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New taxation rules for remote employees

New taxation rules for remote employees

LEGAL DIGEST, NEWS \ 23.08.2022

The Ministry of Finance of the Russian Federation has developed a bill amending the Tax Code in terms of the procedure for calculating personal income tax on the income of remote employees.

If the bill is approved by the State Duma and signed by the President of the Russian Federation, then the following taxation rules will apply to remote employees.

  1. Cancellation of personal income tax from reimbursement of expenses

Reimbursement of expenses related to the performance of a labor function by remote employees will be exempt from personal income tax in the amount determined by the collective agreement, local regulations or employment contract, but not more than 35 rubles for each working day. In this case, the costs incurred must be associated with the use of:

  • software and hardware;
  • information security tools;
  • own or leased property;
  • other means for performance of labor activity.

It is not necessary to request documents confirming expenses from a remote employee to exempt from personal income tax the amount of compensation within the limit. If he provides such documents, then personal income tax can be withheld from the entire confirmed amount of expenses, even if it exceeded the limit of 35 rubles. The proposal also concerns the accrual of insurance premiums from the amount of compensation for expenses. The method of reimbursement of expenses is fixed by the employer in his accounting policy.

Currently, the amounts of compensation for remote employees are not subject to personal income tax and insured contributions in the amounts established by the collective or labor agreement, company regulation if there is documentary evidence.

  1. Clarification of the amount of the personal income tax rate on the income of remote employees

Authorities of the Ministry of Finance of the Russian Federation clarify that income in the form of remuneration for the performance of labor duties of remote employees of Russian companies refers to income from sources in Russia (and not from sources outside the Russian Federation, as was previously accepted, because the workplace of such employees is located on the territory of a foreign country).

This refers to income paid by Russian companies and separate subdivisions of foreign companies registered in the Russian Federation to their remote employees. The exception is the income of employees received from work in foreign branches of Russian companies. In this case, the tax rates will remain at the same level and will be:

  • 13% (15%) in relation to individuals who are tax residents of the Russian Federation and receive income from Russian sources;
  • 30% for individuals who are tax non-residents and receive income from Russian sources.

If an individual pays personal income tax in a foreign country, of which he is tax resident, and Russia has an agreement with this country on the avoidance of double taxation, then foreign tax can be reduced by the amount of personal income tax that was paid in Russia.

We kindly remind you that tax residents of the Russian Federation are persons who stay in Russia for at least 183 calendar days within 12 consecutive months. The period of stay of an individual in the Russian Federation is not interrupted by his departure outside the country for short-term (less than six months) treatment or training, as well as for the performance of labor duties.

In the matter of the application of tax laws, please contact Acsour experts.