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. Please find a visual infographic and detailed description below.

Minimum Monthly Wages

In 2023, minimum wages are as follows:

Please note that these amounts would usually fall significantly below the market salary levels at which to attract any qualified staff.

Taxation

The personal income tax (for Russian residents, citizens, and foreigners) is a flat 13% for all levels of income. On annual income over ₽ 5 million, personal income tax is 15%.

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% (15% if annual income over ₽ 5 million) 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

Insurance contributions are paid out of the funds of a company and are not withheld from an employee’s salary as in the case of personal income tax.

As of January 1, 2023, the Pension Fund and the Social Insurance Fund were merged into the new Social Fund of Russia. This means that there are unified tariffs of insurance contributions for compulsory pension insurance, compulsory social insurance and compulsory medical insurance in the following amounts:

• within the established single maximum limit of the base for calculating insurance contributions – 30%;
• over the established single maximum value of the base for calculation of insurance contributions – 15.1%.

The maximum base for 2023 is 1,917,000 rubles.

Starting from 2023, some taxpayers apply a single reduced tariff of insurance contributions in the amount of 15%. This tariff applies to payments in favor of an individual that exceed the minimum wage established by federal law at the beginning of the calculation period. In other words, from January 1, 2023, the 15% tariff will apply to payments exceeding the minimum wage.

Contributions for foreign employees (temporary and permanent residents) are the same as Russian citizens have. But there is an exception for highly qualified specialists (HQS) who temporarily stay in the territory of the Russian Federation. In this case, they are assessed only for injury contributions. Temporarily staying foreigners are recognized as insured under compulsory medical insurance. A temporary resident is a foreign citizen who has only a visa or migration card.

Benefits paid by an employer under compulsory social insurance:

• Payment of temporary disability benefits
• Payment of maternity leave
• Payment of child care benefits for children up to the age of 1.5 years old

Sick leave

The employer is liable (as a general rule) to compensate only the first 3 days of an employee’s sick leave. The 4^th 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.

Russian Social Fund payments

Starting from the beginning of 2021, the Russian Social Fund started to pay benefits directly. Data on the type of employment, rate, average earnings and replacement of the term of the calculation period are transmitted to the Fund from an employer. The Fund then makes payments to the beneficiaries’ accounts without intermediaries and delays.

Maternity leave

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.

The amount of the benefit is 100% of the average earnings for the last 2 years before the start of maternity leave, but cannot exceed the established maximum amount. As of February 1, 2023, the maximum benefit amount is 383,178.6 rubles and the minimum is 74,757.2 rubles. If a woman’s working experience is less than 6 months, she can count on an allowance not exceeding the minimum wage.

One-time allowance for the birth of a child

This benefit is given to all parents in the same amount, regardless of whether they work or not. If the parents do not work, the allowance is paid at the Pension Fund office at their place of residence. The amount of the benefit from February 1, 2023 is ₽ 23,011 for each child.

Monthly child care allowance for a child up to 1.5 years of age

The monthly childcare allowance is 40% of the average earnings for the last 2 years, but not less than ₽ 7,677.81  and not more than ₽ 33,281.8  (as of February 1, 2023).

Sick leave for child care

Parents and close relatives of the child, such as guardians, have the right to apply for sick leave in order to be released from work and receive allowance in the event of the child’s illness. The benefit is only paid to insured persons, i.e. those working under an employment contract. If the sick leave is issued after the child has fallen ill, it is paid in full from the Russian Social Fund.

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

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.

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