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SZV-M for foreign employees

SZV-M for foreign employees

PUBLICATIONS \ 21.08.2020

The SZV-M form, or information about insured parties – is a personnel report that all employers who have hired employees in their staff are obliged to submit. However, the question of whether to include information about foreign employees in the SZV-M and in what procedure to fill it out in case of disputes remains open. Today we will tell you about the special characteristics of forming a report when hiring foreign employees.

For which foreigners is the pension insurance system applied?

Each person residing or temporarily staying in a state should have a certain legal status, which in turn establishes special rights and obligations for each category of persons. In the Russian Federation, these rules are regulated by Law No. 115-FZ, which provides for three types of status of foreign persons:

  1. Permanently residing. They confirm their status with a resident card.
  2. Temporarily residing. The supporting document is a temporary residence permit. 
  3. Temporarily staying. The right to stay in Russia is confirmed by an open visa or an issued arrival-departure record (if an issuance of visa is not required).

In view of the above, all the above-mentioned categories of foreign citizens with whom the company has concluded the following contracts are recognized as insured parties who are covered by compulsory pension insurance (CPI) and information about whom should be included in the SZV-M form.

– labour contract

– civil law contract (Russian acronym – GPH) for the performance of works, provision of services, author’s order, etc.

Data about the specialist should be included in the report even if in the reporting month:

– the term of the contract with an employee is one day

– an employee did not receive remuneration and insurance premiums were not paid for him or her.

Foreigners who are highly qualified specialists (HQS) temporarily staying in the Russian Federation are not insured parties. Therefore, it is not necessary to enter information about them in the SZV-M form (clause 1, article 7 of Law No. 167-FZ).

The essence of the SZV-M is to inform the PFR authorities in a timely manner about the receipt of income from labour activity by individuals. In the future, this information will be used for the reassessment of pensions of employees who have ceased their labour activity owing to retirement.

Procedure for filling out information about foreign persons in the SZV-M

The procedure for entering information about foreign employees working in the company in the SZV-M is the same as when filling out a report for employees who are citizens of the Russian Federation: it is necessary to specify three main figures – full name, personal insurance policy number (Russian acronym – SNILS) and taxpayer ID number (Russian acronym – INN).

Seemingly, no difficulties should arise. However, in practical terms, companies face situations that call into question the correctness of data recording in the document. And their inaccuracy entails the risk of administrative liability and fines. Questions may arise especially frequently in the following cases:

  1. Absence of patronymic name. It is necessary to fill out the report in accordance with the employee’s passport. It is recommended to rely on it even if the data differs from other documents (for example, with the SNILS, where the patronymic name may be reflected). These arguments were confirmed by the courts (Resolutions of the Volga-Vyatka District dated July 17, 2017 in the case No. A28-11249/2016).

The report will be accepted, but it is recommended sending a letter to the Pension Fund of Russia (PFR) stating that employees do not have a patronymic name. Copies of documents that will confirm this should be attached to the letter. In case of discrepancies between the data in SNILS and passport, it is recommended to reissue SNILS to match data in the passport.

  • There is no INN. The absence of this figure is not a reason for refusing to accept the SZV-M. Therefore, the PFR authorities should accept the report without the INN. This is confirmed by the Federal Tax Service bodies in their Letters No. PA-4-11/15942 dated August 17, 2018, No. GD-2-14/562 dated March 22, 2018.
  • Absence of SNILS. If this figure is not shown in the report, companies may be refused to accept the document. This, in turn, is already a sign of incomplete information and the reason for charging a fine. In this case, the employer should promptly issue SNILS, registering the employee in the state system of personal record-keeping. For foreign specialists, this will be an opportunity for:
  • receiving social payments and allowances, including old-age pensions or survivor’s benefit;
  • obtaining free medical care (if you have a compulsory medical insurance certificate).

Please note that only foreign citizens permanently residing in the Russian Federation can claim a pension.

To register in the system, an employee should fill out and sign a statement in an ADV-1 form, after which the employer sends this statement to the territorial body of the PFR. It is necessary to attach to the application form an inventory of documents in the form ADV-6-1, approved by the Resolution No. 485p of the Managing Board of the PFR dated September 27, 2019. The SNILS issuance procedure is free of charge. The deadline for submitting documents for registration in the system is not set, but it is necessary to submit them in the nearest future in order to reflect information about employees in the SZV-M in a timely manner.

The document confirming the fact of registration is a notification in the ADI-REG form. It can be obtained both in paper and electronic form at the employee’s choice. If this is a paper document, it should be obtained in the territorial body of the PFR and delivered to the employee against signature. The deadline for opening an individual personal account and issuing a notification is 5 days from when the application form and documents were received by the PFR bodies.

If the deadline for submitting the SZV-M has already come, and the employee has not been registered in the system, the employer will have to submit a supplemental report form for the missing employee after receiving notification of the assignment of SNILS.

The deadline for submitting the supplemental form is 5 working days from when the notification from the PFR was received of making an error – incomplete or missing information about the employee in the report. The company can also send an updated version of the SZV-M independently, before the PFR detects the missing information about employees in the report. There should be no fine for this. More often courts take sides with employers (Rulings No. 306-ES19-23114 and No. 301-KG18-24864 of the Supreme Court of the Russian Federation dated December 20, 2019, dated February 8, 2019 and Resolution No. F03-3898/2019 of the Commercial (‘Arbitration’) Court of the Far Eastern District dated September 5, 2019).

What should you pay attention to when filling out the SZV-M?

As practice shows, even when entering simple figures in the report, employers are faced with a number of nuances, inattentive attitude toward which can lead to disputes with the PFR and further proceedings in court. To avoid this, it is necessary to observe the following rules:

  • to take into account the legal status of the employee, which allows to determine whether to include information about the employee in the report;
  • to check the presence of SNILS of the employee, since this item is compulsory when filling out the report. If it is missing, register the employee in the system, otherwise the PFR may not accept the report;
  • to check the content of employee information for up-to-dateness: if it has changed, we recommend to promptly make changes to the human resources documents.

If you are not sure of the correct maintaining of the SZV-M, the relevant solution is to outsource personnel functions. Acsour’s specialists are ready to assist with the preparation and submission of accounts, helping your business to develop in the field-specific direction. Preparing HR accounts in Acsour will allow you to:

  • free up time and resources for performance of other tasks;
  • perform any scope of work without loss of quality and regardless of changes in the company;
  • ensure the security and confidentiality of information. The majority of the processes in outsourcing include confidential information, and personal data about employees is no exception. Owing to Acsour’s serious information security management system, your data is always safe.

Ekaterina Lutenko

Internal Auditor