Insurance premiums and taxes on salaries of foreign employees

Foreigners from the EAEU

If you employ citizens from EAEU countries (Armenians, Belarusians, Kazakhs, Kyrgyz), then their salaries are taxed at a rate of 13% from the first working day

This rule is provided for in Article 73 of the Treaty on the Eurasian Economic Union dated May 29, 2014.

The tax status of such employees upon hiring does not matter. At the same time, it is still necessary to determine this status by the end of the year.

The fact is that tax deductions for personal income tax are provided only to tax residents.

Thus, the Ministry of Finance in letter No. 03-04-05/40970 dated June 15, 2018 reports that the provision of the Agreement on the application of a 13% personal income tax rate to the income of citizens of the EAEU member states from labor activities does not mean that these citizens are automatically recognized as tax residents of the Russian Federation.

Therefore, foreigners from the EAEU countries have the right to take advantage of tax deductions for personal income tax only after they have acquired the status of tax resident of the Russian Federation.

We would like to add that the opinions of the Ministry of Finance and the Federal Tax Service regarding the personal income tax rate for foreigners from the EAEU countries who do not have the status of a resident of the Russian Federation at the end of the year differ.

According to the Federal Tax Service, it does not matter whether a foreigner has acquired the status of a resident of the Russian Federation or not. The rate in any case is 13%. This, in particular, is reported in the letter of the Federal Tax Service No. BS-4-11 / [email protected] dated November 28, 2016.

Tax officials point to the fact that the provisions of Article 73 of the Treaty do not provide for the recalculation of tax obligations of citizens from the EAEU in the event that they do not acquire tax resident status at the rates provided for non-residents.

That is, regardless of whether these employees have tax resident status or not, the rate in any case will be 13%. There is no need to recalculate by 30%.

In addition, there is a Resolution of the Constitutional Court dated 06/05/2015 No. 16-P, which states that the provisions of the Treaty on the EAEU agreed to unconditionally extend to individuals who are tax residents of the EAEU member states, national tax regimes in terms of the application of the tax rate income received in connection with employment in other member states of this Union.

Meanwhile, the Ministry of Finance has a different opinion on this matter. Letters No. 03-04-06/34256 dated 06.10.2016, No. 03-04-05/34859 dated 05.23.2018, No. 03-04-07/11392 dated 02.18.2020 inform that the final tax tax is determined based on the results of the tax period the status of an individual depending on the time of his stay in the Russian Federation in a given tax period.

The Ministry of Finance states that if at the end of the year the employees of the organization - citizens of the EAEU member states did not acquire the status of tax residents (were in the Russian Federation for less than 183 days), the amount of tax withheld from their income received in a given tax period is subject to recalculation by the tax agent at the rate thirty %.

At the same time, the Ministry of Finance claims that such an opinion does not contradict the above-mentioned Resolution of the Constitutional Court No. 16-P.

At the same time, the letter of the Ministry of Finance No. 03-04-06/74275 dated August 25, 2020 states that if no payments are made after the date of dismissal, the tax agent does not recalculate the amounts of tax withheld at the rate of 13%.

However, the Federal Tax Service now also adheres to the opinion expressed by the Ministry of Finance.

For example, on the website of the capital's Federal Tax Service it is reported that if at the end of the year employees of organizations - citizens of EAEU states did not become Russian tax residents, then personal income tax at a rate of 13%, withheld from their income, should be recalculated at a rate of 30%.

The Federal Tax Service notes that the procedure for determining the tax status of an individual applies regardless of citizenship and extends, among other things, to citizens of the EAEU member states.

Thus, the issue of the need to recalculate personal income tax due to lack of residence is not 100% certain.

Foreigners and their statuses affecting the calculation of contributions

Foreigners are persons who are not citizens of the Russian Federation, but either have confirmation of citizenship of another state or are unable to confirm such citizenship.
They can be in the Russian Federation for three reasons (Clause 1, Article 2 of the Law “On the Legal Status of Foreign...” dated July 25, 2002 No. 115-FZ):

permanent residence, which requires a residence permit;
temporary residence, during which a document permitting residence is issued;
temporary stay when a person enters the Russian Federation with or without a visa, receiving a migration card and issuing a document giving the right to work.

Read more about these reasons in our material .

Foreigners can engage in labor activities:

under an employment or civil contract agreement;
as an individual entrepreneur.

To temporarily carry out activities, a foreigner must have a work permit (if he arrived on a visa) or a patent (if a visa is not required). The period of temporary stay in Russia will determine the validity period of the corresponding document. This period may be extended.

