Freelancers need to declare income received via Solar Staff on their own, because the service is not a tax agent and does not pay tax on such income.
Because freelancers are not Solar Staff's employees and we don't pay taxes on their payouts, they must declare any income received via Solar Staff by themselves.
To carry on tax accounting in Russia for your Solar Staff income, you need to:
Be a tax resident
Determine the applicable tax obligations
Tax residence in Russia
An individual is considered to be a tax resident if they are physically present in Russia for at least 183 calendar days during a 12-month rolling period. The tax residence status of an individual should be defined by counting the days spent in Russia within the relevant calendar year.
The days of stay in the Russian Federation are calculated by summing up all calendar days in which an individual has been in the Russian Federation for 12 consecutive months.
The final status of tax residence is determined based on the results of the tax period (calendar year).
Tax residence in the Russian Federation is not related to citizenship, this status can be obtained/lost by both Russians and foreigners.
Short-term departure from the country (less than six months) for medical treatment or education, as well as for employment or other duties associated with performance of works (rendering of services) at offshore hydrocarbon deposits, is not taken into account when determining tax residence.
Taxpayer identification number
Taxpayer identification number (TIN) — a unique code for identifying individuals and legal entities. This number consists of 12 digits for individuals and 9 for legal entities and cannot be changed during the life or existence of the organization. Individual taxpayers can find out their TIN using passport data online online.
Russian Federation: Freelancer tax statuses
Tax liabilities in Russia depend on the freelancer's status and/or fulfillment of certain conditions. In the Russian Federation, there are three statuses a freelancer can have in terms of income taxation:
Read on for more details.
Individual
Depending on their tax residence status, individu
als are liable for income tax on their worldwide and/or Russian-sourced income:
Tax residents of the Russian Federation are obliged to pay personal income tax at a 13% tax rate (or 15%, if their annual income exceeds RUB 5 million), regardless of the source of income.
Non-residents pay personal income tax only on Russian-source earnings at a rate of 30%.
Since legally a freelancer cooperates directly with Solar Staff under a subcontract agreement with a foreign organization, the income received via Solar Staff is considered as income from a foreign source. Therefore, only Russian tax residents have the obligation to pay tax on such income.
Income received via Solar Staff is declared based on certificates and invoices, and as per the Offer Agreement.
Tax reporting and payment
A Personal Income Tax Return is submitted annually, no later than April 30 of the year succeeding the reporting one. The tax should be paid by July 15 of the year following the expired tax period.
In both cases, if the date falls on a weekend, the deadline is postponed to the next workday.
The document can be submitted on paper, in person, by mail, or electronically in the taxpayer's account (requires an e-signature).
Automatic tax payment in Solar Staff
Solar Staff offers individuals a unique service for paying tax automatically.
When this function is enabled, 13% off of each balance withdrawal during the month is automatically withheld towards tax and, in the beginning of the next month (on its first business day), the entirety of that withheld amount is sent to your so-called advance wallet in the FTS (Federal Tax Service) based on your tax registration details (this happens strictly after the month in question ends).
On average, it takes 3-4 workdays for the remittance to be displayed in the FTS account, but no more than 10 workdays.
Once the funds successfully arrive to the FTS (and the month ends), a document marked "PAID" to confirm the tax payment becomes available for download in the Taxes section.
To activate this function, head to the Taxes section in your Solar Staff account and toggle “Pay tax automatically”:
Please note that a fulfilled tax obligation does not exempt freelancers from having to submit a Personal Income Tax Return to the tax authorities.
Tax deductions
Tax deductions reduce the amount of income from which the tax is calculated and paid – the so-called tax base.
If an individual is eligible for tax deductions under Articles 218–221 of Russia's Tax Code, they can fill in the necessary information about the deduction in the Tax Return (there is a separate section in the form).
In cases where the tax has already been paid in full, an individual can submit a “clarifying” Tax Return for the refund of a part of the previously paid amount of personal income tax – for example, in connection with the purchase of an apartment, medical expenses, training, and so on.
The Tax Code of Russia provides for five groups of tax deductions for individuals:
Standard deductions granted for children and to certain categories of individuals.
Social deductions for education, treatment, charity, and others.
Investment deductions on income received from operations with securities and individual investment accounts.
Property deductions for the purchase of housing and the sale of property.
Losses resulting from operations in securities and operations in derivative financial instruments when transferring to future periods.
Any of the above tax deductions can reduce the amount of tax payable. The information specified in the Personal Income Tax Return must be confirmed by the relevant documents.
Please note that non-residents cannot make use of tax deductions.
Self-employed person
Self-employed persons are subject to tax on professional income (effective from January, 2019, as per Federal Law No. 422-FZ On Conducting an Experiment to Establish a Special Tax Regime "Tax on Professional Income" dated November 27, 2018). It is levied at 4% on income received from individuals and at 6% on income received from legal entities (such as Solar Staff).
The main features of the self-employed status:
Registration as self-employed is available for Russian citizens and for some foreigners, such as citizens of Belarus, Kazakhstan, Armenia, Kyrgyzstan, and Ukraine.
Tax residency has no direct bearing on the ability of self-employed persons to legally conduct their activities. They can work from any country while being a non-resident of Russia for tax purposes. However, they must meet the following conditions: (i) be a citizen of the Russian Federation or one of the EAEU countries, and (ii) work with Russian customers.
Self-employed tax residents of the Russian Federation can work with both Russian and foreign customers.
Self-employed income is capped at RUB 2.4 million per calendar year.
Article 6, Paragraph 2 of Federal Law No. 422-FZ places certain limitations on the types of activities that the self-employed can engage in.
Tax reporting and payment
Tax on income received via Solar Staff is paid at a rate of 6% monthly, before the 28th day of the month following the expired tax period (month).
After each withdrawal from the Solar Staff balance to a bank account, the self-employed person is to reflect the income in the My Taxes app as a "new sale." After the sale is created, they need to email a confirmation receipt to [email protected], specifying “чек самозанятого” (self-employed receipt) in the subject. To learn more about generating a receipt, see this article.
Additionally, Solar Staff offers a service for the automatic generation of receipts through Bank 131 upon each balance withdrawal.
Individual entrepreneur
Individual entrepreneurs are subject to tax on income from Solar Staff at a rate starting from 6%. The tax rate and other conditions depend on the chosen taxation system.
The main features of the individual entrepreneur status:
An individual can register as an individual entrepreneur only by forming a request to tax authorities, for example, via an application in Gosuslugi (Госуслуги). Please note that you cannot register as an individual entrepreneur via Solar Staff.
An individual entrepreneur can choose one of the following taxation systems:
Each tax system/regime has its own terms and tax payment procedures, as well as eligibility criteria for the professional deduction.
Income received via Solar Staff is declared based on certificates and invoices, and as per the Offer Agreement.
In addition to taxes, all individual entrepreneurs are required to pay insurance premiums.
Because Solar Staff payments are made from a foreign source (non-resident’s account), they are subject to currency control.
Should you have any questions, please do not hesitate to contact our support team via online chat, or send an email to [email protected].