Marina Potsabey
Lawyer
Currently, more and more companies are offering a job to foreign specialists. This raises questions about the registration of relations with these employees, as well as the procedure for paying personal income tax and insurance premiums.
In accordance with Federal law No. 115-FZ “Concerning the Legal Status of Foreign Citizens in the Russian Federation” dated 25/7/2002, a foreign employee is a foreign citizen temporarily staying in the Russian Federation and being engaged in labour activities in accordance with the established procedure. Foreign citizens who are staying in the Russian Federation may be divided into permanent and temporary residents and those who stay temporarily on the basis of a visa and visa-free regime.
Foreign citizens permanently residing in the Russian Federation have a resident card, issued without restriction on the period of validity (except for resident card for highly qualified specialist (referred to below as HQS) and members of his or her family, which is issued for the duration of a work permit issued to an indicated HQS). In accordance with article 8 of Federal law No. 115-FZ, in order to obtain a resident card, a foreign citizen is obliged to live in Russia for at least 1 year on the basis of a temporary residence permit (part 2 of article 8 of Federal law No. 115 also mentions the list of exceptions when obtaining a permit is not required). At the same time, a foreign citizen permanently residing in Russia does not need a work permit for employment, and an organization that employs this citizen does not need a permit for the hiring of foreign labour. A work permit is also not required for citizens of the Republic of Belarus and Kazakhstan, engaged in labour activities in Russia. Therefore, the employer carries out the recruitment of such citizens on general terms. Also, it is not necessary to notify bodies of the Ministry of Internal Affairs of the employment of a foreigner permanently residing in Russia.
Foreign citizens temporarily residing in the Russian Federation are persons who have received a temporary residence permit. The permit is a mark on the document of identification and is valid for 3 years. Foreign citizens temporarily residing in Russia do not need a work permit, and they can only be employed in the territorial entity of the Russian Federation in which they are allowed temporary residence, except in the following cases:
It is important to note that the above mentioned exceptions apply only to foreign citizens engaged in labour activities by professions listed in clause 2 of the Appendix to the Order of the Ministry of Health and Social Development of the Russian Federation No. 564n dated 28/7/2010.
To conclude a labour contract with a foreign citizen temporarily residing in Russia, the following documents are required:
It should be noted that the duration of the permit for the hiring of foreign labour is one year (clause 4 of article 18 of Federal law No. 115-FZ), therefore the term of the contract with the employee may not exceed 1 year.
Foreign citizens temporarily staying in Russia on the basis of a visa.
Visa is a permit for a foreign citizen to enter the Russian Federation, stay in the Russian Federation and transit passage via the Russian Federation during the period of validity of the visa in accordance with the procedure established by the legislation of the Russian Federation[1].
Depending on the purpose of entry and stay in Russia, foreign citizens may obtain a diplomatic, official, ordinary, transit or temporary residence visa. In turn, an ordinary visa has the following types: private, business, tourist, study, employment, humanitarian, visa to enter Russia for the purpose of obtaining shelter, to enter Russia for the purpose of conferment of citizenship of the Russian Federation.
In order to be engaged in labour activities, a foreign citizen should obtain an ordinary employment visa, which is issued on the basis of an invitation from an organization that has a permit for the hiring of foreign labour, for a period of up to three months.
An organization inviting a foreign employee should file a request for an issuance of an invitation and submit the documents required for issuing a work permit to the territorial body of the Ministry of Internal Affairs. When receiving an invitation, the employer sends it to a foreign citizen to obtain an employment visa in the country of residence, and when a foreign citizen enters the Russian Federation, he or she receives a work permit from the Ministry of Internal Affairs. Now the process of obtaining an invitation is convenient, in the sense that the invitation may be issued in the form of an electronic document, therefore it is not necessary to spend time on sending the original to a foreign citizen in the country of residence.
Foreign citizens temporarily staying in Russia on a visa-free basis include citizens from the CIS countries, as well as a number of other countries with which agreements on visa-free regime have been concluded.
In order to employ foreign citizens of this category who have a patent, a permit for the hiring of foreign labour is not required. A patent is issued by a foreign citizen independently under article 13.3 of Federal law No. 115.
Federal law No. 115-FZ imposes on employers the obligation to notify the territorial body of the federal executive authority in the field of internal affairs within three working days from the moment of occurrence of the event of the conclusion/termination of labour or civil law contracts with foreign employees.
