Payroll in Russia

Payroll in Russia involves dedicated procedures for calculating and distributing salaries in a company. You can find in the following lines information about the formalities involved in this process, mentioning that you can get in touch with our company formation agents in Russia for such services.

Quick Facts
Employee/employer registration services [YES/NO]	YES
Mandatory contributions for employees	13% income tax on salaries (personal income tax)
Employment contributions for employers	Employers contribute to social security, healthcare, and pension fund – around 30% of employee’s salary
Payroll reporting requirements	Monthly tax reporting, Form 1-PIT for personal income tax, quarterly social security payments
Social security contribution for employees	Employees contribute with around 1.5% of their income to the pension fund and social security
Social security contribution for employers	Employers contribute with 22% of an employee’s salary to social insurance and pension funds
Special requirements for foreign employees	Foreign employees require work visas and permits. Companies must notify the authorities about foreign workers
Special requirements for Russian citizens working abroad [YES/NO]	YES, Russian citizens working abroad must be registered with the Russian tax authority and may be subject to tax on worldwide income.
Specific services for foreign companies in Russia	Foreign companies in Russia must register with the tax authority, social security authorities, and comply with Russian payroll laws.
Authorities to register with in Russia	Federal Tax Service (FTS), Pension Fund of Russia (PFR), Social Insurance Fund (FSS)
Salary payment frequency in Russia	Monthly
Employee benefits	Paid annual leave (28 days), sick and maternity leave, health insurance, and other company-specific benefits
Payroll components	– base salary; – bonuses; – overtime; – benefits (health insurance, transportation, etc).
Salary payment period	Monthly salary payments
Overtime payment period	Overtime is typically paid at a rate of 1.5x for regular hours and 2x on holidays/weekends.

What does payroll mean in Russia?

Payroll in Russia involves standard procedures for calculating salaries, followed by their delivery to employees’ accounts. Among them, we mention:

• The taxes to be paid to the state are calculated first. Both employees and employers have a share of social contributions;
• The hours worked by the employee are taken into account. They normally do not exceed 40 per week. In the case of extra hours, the company decides whether they are paid or not;
• Once the respective contributions are calculated and paid, payslips are drawn up and sent to the company‘s management for approval;
• The last step in payroll in Russia is the distribution of salaries in the accounts of the company’s employees, according to the imposed regulations and schedule;
• We mention that for this approach, specific payroll software and dedicated platforms are used by specialists in the field. 

We invite you to discuss more about payroll in Russia with one of our Russian specialists. We have a dedicated team of accountants in Russia who can be hired for your business in this country.

What is payroll reporting and compliance in Russia?

The Russian payroll closing process involves reporting and compliance. In this phase, all the necessary tax forms are returned, depending on the deadline, deductions are made where appropriate, with the withholding of social insurance contributions. This step is extremely important in payroll in Russia, so we recommend our team of company formation specialists for more information and support.

Salaries and contributions in Russia

Around RUB 16,000 (USD 208) is the minimum wage in Russia. However, there are regions and cities where this salary differs. Thus, in Saint Petersburg, there are salaries that can reach or exceed the amount of RUB 19,000, while in Moscow there are salaries of over RUB 20,000. Regarding the contributions paid by the company, we list:

• medical insurance – 0.1% contribution;
• the pension fund – 6% contribution;
• accident insurance – 0.02% contribution;
• social insurance – 1.5% contribution.

We mention that such contributions are calculated at the gross salary per economy. On the other hand, overtime payment is considered when calculating the salaries in the firm.

In addition to the mandatory social contributions, payroll in Russia requires employers to calculate and withhold personal income tax (PIT) from their employees’ wages. The standard PIT rate in Russia is 13% for residents. Non-residents are subject to a higher rate – 30%. It’s crucial for businesses to comply with PIT filing requirements and ensure that all taxes are deducted and remitted to the Federal Tax Service (FTS).

In Russia, certain types of bonuses and employee benefits are taxable. For example, performance bonuses are subject to PIT, and any employer-provided housing or transportation allowances may also be considered taxable income. It’s essential for businesses to understand the full tax implications of these benefits to avoid unexpected liabilities. Our specialized accountants in Russia can offer relevant support in this matter.

If you are interested in payroll services in Russia, our specialists in the field can offer you the necessary support for the company you own. 

Employment contract in Russia

According to the Employment Law in Russia, when a job is accepted, an employment contract is concluded, either part-time or full-time. Such a contract must contain information about the employing company, the type of activities, working hours and conditions, internal regulations, as well as remuneration. Also, an employment contract must stipulate whether it is for a fixed or indefinite period, plus general rules for ceasing such a contract.

A probation period (usually up to 3 months) may be specified in the contract. During this period, the employer has the opportunity to assess the employee’s performance. If either party is dissatisfied, the contract can be terminated with a simpler procedure than for permanent employment.

The contract should also specify the primary location where the employee is expected to perform his/her duties. If applicable, it should also outline any terms for relocating to different locations or traveling for work.

If you plan to open a company in Russia and start an employment procedure, you can rely on the support of our Russian company incorporation specialists to have a better understanding of the contractual matters.

Foreign workers and payroll in Russia

When employing foreign workers in Russia, companies must comply with Russian labor laws as well as the specific tax and payroll regulations applicable to non-resident employees.

These employees are subject to unique rules regarding: their work contracts, tax contributions, and compliance with immigration laws.

Foreign nationals who wish to work in Russia typically need a work visa. This visa is generally issued for a duration of up to one year, after which it must be renewed. In addition to a work visa, foreign workers must also have a work permit in Russia. Employers are responsible for applying for this permit on the employee’s behalf.

Russia has signed double taxation treaties with several countries, in order to prevent foreign employees working in Russia from being taxed twice on the same income. Under these agreements, a foreign employee may be exempt from paying taxes in his/her home country or benefit from reduced Russian tax rates, depending on the specifics of the treaty.

If company incorporation in Russia involves hiring foreign employees for your business, our specialized agents can help with more information on the subject.

Employment in Russia

Russia is an attractive country in terms of workforce, and foreign companies in this country enjoy an advantageous tax system in this regard. Here are some interesting statistical data about employment in Russia:

• In 2023, over 81 million workers – 15 years of age and above – were registered;
• Around 13 million workers were registered in the wholesale and retail industry in 2023;
• In 2024, an unemployment rate of 3.1% was registered.
• Employment rate in Russia was, on average, 62.10% from 2008 until 2024.

We invite you to contact our team of local agents, including our accountants in Russia, for all the information that interests you.