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Family Law: divorce proceedings, conclusion of marriage (Russia)
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Question

Tax question concerning residents and non-residents of Russia

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Answer

In compliance with Russia`s tax legislation, non-residents are to pay the real estate sales tax equal to 30%, and residents – 13%. Under the general rule, tax residents are persons residing in a territory for more than 183 days a year, non-residents reside there less than 183 days a year.

As to application of these rules to a foreign citizen, there is no problem in determining if a foreign citizen in Russia is a tax resident or not, since the fact of a foreign citizen`s predominant residence in Russia`s territory can be confirmed with his/her residence permit and\or stamps in his/her passport, since it is exactly his/her national passport that proves his/her identity in Russia.

Determination of a tax status is much more difficult for Russia`s citizens. As you have already understood by the example of your wife and child, Russia`s citizen can have permanent registration in Russia`s territory and at the same time reside or stay outside the territory of the Russian Federation, In Russia, a citizen`s identity is proved with an internal passport of Russia`s citizen, where no notes are entered about exits or entries out of/to the Russian Federation. Today, the state has no mechanism to find out if a citizen actually lives in Russia or abroad. That is why Russia`s citizens residing abroad can freely buy and sell real property, declare their obtained incomes where they reside (are registered) in the RF territory and pay no taxes, if real property has been in their ownership for more than 3 years (Clause 220 of the RF Tax Code).

Factually, Russia`s citizen stops being Russia`s resident only in case he/she withdraws his/her registration as established where he/she resides in Russia`s territory, and withdraws tax registration. I am convinced that your wife has a Taxpayer`s Individual Number (TIN), and there is no necessity to declare that currently she stays in Belgium longer that in Russia: while she is registered in Russia`s territory, Russia considers that her permanent residence is in Russia. This attitude is typical of all Russian Consulates abroad, “Citizens of the Russian Federation are deemed to have permanent residence in a consular district of the General Consulate if they withdrew their registration with a Ministry of Internal Affairs body where they resided in Russia in connection with their exit abroad with the purpose to live abroad and have a permit of Belgian authorities to live in one of the provinces of a given consulate district”.

Source: http://russian-consulate-antwerp.be/uchet.html . That is just a permit alone issued by the Belgian authorities is not enough to consider an RF citizen not residing in Russia, it requires also a permit issued by the Russian authorities for exit out of Russia. Since your wife did not obtain a permit for exit out of Russia for permanent residence, she will be deemed by Russia`s authorities t be Russia`s permanent resident, until she declares otherwise.

Thus, in order to sell the apartment, your wife will have to go to Russia, make a transaction, at the end of the tax period submit a tax return on the income obtained, receive a tax deduction, and come back to Belgium. There is no problem and no offence in this situation.

She can also sell the apartment via a representative in Saint Petersburg, by issuing a power of attorney. Formally, she can issue a power of attorney, staying abroad. But if she, staying in Russia, issues a power of attorney and has it certified by a Russian notary using her internal Russian passport, even in this case tax authorities will have no claims in her respect. I repeatedly represented interests of Russian citizens residing in Europe, America, Australia - related to the issues of sale of their real property in Russia. All real property transactions were carried out absolutely with receipt of a tax deduction on the whole transaction amount.

Articles and consultations authored by attorney reflect the state of law as of the date of their writing. The laws change daily. Users of this site are advised to consult attorney regarding their situation.
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