How to become a tax resident in Europe or the Caribbean?

Who are tax residents

These are legal entities and individuals who are required to pay tax on income received in Russia. These include:

• companies registered on the territory of the Russian Federation;
• foreign companies that are required to pay tax according to the provisions of an international treaty;
• companies whose management body is located in Russia.

The following rule applies to individuals: residents are those who spend 183 calendar days throughout the year on Russian territory. Short trips for study or training purposes are not taken into account.

If the employee is a non-resident, then the employer must correctly calculate the personal income tax (the amount will be increased). In addition, such an employee cannot take advantage of child and property deductions.

The determination of the status of an individual for calculating personal income tax is described in Letter of the Ministry of Finance dated February 15, 2017 No. 03-04-05/8334.

Individuals with resident status

If an individual is in Russia for at least 183 calendar days within 12 consecutive months, he can be called a resident of the Russian Federation. These 183 days do not have to be consecutive. There are exceptions when staying outside the country does not make a person a non-resident:

• if the individual was absent from the country for reasons of undergoing treatment, training or fulfilling obligations under an employment contract abroad;
• if a Russian serviceman is on military duty abroad or an employee of government agencies on a business trip outside the Russian Federation;
• if an international treaty establishes a different procedure for determining residence, then its provision applies, since its legal force is higher.

If absent from the country for 183 days or more over the past year, an individual is considered a non-resident. Resident status is confirmed by information from the work time sheet, copies of passport pages with border crossing marks, registration documents at the place of residence, and migration card data.

By law, a person's nationality is not relevant for recognition as a resident. They can be recognized as a stateless person or a foreign citizen. Individual entrepreneurs receive residency if they pay Russian taxes and are registered with the Federal Tax Service of Russia.

How to confirm your status

You need to obtain a tax residence certificate. To do this, you will have to contact the interregional inspectorate of the Federal Tax Service, which is responsible for centralized processing of information, with an application (you can download the application template file at the end of the article).

The application must be accompanied by documents indicating that the company receives income abroad: contracts with partners, a decision of the board of directors on the payment of dividends. The certificates must bear the signature of the director and the seal of the company.

To confirm your status for a long time (more than three years), you need information about paying taxes abroad.

Inspectors first examine the submitted papers. If there are no complaints, a certificate of residence of the Russian Federation is issued in the form KND 1120008.

Article 207 of the Tax Code of the Russian Federation. Taxpayers (current version)

Article 207 of the Tax Code of the Russian Federation defines the circle of persons who are taxpayers of personal income tax.

Taxpayers of personal income tax are individuals who are tax residents of the Russian Federation, as well as individuals receiving income from sources in the Russian Federation who are not tax residents of the Russian Federation.

In its letter No. 03-04-06/6-41 dated March 15, 2011, the Russian Ministry of Finance indicated that when workers are sent to work abroad for a long period of time, when they perform all their labor duties stipulated by the employment contract at the place of work in foreign state, the remuneration they receive is remuneration for performing labor duties on the territory of a foreign state, which relates to income received from sources outside the Russian Federation.

Until the employees of the organization are recognized in accordance with Article 207 of the Tax Code of the Russian Federation as tax residents of the Russian Federation, the specified income is subject to personal income tax at a rate of 13 percent.

If during the tax period the status of the organization's employees changes to non-residents and remains so until the end of the tax period, such persons, in accordance with paragraph 1 of Article 207 of the Tax Code of the Russian Federation, are not recognized as payers of personal income tax on income received from sources outside the Russian Federation .

Accordingly, such persons do not have taxpayer obligations to declare income from sources outside the Russian Federation, including those received before acquiring non-resident status, and to pay personal income tax.

Application of the provisions of Article 6.1 of the Tax Code of the Russian Federation in order to establish whether an individual has the status of a tax resident of the Russian Federation.

The specified procedure for determining the tax status of individuals is used regardless of the tax period for which such determination is made.

Attention!

In connection with this wording, tax agents often had questions about whether employees sent on a long-term business trip to another country for a period of more than 183 calendar days are residents.

