Russia Decreases Social Security Contributions for SMEs. Companies with Foreign Shareholders May be Affected

Focus

• The social contributions rate in the Russian SME sector is reduced from 30% to 15% on the portion of wages that is above the minimum wage (~EUR 150).
• The benefit is available for companies that are included in SME register kept by the Federal Tax Service.
• The change came into force on 1 April 2020.

Companies affected

Criteria for SME status in Russia: 

1. Up to 250 employees
2. Revenue up to RUB 2 billion (~EUR 28 million)
3. The total share held by legal entities that do not meet criteria 1-2 above may not be more than 49%

Companies with foreign shareholders

If a foreign shareholder of a Russian SME falls under criteria 1-2 above, its Russian subsidiary company may also benefit from the reduced social charges rate. Notably, the compliance of a foreign participant with the SME criteria should be confirmed by an auditor certified in Russia.

Confirmation procedure

1. The Russian entity should analyse whether the entity itself and its parent company comply with the SME criteria (see above).
2. The parent company should provide its financial statements to a certified Russian auditor.
3. The auditor should provide information on compliance with the SME criteria to the Federal Tax Service between 1-5 July 2020.
4. The Federal Tax Service will include the company in the SME Register by 10 August 2020.

The SME Register can be found on the Federal Tax Service website: https://rmsp.nalog.ru/search.html

Determining whether a company is recognised as a SME in Russia and can thus reduce social security contributions involves a number of deadlines and possibly language barriers. Ecovis Russia is at your disposal if you need our support.

For further information please contact:

Irina Makarova, Certified auditor, ACCA, Head of Audit, ECOVIS Audit-Avangard, Moscow, Russia

Sergey Vyssotsky, Partner, Advisory services, Tax, Accounting & HR, ECOVIS CONSECO Press, Moscow, Russia