Tax in Russia for Foreigners: Residence, Rates, Filings

Residence status sets the rate before anything else

Russia taxes individuals on residence. The test is a day count over the calendar year: spend enough of the year inside the country and you become a tax resident, which means worldwide income comes into scope. Fall short and you are a non-resident, taxed only on Russian-source income and usually at less favourable flat rates on salaries, dividends and property sales.

Status can change during the year and is recalculated at the end, so an employer may withhold at one rate for months and adjust later. Treaties can override the domestic result through tie-breaker rules, but only if you can document your position. Keep entry and exit records, employment contracts and lease agreements - they are what a tax inspector will ask for.

For an investor or seconded manager the practical question is not 'am I resident' in the abstract, but which of my income streams become taxable in Russia if I am, and which stay taxable there regardless.

• Days present in Russia during the calendar year, counted with the specific rules for short absences, treatment and study
• Treaty tie-breaker tests where you could be resident in two countries
• Documented proof of the days: border-crossing records, contracts, rental agreements
• The exact day threshold and recalculation mechanics are amended from time to time - confirm the current rule with a tax adviser before relying on it

Income by type: what is withheld and what you declare yourself

Most employment income never reaches a declaration. The Russian employer acts as tax agent, withholds the tax from payroll and remits it, and issues you an annual statement of income. The same logic applies to dividends from a Russian company and to interest from a Russian bank: tax is taken at source, at a rate that depends on your residence status and on whether the recipient is a company or an individual.

Everything else tends to land on you. Rental income from Russian property, sales of assets where no agent is involved, income from abroad if you are resident, and income from certain self-employed or individual-entrepreneur activity all require a personal income tax return for the year, filed in the following year. Deadlines and forms change; the Federal Tax Service publishes the current calendar and it is worth diarising rather than assuming.

The tax identification number (INN) is the connective tissue here. You need one to be employed, to register property, to open accounts and to file. It is issued by the tax authority and, for a foreigner, is normally obtained through the employer, the bank or the property transaction rather than in advance.

• Salary: withheld by the employer as tax agent, with an annual income statement issued to you
• Dividends and interest from Russian sources: withheld at source, rate depends on residence status and recipient type
• Property sales: rate and any exemption depend on residence status and how long the asset was held
• Rental income and self-employment income: you declare and pay
• Foreign income: in scope for residents, with credit for foreign tax where a treaty provides it

Running a business: 25% profit tax, 0-5% in special regimes, 22% VAT

A foreign company operating in Russia either creates a permanent establishment risk through a branch, a representative office or dependent agents, or sets up a subsidiary. Russian profits are taxed at a 25% corporate profit tax rate, while companies inside special regimes pay 0-5%. Those regimes are not automatic - they come with conditions on activity, investment volume and registration, and they are granted per project or per territory.

VAT is charged at a 22% standard rate since 1 January 2026. Registration obligations depend on activity and turnover, with exemptions for small thresholds and zero-rating for many exports; the thresholds and the export documentation requirements are frequent sources of dispute and should be checked for the specific transaction.

Payments abroad - dividends, interest, royalties, service fees - are subject to withholding tax at domestic rates, reduced only where a treaty applies and the paperwork is in place before payment. Getting the rate wrong is expensive: the excess is withheld, and reclaiming it takes months.

• 25% corporate profit tax; 0-5% inside special regimes, subject to eligibility
• 22% standard VAT since 1 January 2026, with zero-rating and exemptions for defined cases
• Withholding tax on outbound payments, reduced by treaty only with a valid residence certificate
• Special investment contracts: 90 such contracts with over RUB 2 trillion of declared investment (Government of Russia, 2025)
• Special administrative regions: 674 companies registered there (Ministry of Economic Development, 2025), used for redomiciliation and holding structures
• Strategic sectors additionally require approval of the transaction under Law 57-FZ, which is a separate process from the tax question

Treaty relief is a documentation exercise, not a claim

Russia has a broad network of double tax treaties, but the network has changed in recent years and several agreements have been suspended or terminated with particular jurisdictions. Before you build a structure around a treaty rate, check that the treaty is in force and that your counterparty will accept the rate you are applying.

The mechanics are consistent: obtain a certificate of tax residence from your home authority, legalise or apostille it as required, translate it into Russian, and give it to the withholding agent before the payment date. If the document is missing, the payer withholds at the domestic rate and you file for a refund afterwards, which requires the same evidence plus a Russian return and, in practice, a local adviser.

Beneficial ownership tests matter. A conduit company in a treaty jurisdiction that is not the real recipient of the income can lose the benefit, so substance - people, premises, decisions - is examined rather than assumed.

• Confirm the treaty with your specific jurisdiction is currently in force
• Certificate of residence, legalised or apostilled, translated, delivered before payment
• Beneficial ownership evidence for holding structures
• Refund route if the rate was applied at domestic level

Property, land and the ownership limits that change the tax picture

Owning Russian real estate brings property tax and, for land, land tax, both calculated by the tax authority from cadastral values and billed to the owner. Rental income from that property is taxable, and selling it interacts with residence status and holding period in the way described above.

Ownership itself is restricted in ways that matter more than the tax rate. Foreigners cannot own agricultural land - it can only be leased, for up to 49 years. Border areas, including Sochi, Anapa, Gelendzhik and Novorossiysk, are closed to foreign land ownership. Buying through a Russian company does not remove the restriction automatically and adds a layer of profit tax and dividend withholding on top.

Investors from countries designated unfriendly face additional constraints: special account regimes and government approvals apply to certain transactions and holdings. These are compliance matters, not workarounds, and the correct approach is to take independent legal and compliance advice in your own jurisdiction and in Russia before committing capital.

• Property tax and land tax are assessed by the tax authority on cadastral value
• Agricultural land: lease only, up to 49 years, no foreign ownership
• Border and resort areas including Sochi, Anapa, Gelendzhik and Novorossiysk are closed to foreign land ownership
• Unfriendly-country investors: special account regimes and approval requirements, with independent compliance advice essential

The order in which to do things

For a foreign individual or company entering the Russian tax system, sequencing matters more than knowledge. Done in the wrong order, each step creates a problem for the next.

The most common failures are avoidable: treating residence as fixed when it is recalculated annually; paying a treaty rate without a residence certificate in hand; assuming a subsidiary removes permanent establishment risk when the parent's people are working in Russia; and ignoring the reporting obligations that come with holding accounts or property abroad as a Russian tax resident. Penalties are administrative and scale with the amount and the delay, and interest accrues while a dispute is running.

• Map every income stream and where it arises, then map your day count for the year
• Obtain the INN, normally through the employer, bank or property transaction
• Confirm the treaty position and collect the residence certificate before the first payment
• Register with the tax authority if you are self-employed, an individual entrepreneur or running a business
• Agree with each counterparty who withholds what, and at which rate
• Diarise the declaration calendar for the following year and keep the supporting documents for the statutory retention period
• Take local advice on anything involving special account regimes, strategic sectors or cross-border structures - the rules change and general guidance dates quickly

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