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Discover Russia’s tax system, including income tax rates, VAT, corporate tax, and regional levies

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2024
Reading Time: 24 min
How much are the Taxes in Russia?
Russia’s tax system is structured and governs taxes on income, property, business operations, and more. If you’re planning to move or already living in Russia, here’s what you need to know:
1
Key Features
Tax levels Taxes in Russia are collected at three levels: Who Manages Taxes?
  • The Federal Tax Service (FNS) oversees most taxes.
  • Regional authorities handle specific local taxes.
2
How It’s Regulated?
Tax Code
  • Defines general taxation rules for individuals and businesses.
  • Specifies tax rates and payment timelines.
Regional Taxes
  • Regions may have additional tax rules.
3
Why It Matters?
Understanding the system helps you comply with laws, avoid fines, and manage your finances effectively.

LEVEL 1:
Federal taxes in Russia — main source of income for the state treasury

Understanding Tax Residency and Personal Income Tax (PIT) in Russia
Tax Residency in Russia Individuals in Russia are classified as either residents or non-residents, which determines how their income is taxed: Residents:
  • Spend more than 183 days in Russia during a calendar year.
  • Subject to Personal Income Tax on their declared worldwide income.
Non-Residents:
  • Spend less than 183 days in Russia during a calendar year.
  • Pay Personal Income Tax only on Russian-sourced income.
Personal Income Tax in Russia for Residents 2021–2024 Rates:
  • 13% on annual income up to 5 million rubles.
  • 15% on income exceeding 5 million rubles.
Since 2025:
  • 13% on income up to 2.4 million rubles.
  • Progressive rates up to 22% for income exceeding this threshold.
Applicable to salaries, rental income, and other income types forming part of the main tax base.
Table 1. Parameters of the 2025 progressive taxation system* Source: Ministry of Finance of the Russian Federation

Annual income

Average monthly income

Rate

Up to 2.4 million ₽

Up to 200K ₽

13%

2.4–5 million ₽

200K–416.7K ₽

15%

5–20 million ₽

416.7K–1667K ₽

18%

20–50 million ₽

1.67K – 4.17K ₽

20%

Over 50 million ₽

Over 4.17K ₽

22%

The tax is applied progressively, meaning higher rates only apply to the portion of income exceeding each threshold.
PIT Rates for Non-Residents Generally taxed at a flat 30% rate on all Russian-sourced income. Some types of income are taxed at 13%-15%, including:
  • Dividends.
  • Income from securities and derivatives transactions.
  • Taxable interest on Russian bank deposits.
  • Insurance payouts and pension payments.
  • Income from the sale of shares in Russian companies
Key Points to Remember about Personal Tax in Russia Progressive Taxation: Under the new 2025 scale, only the portion of income exceeding each threshold will be taxed at the higher rate. Special Cases: Certain categories of income for non-residents are taxed at the same rates as for residents, offering some consistency. Why This Matters Understanding these tax structures helps ensure compliance and allows individuals to better plan their financial obligations when living or working in Russia. Stay informed to avoid surprises and optimize your tax filings! Back to Level 1 Taxes
Corporate Income Tax in Russia (CIT)
Corporate Income Tax Companies operating in Russia must pay corporate income tax on their profits. Tax Rates
  • 2024 and Prior: The corporate tax rate was 20%, with 3% allocated to the federal budget and 17% to regional budgets.
  • From 2025: The corporate tax rate increases to 25%, with 8% going to the federal budget and 17% to regional budgets. The preferential rate for IT companies rises from 0% to 5%.
Regional Adjustments Certain regions may reduce the regional portion of the tax to attract investment. Worldwide Income Russian legal entities pay taxes on their worldwide income.
Foreign Companies in Russia
  • Foreign companies conducting business in Russia through permanent establishments are subject to corporate income tax at the standard 25% rate. A permanent establishment exists if there is a fixed place of business or significant economic activity in Russia.
  • Foreign legal entities are also taxed on Russian-source income unrelated to permanent establishments, with withholding tax rates ranging from 10% to 20%, depending on the income type and calculation method.
Federal Investment Tax Deduction (ITD) The law allows for a federal ITD, which can be claimed against federal tax payable. This deduction can cover up to 50% of expenses incurred for:
  • Construction or modernization projects.
  • Additional investments in fixed assets or amortizable intangible assets.
By aligning with these guidelines, businesses can better navigate Russia’s evolving corporate tax landscape. Back to Level 1 Taxes
Russia´s Value Added Tax (TAX)
Standard VAT Rate The standard VAT rate in Russia is 20%, applied to the sale of goods and services. Businesses with an annual turnover exceeding 2 million rubles are required to register for VAT. Failure to register can result in penalties. Reduced VAT Rates
  • 16.67%: Applies to certain services, such as electronically supplied services and the transfer of a going concern.
  • 10%: Covers basic food items, specific children’s products, medical supplies, and pedigree cattle.
VAT Exemptions Certain goods and services are exempt from VAT, including:
  • Exports of goods and related services (including logistics).
  • International freight-forwarding services.
  • Supplies to diplomats (under reciprocal arrangements).
  • Foreign passenger transportation services, among others.
Changes Effective 2025
  • Simplified Taxation System (STS) Participants:
  • Individuals using the STS will now be recognized as VAT payers.
  • VAT Rate: 5% for annual incomes between 60 million rubles and 250 million rubles.
  • VAT Rate: 7% for incomes exceeding 250 million rubles.
  • Exemption: Those with annual income below 60 million rubles in the previous tax period will remain exempt from VAT obligations.
These updates ensure businesses and individuals stay informed about their VAT obligations and opportunities for reduced rates or exemptions. Back to Level 1 Taxes
Excise Duties and Mineral Extraction Tax (MET) in Russia
Excise Duties Excise duties apply to products considered harmful or luxurious, such as:
  • Alcohol
  • Tobacco
  • Fuel
  • Luxury cars
These duties are included in the final price paid by consumers. Rates vary depending on the product category and are periodically adjusted to reflect inflation and other factors.
Mineral Extraction Tax (MET) MET is imposed on subsoil users engaged in the extraction of natural resources, including:
  • Oil
  • Coal
  • Peat
  • Gold
  • Other valuable minerals
Tax rates for MET depend on the type of minerals extracted and may vary based on economic and geological considerations.
These taxes play a crucial role in regulating industries and generating government revenue. Back to Level 1 Taxes

