore hydrocarbon fields.
Notification of participation in foreign companies.
You are obliged to notify the tax authority at your place of residence:
- on your participation in foreign entities (if the share of such participation exceeds 10 per cent);
- on the establishment of foreign structures without forming a legal entity.
The notification must be submitted no later than 3 months from the date of the emergence (change in share) of participation in such a foreign organisation (date of establishment of a foreign structure without forming a legal entity).
Failure to submit notification within the established period - a fine of 50,000 rubles for each foreign organisation.
Documents containing information about the company (e.g. memorandum, articles of association, certificate of incorporation):
- Name of the organisation;
- Address;
- Registration number;
- Date of registration;
- Participation start date;
- Participation procedure (direct/indirect participation);
- Participation share.
It is not necessary to attach supporting documentation, however such documentation may be requested by tax authorities as part of individual audits.
The notification should be sent to the tax authority at the place of registration of the taxpayer in one of the following ways.
On paper:
On paper:
- Submit to the tax authority yourself or through a representative with a notarized power of attorney;
- Send by registered mail with a list of attachments.
- Send through the taxpayer's personal account (https://nalog.ru).
- Analysis of the personal situation for the presence of obligations to file a notification, assessment of risks and penalties (if applicable).
- Preparation and submission of the notification to the tax authorities.
Notification of Controlled Foreign Companies (CFC)
A CFC is a foreign organisation that simultaneously satisfies the following conditions:
- The organisation is not recognized as a tax resident of the Russian Federation;
- The controlling person of the organisation is an organisation and/or an individual recognized as tax residents of the Russian Federation.
A CFC is also a foreign structure without forming a legal entity, the controlling person of which is an organisation and/or an individual recognized as tax residents of the Russian Federation.
The controlling person of a foreign organisation is:
- An individual or legal entity whose share of participation in this organisation is more than 25%;
- An individual or legal entity whose share of participation in this organisation (for individuals - together with spouses and minor children) is more than 10%, if the share of participation of all persons recognized as tax residents of the Russian Federation in this organisation (for individuals - together with spouses and minor children) is more than 50%.
The CFC notification must be filed annually and submitted no later than April 30 of the year following the tax period in which the controlling person recognizes income in the form of CFC profit in accordance with Chapter 23 of the Tax Code of the Russian Federation, or which follows the year at the end of which the CFC loss is determined.
1. Documents containing information about the company (e.g., memorandum, charter, certificate of incorporation):
- Name of the organisation;
- Address;
- Registration number;
- Date of registration;
- Participation start date;
- Participation procedure (direct/indirect participation);
- Participation share.
In the absence of an exemption from taxation of the CFC's profits in accordance with paragraph 5 of Article 25.15 of the Tax Code of the Russian Federation, the controlling person is obliged to confirm the amount of profit/loss of the CFC by submitting the following documents:
Documents submitted by taxpayers must be translated into Russian.
- Financial statements of the CFC, prepared in accordance with the personal law of such a company for the financial year, or in the absence of financial statements, other documents confirming the profit/loss of such a company for the financial year;
- Auditor's report on the financial statements of the CFC, if, in accordance with the personal law or constituent (corporate) documents of this CFC, mandatory audit of such financial statements is established or the audit is carried out voluntarily by a foreign organisation.
Documents submitted by taxpayers must be translated into Russian.
- 500,000 rubles for each CFC for which information has not been submitted, or for which false information has been submitted.
- Failure to submit documents confirming the amount of profit/loss of a CFC to the tax authority within the established time limit, or submission of such documents with knowingly false information is a fine of 500,000 rubles.
- Failure to submit documents requested by the tax authority within the established time limit, or submission of such documents with knowingly false information is a fine of 1,000,000 rubles.
The notification should be sent to the tax authority at the place of registration of the taxpayer in one of the following ways.
On paper:
On paper:
- Submit to the tax authority in person or through a representative with a notarized power of attorney;
- Send by registered mail with a list of attachments.
