Relocation of employees abroad – what you need to know

In case of relocation of your employees outside of Russia, the following peculiarities of tax and migration legislation should be taken into consideration: 

 

Change of tax residency status

If an employee leaves outside the Russian Federation for more than 183 days per year, he or she acquires a non-resident status. Meaning that: 

• The personal income tax rate changes from 13% to 30% (for certain types of income) 
• The employee loses the right to get tax deductions 

 

The risk of formation of permanent establishment

The conduct of activities by employees on the territory of another State may entail a “permanent establishment”. The consequences:

• Need to maintain accounting and tax records 
• Declaration and payment of relevant taxes 
• Other obligations by taxpayers

 

Relocation of a foreign employee

Keep in mind that: 

• A work permit to work in Russia is cancelled if the employee stays outside of Russia for more than 6 months 
• A work permit may be required in the country of relocation 
• Need to comply with the local migration legislation

 

It is also necessary to pay attention to international treaties in order to avoid double taxation.

For more information please contact: russia@bellerage.com