Does not make exceptions regarding the compulsory nature of insurance and, accordingly, with regard to the calculation of insurance premiums from foreigners in 2020–2021:

1. Neither paragraph 1 of Art. 7 of the Law “On Compulsory Pension...” dated December 15, 2001 No. 167-FZ, establishing the need for compulsory pension insurance (OPS) for all persons working both under contracts (labor or GPC) and as individual entrepreneurs, except those temporarily in the Russian Federation highly qualified specialists.

2. Neither paragraph 1 of Art. 2 of the Law “On Mandatory Social...” dated December 29, 2006 No. 255-FZ, obliging the implementation of compulsory social insurance (OSI) for disability and maternity of individuals working under employment contracts, except for highly qualified foreign specialists temporarily staying in the Russian Federation. But this law exempts individual entrepreneurs (and, accordingly, foreigners) from OSS (clause 3 of Article 2).

3. Neither art. 10 of the Law “On Compulsory Medical...” dated November 29, 2010 No. 326-FZ, which determines the need to obtain compulsory medical insurance (CHI) for persons working under contracts (labor or GPC) or who are individual entrepreneurs, but who are not classified as highly qualified foreign specialists or foreigners temporarily staying in the Russian Federation.

4. Neither the Law “On Mandatory Social...” of July 24, 1998 No. 125-FZ (clause 2 of Article 5), which extends the obligation for employers to make contributions for injuries and the income of foreigners. These contributions will be accrued in any case, regardless of the status of a foreigner working in the Russian Federation.

That is, insurance premiums for payments to foreigners must be calculated. But these charges have their own nuances, depending on the category of the contribution payer, the basis for the foreigner’s stay in Russia and the qualifications of the foreign specialist.

Foreigners with a patent

With regard to income received by foreign workers from employment in the Russian Federation on the basis of a patent , a personal income tax rate of 13% is applied, regardless of whether they have tax resident status.

Let us clarify that the 13% rate applies to income not exceeding 5 million rubles. If you exceed it, the rate will be 15%.

Even if foreigners with a patent are not tax residents of the Russian Federation, the 13% rate still applies. This is, in particular, stated in the letter of the Ministry of Finance No. 03-04-05/36673 dated June 13, 2017.

At the same time, although a personal income tax rate of 13% is applied for residents and non-residents with a patent, the procedure for calculating the tax will be different.

Non-residents are not entitled to tax deductions . Therefore, if a foreign employee is claiming deductions, the accountant needs to know his tax status.

The peculiarity of calculating personal income tax on the income of patented foreigners is that this category of workers pays their tax in advance, independently, in the form of fixed payments.

At the same time, they have the right to apply to the employer to reduce the amount of personal income tax for fixed payments.

The employer requests a corresponding notification from the tax office and reduces the tax by the amount of fixed advances paid by the foreigner.

Notification by tax authorities must be issued for each tax period. If a foreigner has paid for a “rolling” patent, then a notification must be received for each year.

If suddenly an employee paid more to the budget than calculated from his salary at the end of the year, then the remainder of the fixed payment is burned out. This money cannot be returned from the budget.

Another nuance is that the right to reduce personal income tax by the amount of fixed advance payments made only with one tax agent.

That is, if a foreigner with a patent has several jobs, the deduction will be given only by one, the employer chosen by him.

The Federal Tax Service, in particular, reminds us of this in letter No. BS-4-11/ [email protected] dated September 26, 2016.

Persons who have received temporary asylum. Insurance contributions to the FFOMS

Our organization employs a citizen of Ukraine who has received a certificate of temporary asylum in the Russian Federation for a period of 1 year (from August 2014 to July 2015). In 2014, we calculated insurance premiums from his salary, guided by the letter of the Ministry of Labor dated 09/08/2014 No. 17-3/10/B-5684, as well as comments from the Pension Fund of Russia specialists, which they gave at all seminars, that is, we calculated contributions to The Pension Fund and the Social Insurance Fund for accidents were not accrued to the Compulsory Medical Insurance Fund and the Social Insurance Fund. The letter of the Ministry of Labor in No. 6 “A-E” for 2015 states that contributions to the Compulsory Medical Insurance Fund should be calculated from their salaries.

Does this apply only to the period starting from 2015 or is it necessary to add additional contributions to the Compulsory Medical Insurance Fund for 2014? If for 2014 too, then during the audit will the Pension Fund calculate penalties for late payment? Will you also need to submit a report to the Pension Fund on the RSV-1 form for 2014 with adjustments?

Question

For a long time, the issue of calculating insurance premiums to the Federal Compulsory Medical Insurance Fund caused
a lot of controversy and had no answers
.