LEVEL 2:
Taxes and Fees for Regional Budgets in Russia

Corporate Property Tax
Property tax in Russia is paid by legal entities owning real estate. Key points include:
  • Tax Base: Determined by the cadastral value of the property, which is updated regularly to reflect market conditions.
  • Tax Rates: Set by regional authorities and typically range from 0.1% to 2.2%.
Real Estate Ownership Considerations for Foreigners
No Purchase Tax Buyers are not subject to purchase tax when acquiring property in Russia but must pay a state registration fee to formalize the transaction. Capital Gains Tax
  • Gains from selling real estate are taxable.
  • Long-term owners (holding property for over five years) may qualify for an exemption.
  • Short-term owners (less than five years) can offset gains against losses from other investments.
Transport Tax
Motor vehicle owners registered in Russia are required to pay an annual transport tax:
  • Calculation: Based on the engine power of the vehicle.
  • Regional Variations: Tax rates vary by region.
  • Luxury Vehicles: Subject to higher rates due to additional surcharges.
These taxes contribute significantly to regional budgets and are structured to account for property value, vehicle characteristics, and market conditions.

LEVEL 3:
Local and Municipal Taxes in Russia

Land Tax in Russia
Landowners in Russia are required to pay land tax.
  • Rates: Range from 0.01% to 1.5%, determined by local authorities.
  • Tax Base: Calculated based on the cadastral value of the land, which is updated periodically to reflect market conditions.
Property Tax for Individuals in Russia
  • Applicability: Paid by individuals owning property such as real estate.
  • Rates: Typically 0.1% to 2%, determined by local authorities and tied to cadastral value.
  • Exemptions: Some categories, like residential properties owned by low-income families, may qualify for exemptions or reductions.
Tourist Tax in Russia – effective from 2025
A municipal tax targeting owners of hotels, recreation centers, and other accommodation facilities.
  • Implementation: Applicable only if municipal authorities pass a relevant law.
  • Responsibility: Applies to owners on a special register of temporary accommodation providers.
  • Rates and Benefits: Defined by the local government.

Tax Deductions and Allowances in Russia: Key Updates

Child-Related Deductions in Russia Significant updates will take effect in 2025, doubling child-related deductions:
  • 2,800 ₽ per month for a second child.
  • 6,000 ₽ per month for a third and subsequent children. The income threshold for eligibility will increase from 350,000 ₽ to 450,000 ₽, and employers will be able to apply these deductions without requiring employees to submit applications.
Property and Social Deductions in Russia Deductions are available for property-related expenses, social allowances, and standard deductions:
  • Up to 2 million ₽ for expenditures on purchasing or constructing a house or apartment.
  • An additional RUB 3 million ₽ for interest payments on related loans.
  • Taxable income from the sale of property owned for less than three years can be reduced by either expenses incurred or a flat deduction of 1 million ₽ (or 250,000 ₽ for other property, excluding securities).
Education and Medical Expenses deduction in Russia Taxpayers can deduct:
  • 50,000 ₽ per child for education in Russian-licensed institutions.
  • Costs of medical services and medicines for themselves and close relatives.
Tax-Free Income Categories in Russia Certain types of income and assets remain tax-exempt, including:
  • Statutory allowances and pensions.
  • Revalued shares resulting from mergers or reorganizations.
  • Gifts and inherited property.
  • Donations to qualifying charities and non-commercial organizations are also deductible within specified limits.
What It Means for Tax Residents in Russia While most deductions are exclusive to tax residents and capped (e.g., annual social deductions are limited to 150,000 ₽), they provide substantial relief. These measures are designed to lower living costs and encourage investment in housing, education, and healthcare.