In addition, many difficulties arose when assessing personal income tax on income paid to an employee for a specific period when the residence status changed. Numerous explanations from the financial and tax authorities did not make the situation simpler (see, for example, letters from the Ministry of Finance of Russia dated 04/22/2009 N 03-04-06-01/105, dated 04/20/2009 N 03-04-06-01/98, Department Federal Tax Service for Moscow dated January 30, 2009 N 18-15/3/ [email protected] ).

To overcome this situation, it is necessary to clarify the definition of tax residency of individuals; in the future, it is possible to provide the possibility of determining tax residency based on the center of vital interests of an individual. It is also proposed to introduce a preliminary residence instrument into Chapter 23 of the Tax Code of the Russian Federation, according to which, under certain conditions, an individual can be recognized as a tax resident of the Russian Federation from the moment of arrival on the territory of the Russian Federation. Failure to comply with these conditions entails a return to the general rules for determining tax residency with recalculation of tax. The implementation of this proposal will allow, in certain cases, to levy a tax on personal income from the moment of receipt of income at a rate of 13 percent.

The Russian Ministry of Finance clarified that the Tax Code of the Russian Federation does not provide for a special procedure for determining the tax status of individuals depending on citizenship. The tax status of individuals is determined based on the actual time of their stay on the territory of the Russian Federation, which must be documented.

If, at the end of the tax period, the period of stay of an individual on the territory of the Russian Federation is at least 183 days, this person, regardless of his citizenship, will be a tax resident of the Russian Federation and his income in the form of a pension received from a Russian non-state pension fund will be subject to taxation personal income tax at a rate of 13 percent.

If an individual at the end of the tax period is not recognized as a tax resident of the Russian Federation, that is, the period of his stay on the territory of the Russian Federation will be less than 183 days, his income from sources in the Russian Federation in the form of pension amounts is subject to taxation on personal income tax at the rate 30 percent (see letter of the Ministry of Finance of Russia dated June 17, 2010 N 03-04-05/6-331).

From the above, it follows that when determining the tax status of an individual, any continuous 12-month period is taken into account.

In addition, it should be noted that when determining the status of an individual as a tax resident of the Russian Federation, it does not matter whether the individual has Russian citizenship or not.

Based on this, foreign citizens and stateless persons can also be tax residents of the Russian Federation.

Official position.

The letter of the Ministry of Finance of Russia dated 04.04.2014 N 03-04-05/15215 explains that when determining the tax status of an individual, it is necessary to take into account the 12-month period determined on the date of receipt of income, including those that began in one tax period (calendar year ) and continuing in another tax period (calendar year). The tax status of an individual is determined by the tax agent for each date of payment of income to him based on the actual time of his stay on the territory of the Russian Federation.

The final tax status of an individual, which determines the taxation of his income received during the year, is established based on the results of the tax period. If an individual acquires the tax status of a resident of the Russian Federation, which will no longer change in the tax period, the tax agent must recalculate the amounts of personal income tax withheld from the individual’s income from sources in the Russian Federation, based on the tax rate of 13 percent.

This recalculation is made in relation to income received from the beginning of the tax period. Moreover, if the taxpayer continues to work in the Russian Federation after the end of the tax period, his tax status does not change.

Arbitrage practice.

In practice, there are disputes between tax authorities and taxpayers, in particular, about whether the day of entry into the Russian Federation will be taken into account when determining the tax status of an individual as a tax resident of the Russian Federation.

According to the official position set out in letter dated December 29, 2010 N 03-04-06/6-324, when determining the tax status, the actual days of an individual’s presence in the Russian Federation are important, that is, all days when the individual was in the territory of the Russian Federation are taken into account Federation, including days of arrival and days of departure.

However, arbitration courts have a different opinion.

Thus, the Federal Antimonopoly Service of the Central District, in Resolution No. A54-3126/2009C4 dated March 11, 2010, came to the conclusion, taking into account the provisions of Article 6.1 of the Tax Code of the Russian Federation, that when determining the tax status of an individual, the day of entry into the territory of the Russian Federation is not taken into account.

In a letter dated July 19, 2010 N 03-04-05/6-401, the regulatory authority noted that the Tax Code of the Russian Federation does not provide for a special procedure for determining the tax status of individuals depending on citizenship. The tax status of individuals is determined based on the actual time of their stay on the territory of the Russian Federation, which must be documented.