In private consultations in various publications, employees of the Ministry of Labor of the Russian Federation and the Pension Fund of the Russian Federation reported that insurance contributions to the Federal Compulsory Medical Insurance Fund are not charged

Ministry of Labor of the Russian Federation

, who has the right to explain the provisions of the Federal Law of July 24, 2009 No. 212-FZ,
first
expressed his position in a letter dated September 8, 2014 No. 17-3/10/B-5684 (published in
No. 42 “A-E” for 2014
).

Officials officially announced that payments in favor of a person who has received a certificate of consideration of an application for refugee recognition or a certificate of temporary asylum are subject to insurance contributions only to the Pension Fund of the Russian Federation

subject to the conclusion of an employment contract with him for an indefinite period or a fixed-term employment contract (fixed-term employment contracts) lasting at least six months in total during the calendar year.

From which it follows that contributions to the FFOMS are not accrued

However, in 2015

a new letter from the Ministry of Labor of the Russian Federation dated December 19, 2014 No. 17-3/B-620 has appeared in Internet sources, which sets out the exact opposite position: “
Persons who have been granted temporary asylum are insured persons
in the compulsory health insurance system in the Russian Federation and , accordingly,
payments and other remuneration made in favor of the above-mentioned persons are subject to insurance contributions to the Federal Compulsory Compulsory Medical Insurance Fund
"
(end of quote)
.

The editors made an official request

to a state institution -
the Branch of the Pension Fund of the Russian Federation for the Sverdlovsk Region
with a request to clarify the question: which of the two opposing positions of the Ministry of Labor of the Russian Federation should policyholders be guided by.
Here is the answer in full
.

“In response to your request about the calculation of insurance premiums for compulsory health insurance from payments and other remunerations made in favor of individuals who have received a certificate of temporary asylum, we inform you as follows.

According to Part 5 of Art. 1 of Federal Law No. 212-FZ of July 24, 2009 “On insurance contributions to the Pension Fund of the Russian Federation, the Social Insurance Fund of the Russian Federation, the Federal Compulsory Medical Insurance Fund” (hereinafter referred to as Law No. 212-FZ)

The right to provide explanations on the application of the legislation of the Russian Federation on insurance premiums was vested in the Ministry of Health and Social Development of the Russian Federation.

According to the Decree of the Government of the Russian Federation dated July 19, 2012 No. 610 “On approval of the regulations on the Ministry of Labor and Social Protection” Ministry of Labor of the Russian Federation

is a federal executive body that carries out the functions of developing and implementing state policy and legal regulation in the field of social insurance and
has the right to give explanations on issues within its competence
.

In a letter from the Ministry of Labor of the Russian Federation dated September 8, 2014.

No. 17-3/10/B-5684 “On the imposition of insurance premiums on payments to persons recognized as refugees, applying for recognition as refugees, and persons who have been granted temporary asylum on the territory of the Russian Federation”, it is explained that a person who has received a certificate of temporary asylum, receives the status of a foreign citizen or stateless person temporarily staying in the territory of the Russian Federation.

Payments in favor of a person who has received a certificate of consideration of an application for refugee recognition or a certificate of temporary asylum are subject to insurance contributions only to the Pension Fund of the Russian Federation

In a letter dated December 19, 2014.

No. 17-3/B-620
The Ministry of Labor of the Russian Federation clarified its position
on the issue of calculating insurance premiums for payments to this category of foreign citizens.

It is clarified that in connection with the entry into force on January 1, 2015

Federal Law of June 28, 2014 No. 188-FZ “On Amendments to Certain Legislative Acts of the Russian Federation on Compulsory Social Insurance”,
from January 1, 2015,
foreign citizens who have been granted temporary asylum (that is, having the status of temporary residents) are insured persons in the compulsory pension insurance system, regardless of the duration of the employment contract in accordance with Art. 7 of the Federal Law of December 15, 2001 No. 167-FZ “On compulsory pension insurance in the Russian Federation.”

It is also clarified that persons who have been granted temporary asylum are insured

persons in both the compulsory pension insurance system and
the compulsory health insurance system
.

A similar position on the calculation of insurance premiums for compulsory health insurance is set out in the letter of the Ministry of Labor of the Russian Federation dated December 15, 2014 No. 17-3/10/B-8595

In case of non-accrual

insurance premiums in favor of the specified category of insured persons, the payer of insurance premiums is obliged to
make the necessary changes to the calculation of RSV-1
and submit to the Pension Fund of the Russian Federation in accordance with Art. 17 of Law No. 212-FZ.

Additional accrued amounts of insurance premiums are indicated in section 1 on line 120

“Additional insurance premiums accrued since the beginning of the billing period, total” and
in section 4
“Amounts of additional insurance premiums since the beginning of the billing period.”