With these updates, navigating Russia’s tax system becomes more manageable for residents looking to optimize their finances while benefiting from expanded allowances.

Tax Regulations for Specific Groups of Tax Payers in Russia

Russia’s tax system differentiates between residents and non-residents, taxing residents on worldwide income and non-residents on income sourced within Russia. For foreign professionals, the Highly Qualified Specialist (HQS) program offers a tax-efficient pathway to work in Russia.
What is Highly Qualified Specialist in Russia?
The HQS program targets skilled foreign professionals with notable expertise or achievements in specific fields. To qualify:
  • The individual must earn a minimum monthly salary of 250,000 ₽ (exceptions apply in certain cases).
  • Employment must be secured within Russia.
Tax Benefits for HQS Holders in Russia
  • Standard Income Tax Rates: HQS holders are taxed at the same rates as residents, avoiding the standard 30% tax rate imposed on non-residents without HQS status.
  • Social Security Exemptions: Income earned by HQS employees is exempt from social security contributions, with only accident insurance contributions required.
Why Consider the HQS Program?
This program, alongside the investor visa, makes Russia an attractive destination for skilled foreign professionals. By lowering tax obligations and simplifying compliance, it supports foreign specialists in establishing their careers in Russia without the financial strain typically associated with expatriate taxation.

The HQS program underscores Russia’s commitment to attracting international talent while offering competitive benefits for skilled professionals.
Russia has introduced a range of special tax regimes designed to promote entrepreneurship and specific economic activities. These regimes simplify taxation and reduce financial burdens by replacing multiple taxes with a single payment. Entrepreneurs using these regimes are typically exempt from income tax, personal income tax, VAT, and property tax.

Here are the six regimes available for entrepreneurs in Russia:
01
Tax on Professional Income
Tax rate
4% 6%
on payments from legal entities on payments from individuals
Who is Eligible? Self-employed individuals working independently
02
Single Agricultural Tax
Tax rate
6%
with exemptions from profit and property taxes
Who is Eligible? Agricultural enterprises producing goods
03
Simplified Taxation System (STS)
Tax rate
6% 15%
on income on income minus expenses
Who is Eligible? Individual entrepreneurs and companies meeting specific criteria
Exemptions: Income tax and property tax are not required
04
Patent System
Tax rate
6%
on income,
with a simple registration process through a patent
Who is Eligible? Small businesses in specific sectors
Why Use These Special Tax Regimes for Entrepreneurs? These systems are ideal for reducing administrative complexity and minimizing tax liabilities, making them especially attractive for small businesses and self-employed individuals. By simplifying compliance and offering competitive rates, Russia aims to encourage entrepreneurship and boost economic activity across various sectors.

For entrepreneurs, these special tax regimes offer a streamlined and cost-effective approach to managing their financial obligations.
Russia has developed Special Economic Zones (SEZs) to attract foreign investment and drive economic growth. These zones provide tax incentives, reduced administrative burdens, and other benefits to companies operating within them.
Types of Special Economic Zones in Russia
Industrial SEZs
  • Focus: Manufacturing and industrial production.
  • Benefits: Reduced corporate tax rates, customs exemptions, and streamlined administrative processes.
Technological SEZs
  • Focus: Research, innovation, and high-tech industries.
  • Benefits: Tax breaks, specialized infrastructure access, and support for intellectual property development.
Tourist-Recreational SEZs
  • Focus: Hospitality, entertainment, and tourism-related sectors in high-potential areas.
  • Benefits: Reduced taxes and simplified licensing processes.
Port SEZs
  • Focus: Trade and logistics near major ports.
  • Benefits: Customs duty exemptions, reduced taxes, and expedited customs clearance.
Key Benefits for Special Economic Zone Participants in Russia
  • Corporate income tax rates as low as 0% in some cases.
  • Exemption from property and land taxes.
  • Customs duty-free import of equipment and materials.
  • Simplified administrative procedures and fast-track permitting.
Eligibility Criteria for joining a Special Economic Zone in Russia
To qualify for SEZ benefits, companies must:
  • Meet minimum investment thresholds.
  • Create jobs and align with sector-specific goals.
  • Ensure projects support the strategic objectives of the SEZ.
Why Invest in SEZs and Unlock Tax Benefits for Corporations?
These zones offer an attractive option for businesses seeking cost savings and simplified operations while contributing to Russia’s economic and industrial growth. SEZs remain a cornerstone of the country’s efforts to create a business-friendly environment.
With the rise of the digital economy, Russia has implemented targeted tax measures to support IT companies and attract investment in this fast-growing sector. The special tax regime for IT companies offers numerous advantages aimed at fostering innovation and boosting the tech ecosystem.
Key Benefits of the IT Tax Regime in Russia
Reduced Corporate Income Tax
  • Eligible IT companies pay a corporate income tax rate of just 5%, compared to the standard 20% rate.
Lower Insurance Contributions
  • Accredited IT companies benefit from a significantly reduced insurance contribution rate of 7.6%, down from the standard 30%.
  • This reduction covers contributions to pension funds, social insurance, and medical insurance.
Additional Incentives
  • Access to government grants and R&D subsidies.
  • Participation in state-supported export programs.
  • Potential regional tax incentives and subsidies.
Eligibility Criteria to receive the IT Tax Regime in Russia
To qualify for these benefits, companies must:
  • Obtain accreditation from the Ministry of Digital Development, Communications, and Mass Media.
  • Generate at least 90% of their revenue from IT-related activities such as software development, database management, system integration, or cloud computing services.
Compliance Requirements for IT Tax Regime
Accredited companies must adhere to regular reporting and audits to maintain their status and continue receiving benefits.
Impact on the Tech Ecosystem in Russia
This tax regime positions Russia as an attractive destination for both domestic and international IT businesses. By offering reduced tax rates and incentives, it encourages investment, innovation, and regional growth.