Analyzing paragraph 3 of Article 207 of the Tax Code of the Russian Federation, the Ministry of Finance of Russia in a letter dated December 9, 2010 N 03-04-06/6-296 explained that there is a special procedure for determining tax status in relation to employees of an organization performing labor duties in servicing military equipment outside the Russian Federation , the Tax Code of the Russian Federation is not provided for and the tax status of these persons is determined in accordance with the general procedure.

As the Ministry of Finance of Russia noted, paragraph 3 of Article 207 of the Tax Code of the Russian Federation does not contain a special procedure for determining the tax status in relation to individuals - family members of government employees sent to work outside the Russian Federation. The tax status of these persons is determined in accordance with paragraph 2 of Article 207 of the Tax Code of the Russian Federation (see letter dated December 23, 2009 N 03-04-05-01/1019).

In its letter dated August 26, 2009 N 03-04-05-01/662, the Russian Ministry of Finance explained that a special procedure for determining the tax status of other persons sent to work outside the Russian Federation, including as part of diplomatic missions, consular offices and trade representative offices of the Russian Federation, Article 207 of the Tax Code of the Russian Federation does not contain. The tax status of such persons is determined in accordance with the general procedure, taking into account paragraph 2 of Article 207 of the Tax Code of the Russian Federation.

And in a letter dated December 24, 2009 N 20-20/3/3508, the financial department indicated that if civilian citizens of various states working in military units of the OGRF receive remuneration for work on the territory of a foreign state, then such income relates to income from sources outside the Russian Federation.

Thus, these citizens who are not tax residents of the Russian Federation receive remuneration for work in military units stationed outside the Russian Federation, which is not related to income from sources in Russia.

Consequently, these individuals are not payers of personal income tax in Russia.

Important!

It is also necessary to note that individuals who are not tax residents of the Russian Federation, in relation to income in the form of remuneration for the performance of labor duties, including under an employment contract for remote work, received from sources outside the Russian Federation, are taxpayers of personal income tax persons are not recognized.

This position was also reflected in the explanations of the official bodies. See, for example, letter of the Ministry of Finance of Russia dated March 31, 2014 N 03-04-06/14026.

Comment source:

“ARTICLE-LINE COMMENTARY TO CHAPTER 23 OF THE TAX CODE OF THE RUSSIAN FEDERATION “INDIVIDUALS INCOME TAX” (UPDATED)

Yu.M. Lermontov, 2014

How to submit an application to the tax office

Choose a convenient method of contact:

• through the tax office website;
• hand over documents in person;
• make a postal item.

In the contact form, specify the code:

• write the numbers “0000” if you submit documents to the office yourself;
• indicate “9965” when sending by post.

Inspectors, as you know, check everything carefully and only then give an answer. Therefore, it is important to protect yourself and confirm where you were:

• make copies of the pages of your international passport about crossing the border;
• obtain certificates of presence in Russia for the required period of time;
• evidence of the location of property abroad.

For example, documents on ownership of real estate and a lease agreement. Foreign papers must be translated and notarized. Then the inspectors will be able to accept them.

The application form for companies was approved by Order No. ММВ-7-17 dated November 7, 2017/ [email protected]

Concept and classification of subjects of tax law

Social relations, which primarily form the subject of tax law, develop regarding the transfer of ownership of funds.
Most of these relationships are aimed at achieving a balance of private and public interests, therefore the concept of a subject of tax law - the bearer of interest - is key.

The precise definition of the subject of tax law is also of practical importance, since it allows us to identify the circle of persons entering into tax relations and whose actions entail legally significant consequences. The presence of criteria allowing to classify any individual or legal entity as a subject of tax law makes it possible to establish which persons and their actions fall under the jurisdiction of the legislation on taxes and fees. Only subjects of tax law can have the rights and bear the responsibilities provided for by the Tax Code of the Russian Federation and the regulatory legal acts adopted in accordance with it.

The state, regulating relations in the field of taxation with the help of legal norms, determines the circle of subjects of tax law. The legislation on taxes and fees does not contain an exhaustive list of persons entering into tax relations, however, subjects of tax law can be classified on the following grounds.

1) According to the method of normative certainty:

• fixed by tax legislation as subjects of tax relations;
• not fixed by tax legislation as subjects of tax relations.

2) By the nature of fiscal interest:

• private entities;
• public subjects.

