- Posted by Awara
- On March 29, 2019
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The goal of this article is to outline the most important payroll regulations in Russia, including calculation and payment of salaries, social benefits, and other expenses. The following information will primarily serve as a guide for companies which recently established or plan to start their business in Russia. You can also find key facts in our infographics.
Minimum Monthly Wages
Starting from January 1, 2019 the minimum wage is:
- 11,280 RUR per month in general in the country
- 18,781 RUR per month, concerning Moscow
- 18,000 RUR per month, concerning Saint Petersburg
Please note that these amounts would usually fall significantly below the market salary levels at which to attract any qualified staff.
The personal income tax (for Russian residents, citizens, and foreigners) is a flat 13% for all levels of income. For non-residents (those who spend less than half the year in Russia) the rate is 30%, but a relevant double taxation treaty between Russia and a foreign state can entail a different rate.
Foreign residents who receive a work permit as a so-called ‘highly-qualified specialist’ (HQS) pay 13% on income tax, notwithstanding the number of days spent in Russia. (A foreigner will receive HQS status if his salary for the year is more than 2 million rubles.)
The employer must withhold the personal income tax and submit it to the tax authority.
Social Security Contributions
The social contributions are divided into three categories, each of which has a different rate and slightly different limits.
The exact rule is as follows:
- Social contribution to Pension Fund (SCPF) – 22% on cumulative gross salary < 1 150 000 RUR, and 10% – above 1 150 000 RUR
- Social security contribution (SSC) – 2,9% on gross salary < 865 000 RUR, 0% – on above 865 000 RUR
- Medical insurance fund charges (MIF) – 5,1% on gross salary
Benefits paid out from mandatory social security (regulated employee benefit by the government):
- Sick leave
- Maternity leave
- Retirement pension
What insurance contributions do foreigners pay in 2019?
The rate of insurance contributions for foreign citizens depends on two factors: the grounds for being in Russia and the status of a highly qualified specialist.
Foreigners can stay in Russia on three grounds:
- Temporary stay
- Temporary residence
- Permanent residence
Insurance contributions for foreigners upon temporary stay in Russia
- Pension insurance – rate of 22%. On income exceeding 1,150,000, the rate is 10%.
- Social insurance – reduced to rate of 1.8%. The contribution does not need to be paid on income that exceeds 865,000 rubles.
- Medical insurance – 0%.
Highly qualified specialists on temporary stay pay no pension Insurance at all.
Insurance contributions of foreigners who permanently and temporarily reside in Russia
- Pension insurance – 22%. On amounts exceeding 1,150,000, the rate is 10%.
- Social insurance – 2.9%. The fee does not need to be paid on income that exceeds 865,000 rubles.
- Medical insurance – 5.1%
Permanently and temporarily residing highly qualified specialists do not pay medical contributions.
The employer is liable (as a general rule) to compensate only the first 3 days of an employee’s sick leave. The 4th and subsequent sick leave days are compensated by the Social Security Fund. The amount of compensation payment is calculated based on the employees’ income during the last 2 calendar years and their pension insurance record.
Maternity leave encompasses a period of 70 days before child delivery (84 days when expecting twins) and 70 days after delivery (110 days when twins). After that, the employer must provide child-care leave which lasts 1.5 years. The maternity and child-care leave compensations are paid out of social security.
A woman may choose to extend the child-care leave until the child reaches 3 years. For this period a significantly smaller contribution is paid (RUB 50 per month), again out of social security.
Thus, maternity leave does not represent a cost for the employer, but the employer must reserve the job position for the affected woman.
Compulsory work hazard insurance
In addition to the social security contributions, the employer must also pay for compulsory work hazard insurance managed by the state social security fund. The rates are 0.2% to 8.5%, depending on the nature of the work. For office workers, the rate is in general 0.2%. Salaries for any kind of employee groups, including foreigners and highly-qualified specialists, are subject to taxation under this kind of social contribution.
Voluntary medical insurance
In addition to mandatory social security insurance, employers frequently take out voluntarily insurance for additional health care protection, mainly for the benefit of visiting private clinics. Travel insurance may also be taken out for the relevant category of employees.
Annual leave is granted for 28 calendar days (including Saturdays and Sundays). This is at the employer’s expense.
How can companies handle payroll work
Companies can hire a separate employee for calculation of salaries and other payments (as well as preparation and submission of reports to authorities) or choose an outsourcing firm that provides payroll services in Russia.
You can find more information on Russian tax and labor law in our business guides
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