Let us have a look at the procedure for obtaining a permit and employment of foreign employees, obtaining a work permit.
Permit for the hiring and employment of foreign labour
The rules for obtaining a permit are set:
– Order of the Ministry of Internal Affairs of Russia No. 827 “On approving the Administrative policy of the Ministry of Internal Affairs of the Russian Federation on providing of the state service for issuing permits for the hiring and employment of foreign employees and work permits to foreign citizens and persons without citizenship” dated 1/11/2017 (Registered in the Ministry of Justice of Russia on January 23, 2018 No. 49725)
– Decree of the Government of the Russian Federation No. 800 (edited 15/5/2019) “On approval of the Regulations for preparing proposals for determining the need to recruit foreign employees arriving in the Russian Federation on the basis of a visa, approval of the quota for issuing invitations to foreign citizens to enter the Russian Federation for the purpose of engaging in labour activity, as well as quotas for issuing work permits to foreign citizens arriving in the Russian Federation on the basis of a visa” dated 12/9/2013
Permit for the hiring and employment of foreign labour is issued by the migration departments of the territorial bodies of the Ministry of Internal Affairs of Russia at the regional level on the basis of the decision of the executive authority on employment issues of the territorial entity of the Russian Federation. Consequently, first of all, the employer applies to the employment centre with an application about the need for employees to obtain a quota[2]. At the same time, to receive a quota for the right to the hiring and employment of foreign labour in the next year, the application should be submitted at the beginning of the current year, i.e., well in advance. The schedule of receipt and processing of applications of organizations about the need of the hiring of foreign labour for each year is determined separately. The decision to approve/reject/send for revision the applications about the need of the hiring of foreign labour is made by an interdepartmental commission from among representatives of interested federal executive authorities and is approved by the Ministry of Labour and Social Protection of the Russian Federation.
For obtaining a permit for the hiring and employment of foreign labour, the employer should submit to the Directorate General for Migration of the Ministry of Internal Affairs of Russia, a migration department of the territorial body of the Ministry of Internal Affairs of Russia at the regional level:
In order to obtain a permit for the hiring and employment of foreign employees, the Ministry of Internal Affairs sends an interdepartmental request on issuance of a decision on the hiring and employment of foreign employees to the public employment agency of the territorial entity of the Russian Federation, where it is planned to perform job functions by foreign employees.
Pursuant to the general rule, the decision to issue a permit is made within 30 calendar days from the date of submission of documents.
Work permit is a document confirming the right of a foreign citizen who has arrived in the Russian Federation in accordance with the procedure requiring a visa, and of other categories of foreign citizens to be temporarily engaged in labour activity in the Russian Federation in the cases provided for by this Federal law[3].
If a visa is required for a foreign employee, the documents for obtaining a work permit for him or her are submitted by the employer together with the set of documents for obtaining an invitation to enter the Russian Federation. To obtain a work permit, the employer should submit:
– statement for an issuance of a work permit for each citizen engaged. The statement form was approved by the order of the Ministry of Internal Affairs of Russia No. 637 dated August 14, 2017;
– colour photograph (3×4);
– a copy of the document of identification;
– a copy of the professional education certificate;
– medical opinion confirming that the foreign citizen has no infectious diseases or drug addiction. Please note that after the introduction into effect of the Resolution of the Chief State Sanitary Doctor of the Russian Federation No. 19 “On immunization against measles of labour migrants temporarily staying and residing in the Russian Federation” dated November 7, 2019, medical organizations check carrying out of immunization against measles of the foreign citizen before issuing the certificate.
– HIV-negative certificate;
– document confirming payment of state duty in the amount of 3,500 rubles.
Documents issued outside the Russian Federation should be properly legalized for the Ministry of Internal Affairs to accept them. The deadline for making a decision to issue/to refuse to issue a work permit is 15 working days[4].
Pursuant to the general rule, foreign citizens staying in Russia are obliged to register for migration within seven working days after their arrival. At the same time, all registration procedures are performed by the party hosting a foreign citizen.
The migration registration is notifying in nature. On the basis of passport and arrival-departure record of the foreign citizen, the host party fills in a notification of arrival of a foreign citizen at a place of stay and provide it to the territorial body of the Ministry of Internal Affairs of the Russian Federation. For migration registration, it is necessary to pay a state duty of 350 rubles.