3) According to the degree of property interest in the emergence of tax relations:

• having a direct proprietary interest in tax relations;
• who do not have a direct proprietary interest in tax relations.

The Tax Code of the Russian Federation fixes the concept of “ participants in relations regulated by the legislation on taxes and fees ” (Article 9), which include:

1. taxpayers or payers of fees (organizations and individuals);
2. tax agents (organizations and individuals);
3. tax authorities (federal executive body authorized for control and supervision in the field of taxes and fees, and its territorial bodies);
4. customs authorities (federal executive body authorized in the field of customs affairs, customs authorities of the Russian Federation subordinate to it).

Legal status of participants in tax relations listed in Art. 9 of the Tax Code of the Russian Federation is regulated by the entire set of regulatory legal acts on taxes and fees, including regional tax legislation and legal acts of local governments.

The Tax Code of the Russian Federation gives the status of participants in tax relations to only two categories of subjects:

1. taxpayers and fee payers (private entities);
2. the state represented by bodies representing and realizing its property interests (public entities).

These types of entities represent different sides of tax legal relations that have opposing fiscal interests. At the same time, the presence of a direct property interest in entering into tax relations allows us to unite private and public entities into one group - entities that have a direct property interest in tax relations.

In fact, tax relations affect a larger number of subjects, since the establishment, introduction and collection of taxes for the income of the state (municipal entity), the implementation of tax control and prosecution for tax offenses also require the involvement of other individuals and legal entities, authorities and local self-government, which are not directly designated as participants in tax relations, but are endowed by tax legislation with the corresponding rights and obligations and, in certain cases, bear tax liability.

Such subjects include experts, witnesses, specialists, witnesses and translators who take part in the tax audit process (Articles 90, 95-98 of the Tax Code of the Russian Federation).

Tax relations that arise regarding the registration of taxpayers require the presence of registration authorities that perform certain functions (Articles 85, 86 of the Tax Code of the Russian Federation).

Relations arising in relation to settlement transactions for the transfer of taxes and fees are implemented through the participation of banks (Article 60 of the Tax Code of the Russian Federation).

The taxpayer has the right to enter into tax relations through a legal or authorized representative (Articles 27, 29 of the Tax Code of the Russian Federation).

The legal status of these entities has two features:

1. optional (auxiliary) nature, since it helps taxpayers or the state to exercise fiscal rights or fulfill obligations;
2. lack of own property interest in tax relations.

Consequently, subjects of tax law include individuals and organizations not expressly designated in Art. 9 of the Tax Code of the Russian Federation, but are such due to the presence of rights and obligations in tax relations. This group consists of entities that do not have their own property interest in tax relations.

It is necessary to distinguish between the concepts of “subject of tax law” and “subject (participant) of tax legal relations.”

The subject of tax law is a person endowed with legal personality, i.e., the ability recognized by tax legislation to be a participant in specific tax legal relations. The concept of “tax legal personality” includes the concepts of “tax legal capacity” and “tax capacity”. Tax capacity is the ability to have tax rights and obligations as provided by law. Tax capacity is the ability of a subject, independently or through representatives, to acquire, exercise, change and terminate tax rights and obligations, as well as be responsible for their non-fulfillment and unlawful implementation.

The subject of a tax legal relationship is an individually determined real participant in a specific legal relationship.

By entering into specific tax legal relations, the subject of tax law acquires new properties, becoming a subject (participant) of a financial legal relationship, but does not lose the qualities that he possessed before entering into them. Consequently, the concept of “subject of tax law” is larger in scope than the concept of “subject (participant) of tax legal relations.” The status of a subject (participant) of a tax legal relationship contains a certain legal characteristic, a state regarding the law.

How to get an answer

Choose the most convenient way to obtain a certificate of residence of a legal entity:

• on the inspection website;
• by mail to the address specified in the application.

The information provided in the document is valid for 12 months. Issued exactly for the year that you indicate in the application. You can receive several copies at once. But this must be noted in the application.

It happens that the fiscal department does not issue a certificate. In such a situation, the applicant is sent a justified refusal. You can try to eliminate the shortcomings - collect evidence and ask for an answer again. The period for studying papers is 40 days.

If you need to confirm your tax status, take care of this in advance. Collect documents and send them to MIFTS in a convenient way.