- Send via the taxpayer's personal account (https://nalog.ru).
- Analysis of personal situation to confirm whether one is considered a controlling person, the presence of an obligation to submit a notification of a CFC, and associated risk and fine assessments (if applicable).
- Consulting on the procedure for determining the profit of a CFC, profit distribution mechanisms, and the declaration procedure.
- Preparation and submission of notifications to the tax authorities.
- Preparation of financial statements of a CFC and associated audit support.
- Preparation of translation of documents into Russian.
4
Support For Tax Disputes, Audits, Notifications, Requirements
When conducting tax and currency control activities, tax authorities may initiate an additional audit in relation to previously submitted or unsubmitted reports, for example:
A check of compliance with tax and fee legislation based on the tax return and documents that the taxpayer independently submitted to the tax office, as well as documents already with the tax authority. The period of implementation is within 3 months.
A more detailed and extensive audit than a desk audit. An on-site audit is usually conducted for a specific tax period at the place of residence of an individual (in the absence of such consent, an on-site audit is conducted at the location of the tax authority). The duration is 2 months (can be extended to 4 or 6 months).
Formal requests from tax authorities to provide specific documents or information during a desk or on-site audit, or due to data being received as part of the automatic exchange of financial information.
The process whereby a taxpayer is summoned to clarify questions about the materials of an audit that has already been conducted prior to a decision being made on the audit. Before a decision is made, the taxpayer may file a petition for mitigating circumstances.
- Requesting documents from the taxpayer in cases stipulated by the Tax Code of the Russian Federation;
- Requesting documents and information from counterparties and other persons;
- Interrogation of witnesses;
- Conducting an examination;
- Participation of a translator, expert.
- Definition required?
Via the taxpayer's personal account on the FTS website (nalog.ru);
By registered mail with a delivery confirmation to the taxpayer's registration address;
By taxpayer's email.
By registered mail with a delivery confirmation to the taxpayer's registration address;
By taxpayer's email.
- Preparation of explanations/responses based on the tax authority's requests;
- Preparation of a package of supporting documentation based on the tax authority's requests;
- Communication with the tax authority regarding submitted explanations, and representations of the taxpayer's interests with the tax authorities on the basis of a notarized power of attorney;
- Challenging decisions of tax authorities, and preparing petitions to reduce fines;
- Support for the translation of foreign documents into Russian.
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How can we help you?
We are available to advise you on the following matters (including but not limited to).
- The procedure for taxation of tax residents and non-residents when receiving investment income from sources in the Russian Federation and foreign sources
- Establishing and advising on the operation of PCMs (personal holding vehicles: trusts, family foundations and other structures) for the management of family assets
- Investment and disposal of Russian and foreign property
- Procedure for accounting for expenses, application of tax deductions, incentives and exemptions
- Mechanism for crediting tax withheld in a foreign country
- Support in fulfilment of duties under the Russian CFC rules
- Development of a private investment structure, optimisation of the current asset ownership structure
- Assisting in the client's KYC/AML procedures and liaising with the banks' compliance departments
Сonsultation request
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Сonsultation request
Fill in the feedback form and our expert will contact you as soon as possible
Our Team
ALPINE GROUP Team works every day to provide the best service to our clients.
-
Sergey Gerasimov
Managing Partner
Professional experience
-
Maxim Klyuchnikov
Partner
Professional experience -
Natalia Pushkina
Partner
Professional experience
Контакты
Телефон:
+7 925 436 1897
Email:
mkamzolova@alpinetax.ru
pc@alpinetax.ru
Telegram:
https://t.me/alpine_tax
Адрес:
Moscow, 2nd Syromyatnichesky per. 1,
BC "Delta Plaza", 1st floor
+7 925 436 1897
Email:
mkamzolova@alpinetax.ru
pc@alpinetax.ru
Telegram:
https://t.me/alpine_tax
Адрес:
Moscow, 2nd Syromyatnichesky per. 1,
BC "Delta Plaza", 1st floor
Контакты
ТАХ & CURRENCY