A practical guide to employing foreign nationals remotely in Russia and Russian employees working remotely for foreign companies — personal income tax…
Remote work involving Russia has always been a complex tax and employment law question. Before 2024, the same worker could face radically different tax treatment depending on how many days they had spent in Russia that year — creating administrative burdens for employers and significant uncertainty for employees who travelled frequently.
The 2024 and 2025 legislative changes eliminated this uncertainty for most common arrangements. The trade-off is that Russian-source income is now taxed at Russian PIT rates for remote employees regardless of where they physically sit — which has created new withholding obligations for Russian employers and, for contractors, a new category of Russian-source income that did not exist before 2025.
Remote work involving Russia covers four distinct scenarios, each with different tax and labour law treatment:
Before 2024, the personal income tax treatment of remote workers employed by Russian companies depended entirely on tax residency — itself a function of how many days the employee had spent in Russia during the calendar year. An employee who had left Russia and spent more than 183 days abroad in a year became a non-resident and their Russian salary was technically foreign-source income, subject to 30% PIT or potentially exempt under a double tax treaty.
This created a monitoring nightmare for employers and significant uncertainty for employees. Federal Law No. 389-FZ of 31 July 2023 resolved this by reclassifying the income:
From 1 January 2024, remuneration paid by a Russian employer (or a Russian branch of a foreign company) to a remote employee is Russian-source income — regardless of where the employee physically works
The applicable PIT rate is 13% on income up to RUB 5 million per year and 15% on income above that threshold
These rates apply regardless of whether the employee is a Russian tax resident or not
The employer is the tax agent and withholds PIT at source — there is no need to monitor where the employee is physically located
For Russian employers, the change eliminated the need to track employees' locations and residency status. The payroll calculation is now straightforward: apply 13%/15% regardless. This also means that Russian employees who relocated abroad after 2022 and were on 30% withholding (where employers were cautious) should now be on 13% — employers should review their payroll records for 2024 and correct any over-withholding.
One important exception: employees working in a separate subdivision of a Russian company that is registered abroad (e.g. a branch of a Russian company in Germany) are treated differently. Their income is still considered foreign-source income — the Russian-source income rule does not apply to them. This is a narrow exception that applies to Russian companies with overseas registrations, not to foreign companies operating in Russia.
From 1 January 2025, the Russian-source income concept was extended to payments under civil law contracts (contractor agreements). Previously, if a contractor worked under a civil law contract (не трудовой договор) rather than an employment contract, the residency-based rules still applied — and a contractor who was a non-resident and performed work outside Russia could argue that the income was foreign-source and not subject to Russian PIT.
From 2025, payments under a civil law contract are treated as Russian-source income — and therefore subject to 13%/15% PIT with employer withholding — if both of the following conditions are met:
The work is performed using Russian internet resources (domain names and network addresses in the Russian national domain zone, e.g. .ru) or software whose technical infrastructure is located in Russia
At least one of: the contractor is a Russian tax resident, or the payment is received on an account at a Russian bank
Most Russian employers use .ru domain names and Russian-hosted infrastructure for their internal systems. This means that virtually any contractor who accesses Russian company systems from abroad — and is either a Russian tax resident or receives payment to a Russian bank account — will have their contract income treated as Russian-source income from 2025. Employers should review all contractor arrangements and assess whether withholding obligations now apply.
Social insurance contributions (пенсионное, социальное и медицинское страхование) are a separate question from PIT. The rules depend on where the employee is located:
Russian Labour Code Articles 312.1–312.9 govern remote work (дистанционная работа). The rules apply to employees working under Russian employment contracts regardless of location. Key requirements:
The employment contract must explicitly provide for remote work — it cannot simply be an informal arrangement
The contract must specify the place of work — if the employee works from outside Russia, this should be stated
From 2024, if the contract does not specify the location as a foreign country, the Russian-source income rules apply and the employer must withhold PIT
Compensation for use of personal equipment and internet costs may be paid tax-free up to RUB 35 per working day (without supporting documentation) or actual costs (with documentation)
Remote employees are subject to the standard Russian Labour Code provisions on working time (40 hours per week maximum, regulated overtime) and rest periods. Where the employee works in a different time zone, the contract should address which time zone governs working hours and availability requirements.
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