Baker & McKenzie: Changes in Russian Immigration and Tax Legislation on Hiring Foreign Citizens


On 21 May 2010, Rossiyskaya Gazeta published a Federal Law amending the Russian legislation regulating the employment of foreigners in Russia[1]. The amendments are aimed at creating a more favourable regime to attract foreign employees to work in Russia. Most of the amendments become effective from 1st July 2010.

This legal alert covers only amendments introduced into the Federal Law "On the Legal Status of Foreign Citizens in the Russian Federation"[2] (hereinafter the "Law") and RF tax legislation.


1. Highly qualified foreign specialists

The amendments introduce a special category of foreign employees - a highly qualified foreign specialist ("Specialist"). The main criterion for recognizing a foreign employee as a Specialist is a salary level of 2,000,000 roubles per year or more. Defining the required qualification level and the assessment of the competence of foreign employees as Specialists is left to the employers themselves.

Specialists are subject to a simplified procedure for obtaining work permits and work visas. To receive work permits for Specialists their employers are not required to:

  • obtain a quota for work permits;
  • register vacancies with the employment authorities;
  • obtain permission to hire foreigners.

Certain employers, in particular, Representative offices of foreign legal entities, non-profit and religious organizations, and those employers who have been penalized for illegal employment of foreigners in Russia within the last two years, can not use the simplified procedure for obtaining work permits for Specialists.

A work permit for a Specialist may run for 3 years with the possibility of repeatedly extending it as long as the Specialist has a valid employment contract. The valid territory for the work permit may include more than one region in the Russian Federation.

The Specialist's work permit constitutes a basis for him or her to obtain a permanent RF residency permit both for himself and for the members of his family. That said, the Specialist must request preparation of a residency permit.


2. Visa-free foreigners working for personal needs of Russian citizens

Amendments to the Law introduce a new rule regarding hiring foreign citizens from countries with which Russia has established a visa-free regime ("visa-free foreigners") who come to work in Russia for the personal needs of Russian citizens. Now, such visa-free foreigner must obtain special permission – a "patent" (as distinct from a work permit). The patent is issued for a period of 1 to 3 months with the possibility of extension for up to 1 year. The patent provides a visa-free foreigner with the right to work in the RF region in which such patent was issued.


3. Preferential tax treatment

In accordance with the amendments to the RF Tax Code, which came into force on 21 May 2010, the income of a Specialist paid by Russian organizations (institutions) and branches of foreign organizations is taxed at a rate of 13% irrespective of the specialist's tax residency. Previously the Russian source income of foreign employees who were not tax residents of Russia (i.e., spent less than 183 calendar days in Russia over a period of 12 consecutive months) was taxed at 30%.

Furthermore, the lowered 13% rate and the special procedure for paying taxes may also be applied to foreign citizens hired by Russian individuals to work for those individuals' personal needs.


4. Employment of foreigners in Russia without obtaining immigration permits

In accordance with the amendments to the Law, accredited employees of the Russian representative offices of foreign legal entities are added to the list of employee categories which may be hired in Russia without the relevant immigration permits. However, immigration permits for such employees will not be required on the basis of the principle of reciprocity in accordance with international treaties concluded by Russia with a corresponding country.

It should be noted that, at present, Russia has a very limited number of such international treaties with other countries and these treaties relate only to particular industrial sectors.


The changes made to Russian legislation aim to significantly simplify the current requirements of migration legislation and decrease the tax burden for highly qualified foreign specialists working in Russia. However, the mechanisms for implementation of the new provisions of the Law will be specified in the relevant bylaws, which are still in the development stage at present.


Should any questions arise, please contact the lawyers specializing in labour and immigration law, Igor Makarov, partner, or Valery Fedoreev, associate, and Sergei Zhestkov, partner, from the tax law group, at +7 (495) 787 27 00 or to Maxim Kalinin, partner at our St. Petersburg office, at +7 (812) 303 90 00.

[1] Federal Law No. 86-FZ dated 19 May 2010 "On Amending the Federal Law 'On the Legal Status of Foreign Citizens in the Russian Federation' and Other Legislative Acts of the Russian Federation."

[2] Federal Law No 115-FZ "On the Legal Status of Foreign Citizens in the Russian Federation" dated 25 July, 2002 (as amended).