A highly qualified specialist (HQS) is a foreign citizen who has work experience, skills, or achievement in a specific field of activity[5]. At the same time his or her income should be:
– at least 58,000 rubles per calendar month – for foreign citizens who are employed as residents of the technology development special economic zone (except for individual entrepreneurs);
– at least 83,500 rubles per calendar month – for specialists who are scientists or teachers invited to work in institutions of higher education which have state accreditation, academies of sciences, national research centres or state research centres;
– at least 83,500 rubles per calendar month – for specialists who are invited to work as residents of industrial production, tourism and recreation, port-based special economic zones (except for individual entrepreneurs);
– at least 83,500 rubles per calendar month – for specialists who are invited to work by organizations performing activities in the field of information technologies and having IT accreditation, obtained in the Ministry of Communications of the Russian Federation (except for organizations having a resident status of technology development special economic zone);
– without taking into account the salary requirements – for foreign citizens participating in the realization of SKOLKOVO project, as well as foreign citizens participating in the realization of the project to create and to ensure functioning of an innovative centre of science and technology;
– at least 1 million rubles per calendar year – for specialists who are medical, pedagogical or scientific employees, when they are invited to work in the international medical cluster;
– at least 83,500 rubles per calendar month – for foreign citizens engaged in labour activity by legal entities operating in the Republic of Crimea and the federal city of Sevastopol;
– at least 167,000 rubles per calendar month – for other foreign citizens;
These specialists and their family members are not subject to quotas, and the employer may recruit them without determining the need for such employees in advance.
Upon a written invitation of the employer, an employment visa is issued for a highly qualified specialist for the duration of the concluded labour or civil law contract for the performance of work (rendering of services), but for not more than three years from the date of entry of this foreign citizen to the Russian Federation with the subsequent right to extension. To obtain a work permit for this specialist, the employer is obliged to submit to the territorial body of the Ministry of Internal Affairs of Russia at the regional level:
– a request for the recruitment of a highly qualified specialist;
– labour or civil law contract;
– a copy of the document of identification of a foreign citizen, if the document of identification does not contain data in Russian, it is necessary to prepare a certified translation of it;
– a written obligation from the employer to reimburse the expenses of the Russian Federation associated with the possible administrative expulsion of this specialist;
– a receipt confirming payment of state duty in the amount of 3,500 rubles;
– a power of attorney from the organization to represent interests in the Ministry of Internal Affairs;
– a copy of the organization’s taxpayer ID number certificate;
– a copy of the organization’s principal state registration number (Russian acronym – OGRN) certificate;
– colour photograph of a foreign citizen (3.5 x 4.5).
The deadline for consideration of the application is 15 working days from the date of its receipt by the Migration department of the Directorate General for Migration of the Ministry of Internal Affairs of Russia at the regional level[6].
Highly qualified specialists and their family members are not obliged to register for migration at their place of stay for a period of not more than 90 days from the date of entry in the Russian Federation. After the expiration of this period, they are required to perform this procedure within 7 working days. The employer is obliged to notify the territorial body of the Ministry of Internal Affairs of Russia at the regional level of hiring a highly qualified specialist within 3 (three) working days from the date of conclusion of a labour contract with a foreign citizen. Also, the employer should quarterly notify about the performance of duties on payment of salary, termination of the contract (within 3 (three) working days from the date of termination).
Foreign citizens are recognized as personal income tax payers in accordance with the legislation of the Russian Federation. At the same time, for the purposes of calculating and paying personal income tax, it is necessary to determine the status of a foreign employee: resident or non-resident. According to article 207 of the Tax Code of the Russian Federation, individuals who are staying in Russia for at least 183 calendar days within 12 consecutive months are recognized as tax residents. The start date is the day after the arrival date, and the end date is the departure date.
Residents’ income is mainly taxed at the rate of 13%, non-residents’ income is taxed at the rate of 30%, with the exception of dividend income from equity participation in the activities of Russian organizations – 15%. At the same time, standard tax deductions are not provided to non-residents in accordance with clauses 3, 4 of article 210 of the Tax Code of the Russian Federation.
