Over the past year and a half, hundreds of thousands of people have left Russia, including many entrepreneurs. In this article, we have collected the polyphony of their voices – what problems they face, why the words “digital digital signature from the tax office” make them shiver, and how it turned out that individual entrepreneurs have every chance of falling into full-fledged double taxation.
Masha Lutsenko helped me prepare this material – she hosts YouTube channel online accounting Kontur.Elba, and the guys from there are extremely knowledgeable about everything related to entrepreneurship.
We did it simply: we called out at the same time in my channel RationalAnswer and in the community Elbe contour to all expat entrepreneurs to share with us their experiences and the most pressing challenges they face. Then we systematized all this and, where necessary, received comments from lawyers. In some places, the names of the characters have been changed for privacy. Go!
Are all individual entrepreneurs who left Russia criminals?
Let’s start right away with the trump cards: here and there on the Internet you can read that the very fact of conducting business activities through a Russian individual entrepreneur by people who have emigrated to another country automatically brings them under criminal charges with sentences of up to three years in prison (see below) .
The idea of running a business as a Russian individual entrepreneur while permanently residing in another country is questionable due to fictitious registration. Strictly according to the law, upon loss of resident status, a person must be discharged from housing in Russia, and therefore “close” the individual entrepreneur. A non-resident can continue to be an individual entrepreneur in Russia with the understanding that he risks criminal liability for fictitious registration.
Sergey Yakovlev, Tinkoff Business Secrets
In our opinion, the risks of criminal liability here are greatly exaggerated. After all, fictitious registration under the Criminal Code is when, on the basis of obviously false information, you register certain persons in an apartment in which they definitely do not intend to live. If you once quite legally had permanent registration in an apartment, and then left there and “forgot” to check out, then this is the maximum administrative penalty for violation of registration rules up to 5 thousand rubles. (and even then, there are different opinions here – to what extent deregistration in your own apartment is mandatory when traveling abroad).
In general, we have not encountered any cases of bringing emigrant individual entrepreneurs to criminal liability for fictitious registration. At the same time, the law, in principle, does not oblige an individual entrepreneur to report his move to another country or his residence status, and the Ministry of Finance in its letters directly writesthat conducting business through an individual entrepreneur is not a violation of the Tax Code, even if the individual is not a tax resident of the Russian Federation.
How to manage an individual entrepreneur remotely (without attracting the attention of orderlies)
In general, we expected that the most common problems of private entrepreneurs who left would be all sorts of problems with tax nuances. But no! Almost all the entrepreneurs who wrote to us primarily mentioned difficulties with electronic signatures and direct remote interaction with government agencies.
When leaving Russia in June 2022, I did not take into account that my electronic signature issued through the bank, with which I signed tax returns, would soon expire – and that in order to reissue it, I now needed to come to the Russian tax office in person. Of course, I didn’t want to do this; flying halfway around the world for a visit to the Federal Tax Service is such a pleasure!
In this case, we are talking about a qualified electronic signature (CES) – with its help you can sign not only documents with counterparties, but also all sorts of mandatory reports to the tax office, as well as other official documents (like a patent application). Only such a signature can completely cover all the needs of an individual entrepreneur for the remote exchange of documents from abroad.
Until 2022, such a signature could be obtained from dozens of certification centers, and then successfully renewed remotely without any personal visits. But last year the rules changed, and an electronic signature for a business began to be issued only at the tax office and only during a personal visit (at least, regular re-issuance of such a “trump” signature from the tax office after the initial receipt can still be done remotely).
This put a huge number of emigrated entrepreneurs with an expiring signature, which was not obtained from the Federal Tax Service, in a difficult position: it is no longer possible to renew the signature, as before, and there is also no physical opportunity to issue a new signature with a personal visit (the guys from Elbe analyzed in more detail all the nuances of the resulting legal order here in this video).
A year after the wave of mass emigration, unfortunately, no magical way to get the first signature from the tax office without personal presence has appeared. There were companies on the market that supposedly issued such signatures remotely, but most often they were talking about the signature of an individual. But the signature of an individual is not the same as the signature of an individual entrepreneur, even if we are talking about the same citizen. Although, it must be admitted that some tax authorities sometimes accept reports signed with such a signature (unfortunately, there is no answer for how long this will last).
As a result, many entrepreneurs decided to close their Russian individual entrepreneurs completely, just in case:
In the end, I had to close the individual entrepreneur, because at the time of departure I did not have a qualified digital signature (or rather, I did, but as it turned out, it was not the one that is needed now). Fortunately, you can close an individual entrepreneur remotely using a biometric passport and a smartphone with NFC.
