Russians living abroad will be hit in the wallet
Russians living abroad may soon find themselves in a situation where they will need to pay taxes in two countries: in Russia and where they are. The withdrawal of our country from international agreements on the abolition of double taxation can lead to such consequences. This initiative was put forward by two departments at once — the Ministry of Finance and the Ministry of Foreign Affairs of the Russian Federation. Experts disagreed about how legal such a decision is and how it will eventually turn out for compatriots.
It should be noted that this initiative is not new and there are already analogues to it. As Pavel Zyukov, chairman of the Tax Committee of the Moscow city branch of the Opora Rossii public association, recalled, the agreement with the Netherlands has now been denounced. Today, those citizens who receive dividends, for example, from participation in Russian companies and receive them in the Netherlands, are required to pay both tax when paying this income in the Russian Federation (i.e. the company acts as a tax agent when paying dividends), and in the country receive.
If this initiative is implemented, the tax burden will increase quite noticeably. In our country, it is understandable: the rates for residents (citizens) are 13%, for non-residents — 30%. In the event that international agreements are terminated, then residents and non-residents will have to pay, both in the Russian Federation and at the rates established in the relevant jurisdiction with which the agreement was terminated. Here taxes can reach up to 30%, 40%, 45%.
According to Ekaterin Boldinov, head of the tax practice at the Five Stones Consulting law firm, it is difficult to talk about the legality of the measure proposed by the government. “Essentially, this is an attempt to punish those who left, but kept in touch with Russia through work,” the expert says. “At the same time, as soon as such citizens lose their residency in the Russian Federation, having lived 183 days outside it, their personal income tax rate will increase to 30%.” Given the rather high tax rates, for example, in Europe, compatriots who have left can lose up to 2/3 of their income. For example, 30% personal income tax in Russia and up to 42% in Germany. “Such a measure can in no way be considered fair,” Boldinova is sure.
On the other hand, as Vadim Tkachenko, the founder of the vvCube consulting group, rightly notes, the question of legality is not on the table now, since the world community is under great pressure from political and economic factors, and each country corrects national legislation and makes decisions based on its own interests. To avoid an additional tax burden, those who left will simply need to monitor the period of stay abroad (it should not exceed 183 days) in order to understand what taxes and at what rate they must pay.
“Such a decision is absolutely legal” , — Polina Gusyatnikova, senior managing partner of the law firm PG Partners, enters into a dispute. At one time, agreements on the avoidance of double taxation were concluded with many countries, the exit from them is a normal phenomenon.
The financial burden will increase significantly for the Russians who fell under this law. “It’s one thing when they pay taxes at a rate of 13% and nothing else, and quite another when they pay taxes in both countries,” continued the lawyer. — It should be noted that in our country this level is quite low, and, for example, in the same Armenia — 21%. And so in most countries, somewhere personal income tax can even reach 30-35%. Most likely, this initiative acts as a measure to combat the drain of personnel. Perhaps, with such a strange method, the state is trying to return some of those who left back, the expert suggested.
At the same time, Vladimir Kuznetsov, chairman of the All-Russian Trade Union of Mediators, drew attention to the fact that the Ministry of Finance and the Ministry of Foreign Affairs of the Russian Federation in this case are not talking about our country's withdrawal from the agreements, but only about the suspension of their action as a response to the decisions of Western countries. It is difficult to say how many compatriots will be affected by such an initiative of the authorities. First, estimates of the number of citizens who left and did not return to the territory of the Russian Federation differ. Secondly, some of the citizens left for states that are not on the list of those with which the agreements will be suspended. Thirdly, not all of the compatriots who left our country work for Russian companies.
It is not yet reported when the new rules will come into effect. There is only talk that the agreements will be suspended by Russia «from the moment the presidential decree is issued», but given how prompt the procedure for issuing the relevant decrees is, we can expect changes in a fairly short time, the expert emphasized.