Before submitting the updated RSV-1 calculation, we recommend that the payer pay the missing amount of insurance premiums and the corresponding penalties

Deputy Branch Manager S.Sh. Bakhtikireeva". (end of quote)

We consider it necessary to add the following.

According to paragraph 9 of Art. 25 of Law No. 212-FZ, penalties are not charged
on the amount of arrears that have arisen
for the payer of insurance premiums
as a result of his compliance with written explanations
on the procedure for calculating, paying insurance premiums or on other issues of application of the legislation of the Russian Federation on compulsory social insurance,
given to him or an indefinite number of persons the body monitoring the payment of insurance premiums
or other authorized government body (an authorized official of this body) within its competence (these circumstances are established in the presence of a corresponding document of this body,
in the meaning and content related to the settlement
(
reporting
)
periods for which the arrears arose , regardless of the date of publication of such a document
).

In addition, execution

the payer of insurance premiums of written
explanations
on the procedure for calculating, paying insurance premiums or on other issues of application of the legislation of the Russian Federation on insurance premiums and on compulsory social insurance,
given to him or an indefinite number of persons by the body monitoring
the payment of insurance premiums or other authorized government body (authorized official of this body) within its competence (these circumstances are established in the presence of a corresponding document of this body, in meaning and content relating to the periods in which the offense was committed,
regardless of the date of publication of such a document
),
is recognized as a circumstance excluding the guilt of a person
in committing an offense (p 3 Article 43 of Law No. 212-FZ).

Thus, insurance contributions to the FFOMS

payments to a citizen who has received temporary asylum must
be accrued from the moment an employment contract is concluded with him
.

For arrears

, arising from the moment of conclusion of the employment contract and
until December 15, 2014
(the date of publication of the letter of the Ministry of Labor with a different position),
penalties are not charged
(clause 9 of Article 25 of Law No. 212-FZ).

From December 15, 2014

For arrears arising from this date,
penalties are charged
.

Contributions for foreigners residing (permanently or temporarily)

According to the provisions of the laws on compulsory insurance, foreigners living (permanently or temporarily) in the Russian Federation are subject to such types of insurance as:

OPS, regardless of how they work (under an employment or GPC contract or as an individual entrepreneur);
OSS for disability and maternity when performing work under an employment or GPC contract, but not in a situation where the foreigner is an individual entrepreneur;
Compulsory medical insurance, regardless of how they work (under an employment or civil employment contract or as an individual entrepreneur), but not when the foreign specialist is highly qualified;
OSS on injuries when performing work under an employment or civil employment contract.

That is, on the income of foreigners registered under an employment or civil employment contract, you will have to pay all contributions according to the same rules as on the income of citizens of the Russian Federation, if the foreigners do not belong to the category of highly qualified specialists. In relation to a highly qualified specialist, accruals for OPS and OSS will be mandatory.

Read about the rules for paying contributions from payments of highly qualified foreign specialists in ConsultantPlus. To do everything correctly, get trial access to the system and go to the Typical Situation. It's free.

A foreign individual entrepreneur will be the payer of contributions for compulsory medical insurance and compulsory medical insurance.

Generally established tariffs for contributions in 2020–2021 from the salaries of foreigners from the EAEU working under a labor or civil service agreement will be (Article 426 of the Tax Code of the Russian Federation):

on OPS - 22% from income not exceeding 1,465,000 rubles. (in 2021), and 10% of income above this amount;
OSS for disability and maternity - 2.9% on income not exceeding 966,000 rubles. (in 2021), contributions will not be accrued above this income;
Compulsory medical insurance - 5.1% of the entire amount of income.

ATTENTION! Calculate contributions to VNIM for temporarily staying foreign workers at a rate of 1.8%, and do not accrue compulsory medical insurance. Calculate all contributions for refugees, just like for Russians (Letter of the Ministry of Labor dated December 19, 2014 N 17-3/B-620). But make sure they actually have refugee status.

In addition, the fee payer may also experience:

the obligation to apply additional tariffs due to the special working conditions of a foreign employee (Articles 428, 429 of the Tax Code of the Russian Federation);
the possibility of using reduced tariffs in accordance with Art. 427 Tax Code of the Russian Federation.

If the employer is included in the list of SMEs, then on the income of a foreign worker exceeding the minimum wage, he has the right to pay contributions at reduced rates.

Read more about reduced contributions in ConsultantPlus. If you do not have access to the K+ system, get a trial online access for free.

Insurance premium rates for foreigners in 2020–2021 for injuries will depend on the type of activity carried out by the employer.