Here we are talking about the State Key – this is a signature that can be obtained using a mobile phone and a new generation passport with an NFC chip (here it is, the coming cyberpunk!). Unfortunately, Gosklyuch only works in those systems that are integrated with it, and mainly solves various problems of individuals. For businesses, it is suitable for a limited range of tasks: opening or closing an individual entrepreneur, reporting false information to the Unified State Register of Legal Entities.
But you will not be able to send a tax return from an individual entrepreneur or sign an agreement with a counterparty using such a signature. For these purposes, many entrepreneurs who left had to eventually resort to the help of trusted persons who remained in Russia:
As a result, the solution was to send a tax return by mail from the Russian Federation. I believed that the sender of the letter with the declaration must be the person directly reporting on it – however, as it turned out, our native Russian Post does not closely monitor the data on the receipt, so my authorized representative was able to successfully send my report without much effort.
In general, a power of attorney for an individual entrepreneur (written out to a person in Russia whom you trust) can help you solve many problems if for some reason you do not have the opportunity to obtain a CEP from the tax office. Such a person will be able to sign documents on behalf of the individual entrepreneur and submit reports to the tax office. By the way, it is also possible to make such a power of attorney abroad: you draw it up at any consulate of the Russian Federation (the personal presence of the person for whom you are drawing up the power of attorney is not required), and then simply send it by mail to Russia.
And a few more examples of not obvious risks that the entrepreneurs who wrote to us faced:
Far from my homeland, I suddenly turned 45 years old. After the three months required by law, the domestic Russian passport turned into a pumpkin, and with it most of the accounts in Russian banks. Some were extended abroad (Alfa), some were not (Tinkoff). It is impossible to renew your internal Russian passport abroad.
Megafon blocked the SIM card from all banks and EDI because there was no paid activity for three months. And some banks do not allow you to change the phone number linked to your account without a personal visit to the branch. This is the case.
Useful tips for remote IP management:
Get a qualified electronic signature for your individual entrepreneur from the tax office, and then keep this flash drive with the token like the apple of your eye. Set a reminder in your calendar so you don’t forget to renew it remotely on time.
If you still have people in Russia whom you trust, just in case, issue a power of attorney for them with the right to sign documents on behalf of your individual entrepreneur and interact with government agencies, including the tax authorities.
Check with your operator (for the phone number to which you have access to bank accounts) for the rules for blocking a SIM card due to inactivity. If necessary, connect to the cheapest service with a monthly payment.
How to pay taxes from abroad (preferably less)
For individuals, moving abroad and losing tax residency often means a significantly higher tax rate for income from Russia (we wrote more about this Here). For emigrant entrepreneurs, oddly enough, there are often much fewer changes; but there are also important nuances – let’s look at the most popular taxation systems.
NIT (professional income tax, also known as self-employment)
For the self-employed and individual entrepreneurs on NAP, if they lose tax residency, nothing changes – the main thing here is not to exceed the income limit, which for this tax regime is set at 2.4 million rubles. in year. The tax rate will be 6% on income from legal entities and 4% on income from individuals. You can read more about the nuances of self-employment/NPD in this article.
STS (simplified taxation system)
Nothing changes on the simplified tax system either – it doesn’t matter where you actually are, where you get your income from, or whether you are a resident. Please pay 6% on income or 15% on profit (in some regions rates may be different less), and don’t forget about individual entrepreneur’s insurance premiums either.
By the way, if you start receiving foreign income from business, then they will also need to be taken into account in the tax base of the simplified tax system at the rate of the Central Bank, see clause 3 of article 346.18 of the Tax Code of the Russian Federation (we wrote more about paying taxes on the simplified tax system on income from abroad Here).
Patent – this is the favorite tax system of Russian IT specialists. You pay a fixed tax 2 times a year, and you don’t know any troubles. The fact is that the actual income of an entrepreneur on a patent does not affect its value: a certain standard “potential income” is taken into account, which was calculated by the region for each type of activity. For example, in Moscow, a year of a programming patent costs 600 thousand rubles, but in the Sverdlovsk region it costs only 21 thousand rubles. (even if you earn, conditionally, more than a million rubles a month!)
It all seems too good to be true…
I have a patent for software and database development. For individual entrepreneurs, the rule is that services are provided at the place of registration – and it coincides with the place of registration. That is, if it is possible to register in another locality with a smaller tax base, then this works fine!
Unfortunately, we do not share Mikhail’s unconditional optimism here: when an entrepreneur emigrates, the legality of using a patent is often called into question. Since the cost of a patent is tied to the region, then the entrepreneur’s business should also be somehow tied to it. Ideally, you need to physically work right in this region.
But there are other options: for some types of activities, the Ministry of Finance allows you to be tied to the region with the help of customers and clients, or based on the place where the contract was concluded. For example, here in this letter The Ministry of Finance writes that a programmer can develop software remotely for foreign customers – the main thing is that the contract is concluded in the region where the patent was obtained. Here The Ministry of Finance confirms that it is also possible to engage in educational activities remotely, and Here – that you can rent out an apartment in Russia with a patent while abroad.