For correct calculation of personal income tax, it is necessary to determine the status of a foreign employee as of the date of payment of salary (in case of delay – on the last day of the month for which the income was accrued).
However, the status of an individual may change during the tax period. When the status of a foreign employee changes from non-resident to resident, it is necessary to recalculate the personal income tax at the rate of 13% and return over-deducted amounts to the foreign employee. The refund is made by the tax authority where the foreigner was registered at the place of residence (place of stay) (clause 1.1 of article 231 of the Tax Code of the Russian Federation). At the end of the tax period, a foreign employee should submit a declaration and documents confirming the status of a resident to the tax inspectorate at the place of stay.
Also, in this case, the employer may offset a tax withheld and transferred at the rate of 30% against the payment of personal income tax calculated at the rate of 13% for a certain employee. And this offset will have to be made until the month when the budget debt to the employee is exhausted. In this case, the employee will not need to contact the tax inspectorate directly.
Article 13 of Federal law No. 115-FZ sets a tax rate of 13% for highly qualified specialists and foreign specialists acting on the basis of a patent, regardless of their status.
It should also be noted that if there is an international agreement on the taxation of personal income between Russia and the state where the foreign employee is a citizen, the taxation of this employee’s income will be determined in accordance with the rules of such an agreement.
The procedure for accrual of insurance premiums for payments to a foreign employee depends on the foreigner’s citizenship and status.
Insurance premiums for payments are accrued in the same order as for Russian employees:
– citizens of the Eurasian Economic Community countries (Belarus, Kazakhstan, Armenia, Kyrgyzstan);
– permanently residing foreigners;
– temporarily residing foreigners;
– refugees (here it should be checked that a person has the status of refugee, and not the right to temporary shelter – these are different statuses).
The following contributions are accrued for foreigners who have received temporary shelter:
– for pension and health insurance and for insurance for traumas as well as for the Russians;
– for social insurance – at a rate of 1.8%.
The following contributions are accrued for temporarily staying foreign employees:
– for pension insurance and for insurance for traumas are accrued in the same way as for the Russians;
– for social insurance – at a rate of 1.8%;
– for health insurance – they are not accrued.
When the status of a foreign citizen temporarily staying in the Russian Federation is changed to the status of temporarily residing one, according to the Letter of the Pension Fund of the Russian Federation No. 30-26/6334 dated 7/6/2011, payments towards this foreign employee should be taxed by insurance premiums since foreign citizens temporarily or permanently residing in the Russian Federation are recognized as insured persons in the sphere of compulsory pension insurance according to the clause 1 of article 7 of the Federal law No. 167-FZ dated 15/12/2001. It should also be taken into account that if there is an International agreement establishing the rules for calculating and paying insurance premiums between Russia and the country where the foreign employee is a citizen, the provisions of this agreement should be used for calculating and paying insurance premiums.
[1] Decree of the Government of the Russian Federation No. 335 “On the approval of Regulations on establishment of the form of visa, procedure and conditions of its drawing up and issuance, extension of its validity, reissuance in case of loss, and also the procedure for cancellation of visa» dated June 9, 2003
[2] You can see the approximate procedure for obtaining a quota based on the example of Moscow here https://dszn.ru/deyatelnost/trud-i-zanyatost/Inostrannaya-rabochaya-sila/Poryadok-polucheniya-kvoty
[3] Clause 1 of article 2 of Federal law No. 115-FZ “Concerning the Legal Status of Foreign Citizens in the Russian Federation” dated 25/7/2002
[4] clause 31 of the Order of the Ministry of Internal Affairs of Russia No. 827 “On approving the Administrative policy of the Ministry of Internal Affairs of the Russian Federation on providing of the state service for issuing permits for the hiring and employment of foreign employees and work permits to foreign citizens and persons without citizenship” dated 1/11/2017 (Registered in the Ministry of Justice of Russia on January 23, 2018 No. 49725)
[5] Article 13.2 of Federal law No. 115-FZ
[6] Order of the Ministry of Internal Affairs of Russia No. 827 “On approving the Administrative policy of the Ministry of Internal Affairs of the Russian Federation on providing of the state service for issuing permits for the hiring and employment of foreign employees and work permits to foreign citizens and persons without citizenship” dated 1/11/2017 (Registered in the Ministry of Justice of Russia on January 23, 2018 No. 49725) Clause 31.
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