Many Russian regions complement these federal measures with additional tax breaks and subsidies, further incentivizing IT companies to establish and expand their operations locally. The program underscores Russia’s commitment to strengthening its digital economy and maintaining a competitive edge in global tech markets.
Offshore companies and Controlled Foreign Corporations (CFCs) are integral to international tax planning. To address tax evasion and increase transparency, Russia has introduced robust measures targeting these entities.
What is a Controlled Foreign Corporations?
Under Russian law, a CFC is a foreign entity where Russian taxpayers hold a substantial interest (typically 25% or more).
  • Tax Obligation: Russian residents who control a CFC must report and pay tax on the CFC’s undistributed profits, provided these exceed specific thresholds.
Transparency Requirements for Controlled Foreign Corporations in Russia
To ensure compliance:
  • Disclosure: Beneficial ownership and financial details of CFCs must be reported.
  • Anti-Abuse Rules: Structures designed purely for tax avoidance are actively discouraged and subject to scrutiny.
Exemptions and Exceptions to the rules for Controlled Foreign Corporations in Russia
Certain entities may be exempt from CFC obligations, such as:
  • Companies located in jurisdictions with effective information exchange agreements.
  • CFCs engaging in active business activities, rather than passive income generation.
Why the regulation on Controlled Foreign Corporations in Russia matters?
These regulations reflect Russia’s commitment to reducing offshore tax evasion while ensuring fair tax practices. Russian taxpayers with international holdings are encouraged to stay informed about CFC rules to remain compliant and avoid penalties.

By enforcing transparency and limiting tax avoidance structures, Russia seeks to foster a more equitable and accountable international tax environment.

Personal Tax Planning Strategies in Russia

For foreigners residing in Russia, strategic tax planning can significantly optimize tax burdens and maximize savings. Russia offers various measures to ease financial pressure and encourage investment in essential services, including deductions for education, healthcare, and mortgage interest payments.
Key Deductions and Incentives for Taxes in Russia
  • Education and Healthcare: Increased deductions for personal and family education costs and medical expenses.
  • Mortgage Interest: Tax relief on interest payments for home loans, helping middle-class families invest in property.
International Tax Treaties with Russia
Russia maintains a robust network of double taxation treaties with over 70 countries. These treaties:
  • Prevent individuals and businesses from being taxed twice on the same income.
  • Offer reduced withholding tax rates on dividends, interest, and royalties, making cross-border operations more cost-effective.
Impact of Recent Tax Changes in Russia
In 2023, a Presidential decree partially suspended tax treaty benefits with “unfriendly” countries, including the U.S., U.K., Japan, and South Korea (49 territories in total).

Key Example: In 2024, the U.S.-Russia tax agreement was suspended, eliminating benefits for Russian residents using the W-8BEN form and Americans residing in Russia.
Tailored Tax Solutions for your life in Russia Navigating the complexities of Russia’s tax system can be challenging, but proactive planning helps minimize liabilities and ensure compliance. Whether you’re a foreign individual or business, understanding available deductions and treaty benefits is critical to effective financial management.
Our expertise is here to guide you through Russia’s evolving tax landscape, offering tailored advice to simplify your obligations and make your financial journey stress-free.
Book a Consultation
This insight is written by our expert
Dmitry Serebrennikov
Managing Partner 
movetorussia.com
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