All in all, going patent could theoretically save you a ton of money on your taxes. But if you are not physically located in the region of the patent, then at least you should take care that all contracts are drawn up in the required region, and ideally there are also some clients from there.
Real estate sales tax
You know that tax non-residents of the Russian Federation must pay personal income tax of 30% on the sale price of an apartment if they have owned it for less than 5 years (in some cases, less than 3 years)?
So, it turns out that sometimes even a non-resident can avoid such a hellish tax rate – if he sells his real estate as an individual entrepreneur (and pays, for example, 6% of the proceeds to the simplified tax system). True, for this he will need to have reinforced concrete evidence that the property being sold was directly used in business activities (for example, he rented out an apartment and paid tax as an individual entrepreneur on the rent). They talked about this in more detail Here.
The Miracles of Double Taxation
As it turned out, this is not obvious to everyone, but nevertheless: paying taxes from an individual entrepreneur in Russia does not relieve you of the obligation to pay taxes in the new country of your tax residence. The tax system in each specific jurisdiction must be dealt with separately – but in the most general case, most likely, the income of your Russian individual entrepreneur will be equated to the abstract income of an individual and will be subject to taxation where you are now a tax resident. (However, there are pleasant exceptions: for example, in Georgia foreign income is not taxed.)
As a rule, countries enter into special double taxation agreements (DTAs) with each other to avoid doubling the tax on the same income in two countries. Usually it works like this: if you receive income from one country, where 10% was withheld from it, and in another country where you are a tax resident, the tax rate is 15%, then you only need to pay an additional 5% to the budget of the second country (i.e. because the 10% already paid elsewhere is, as it were, “credited” to you).
The idea sounds good, but there is one catch: the provisions of the DTT apply only to those taxes that are directly specified in the text of the agreement – and these are most often only the most “common” taxes around the world, such as personal income tax, VAT or income tax. But all sorts of special preferential regimes for individual entrepreneurs, like the NAP, simplified taxation system or patent discussed above, are usually not included in the text of the DTT – so under them you may face all the delights of double taxation to the fullest.
Again, there are some happy exceptions: for example, the tax legislation of Cyprus directly allows any taxes paid in another state to be counted towards the reduction of the “local” income tax – regardless of their presence in the DTT.
In general, Russia has DTAs with many countries. True, in August 2023, the President of the Russian Federation signed a decree on the unilateral partial suspension of almost half of them – therefore, how exactly they will act further, taking into account the possible reaction of the affected countries, is still unknown (we wrote more about this Here).
The main advice for business tax matters is simple: be sure to consult an experienced lawyer who specializes in the tax law of the country of your current tax residence. Most likely, this will allow you to save a lot of money and nerve cells.
This is all fully applicable, of course, not only to Russian individual entrepreneurs. A year ago, everyone was discussing the story of the notorious “Estonian IT girl” – an emigrant from the Russian Federation, who boasted on Twitter how she, with the help of a Georgian individual entrepreneur, cunningly paid only 1% (instead of the 60% due in Estonia, where she lived, according to her calculations). They stuffed it into her Panama hat then from the heart, you can get acquainted with the essence of the matter in more detail – how exactly this story ended is unknown, but the consequences could be very, very unpleasant for the IT specialist.
How to withdraw money from Russia abroad
The last layer of problems that is encountered in almost all the stories of entrepreneurs who wrote to us is the withdrawal of earned income from the Russian Federation in such a way that they can be used in the current country of residence. Once upon a time, international SWIFT transfers handled this task perfectly, but now, due to various sanctions, this path has become extremely unreliable (see more details) here). So emigrant individual entrepreneurs sometimes have to show remarkable ingenuity.
Of the most common options for organizing cash flows, which the owners of individual entrepreneurs wrote to us about, we can highlight the following:
Ruble transfers to bank accounts in “friendly” CIS countries.
SWIFT transfers in foreign currency (if you are lucky enough to have open foreign currency accounts in those few Russian banks from which such transfers more or less go away).
“Barter” with other emigrants (for example, someone needs to send rubles to relatives in Russia – and in return he is ready to pay in currency in the country of current residence).
We discussed all these methods, with their inherent risks and disadvantages, in more detail in this guide from October last year.
If you have any unanswered questions, feel free to write them in the comments, we will try to sort them out (well, also share your stories about IP misadventures, if you have something to tell). We will also be grateful for subscribing to my TG channel RationalAnswer about a reasonable attitude towards personal finances, as well as Kontur.Elbe channel about taxes and laws of the Russian Federation for small businesses (the guys from which supported the publication of this article).