For foreign individual entrepreneurs, the amount of contributions due for payment will be determined in the same way as for individual entrepreneurs who are citizens of the Russian Federation (clause 1 of Article 430 of the Tax Code of the Russian Federation):

1. Annual payment for compulsory pension insurance for income not exceeding 300,000 rubles. for the year, will be equal to 32,448 rubles. in 2021. If the income turns out to be more than 300,000 rubles, an additional 1% will be charged on the amount exceeding 300,000 rubles. The total amount of payments cannot be more than 8 times the fixed annual payment 32,448 × 8 = 259,584 rubles. in 2021.

2. The annual payment for compulsory medical insurance will be determined as a specific amount - 8,426 rubles. in 2021.

To learn about the amount of contributions for injuries, read the article “The rates of contributions for compulsory social insurance against industrial accidents and occupational diseases depend on the type of economic activity .

Temporary residents

The status of a foreign citizen temporarily residing in the Russian Federation means that the person has received a temporary residence permit here.

In relation to permanently and temporarily residing foreigners, insurance premiums in 2021 are calculated as for Russians (letter of the Ministry of Labor dated 02/09/2016 No. 17-3/B-48). And this applies to all types of contributions.

Also see “Insured Person Category Codes for 2021: Table with Explanation.”

Results

Foreigners can be in the Russian Federation in the status of residents (temporarily or permanently) or temporarily staying. For the first group, insurance premiums will be calculated in the same manner as for citizens of the Russian Federation. That is, at generally established, additional or reduced tariffs, if the foreigner is registered under a contract (labor or civil process agreement). An exception will be highly qualified specialists, from whose income they will not have to make contributions to compulsory medical insurance.

No accruals will be made on the income of highly qualified specialists temporarily located in the Russian Federation and working under a contract (labor or civil employment contract), except for contributions for injuries. And the income of other foreign workers temporarily staying in the Russian Federation and working under a contract must be subject to contributions to compulsory health insurance and compulsory social insurance, applying a special rate for compulsory social security for disability and maternity.

Contributions from the income of foreign individual entrepreneurs will be calculated according to the algorithm for calculating payments for individual entrepreneurs in force in the Russian Federation, regardless of their status.

Sources:

Federal Law of July 25, 2002 N 115-FZ “On the legal status of foreign citizens in the Russian Federation”
Federal Law of December 15, 2001 N 167-FZ “On Compulsory Pension Insurance in the Russian Federation”
Federal Law of December 29, 2006 N 255-FZ “On compulsory social insurance in case of temporary disability and in connection with maternity”
Federal Law of November 29, 2010 N 326-FZ “On Compulsory Health Insurance in the Russian Federation”
Federal Law of July 24, 1998 N 125-FZ “On compulsory social insurance against industrial accidents and occupational diseases”
Tax Code of the Russian Federation

You can find more complete information on the topic in ConsultantPlus. Free trial access to the system for 2 days.

Some specific situations regarding contributions from the income of foreigners

Art. 420 of the Tax Code of the Russian Federation, defining the object of taxation of insurance premiums, makes an exception regarding payments to foreigners, in which such contributions will not be charged:

when a foreigner, under an employment or GPC contract, works in a structural unit of a separate nature, located outside the territory of the Russian Federation (clause 5).

The norm specified in paragraph 5 of Art. 420 of the Tax Code of the Russian Federation, allows not to impose contributions on income accrued to foreigners located outside the territory of the Russian Federation and performing work under a civil process agreement remotely (letter of the Federal Tax Service of Russia dated 02/03/2017 No. BS-4-11 / [email protected] ).

However, if income from a foreign company is received by a foreign employee who is temporarily in Russia, working in the representative office of this employer on the territory of the Russian Federation and who is not a highly qualified specialist, then his income must be paid contributions to OPS and OSS for disability and maternity (letter from the Ministry of Finance of Russia dated 02/06/2017 No. 03-15-05/6079).

From the income of a foreigner temporarily staying in the Russian Federation who has received refugee status, unlike other foreigners with a temporary stay, additional deductions will be made for compulsory medical insurance using the usual tariff for the Russian Federation of 5.1% (letter of the Ministry of Labor of Russia dated February 17, 2016 No. 17-3/OOG- 229).

To learn whether to charge contributions if a citizen of the Russian Federation works abroad, read the material “Distance worker abroad: we pay contributions, but we don’t pay personal income tax .

All details of the calculation and payment of insurance premiums, including against accidents, for payments to foreign employees are discussed in detail in the Ready-made solution from ConsultantPlus. Trial access to the system can be obtained for free.