Article 208 of the Tax Code of the Russian Federation: income from sources in the Russian Federation and income from sources outside

To understand whether an individual will pay personal income tax, one should establish both his tax status and the objects from which he makes a profit. The latter are defined in Art. 208, 209 of the Tax Code of the Russian Federation. Moreover, the legislation provides for a certain distinction between the amounts subject to taxation. Their classification is determined by Article 208 of the Tax Code of the Russian Federation "Income from sources in the Russian Federation and income from sources outside the country." It also provides categories of payments that are not subject to taxation. Consider further Art. 208 of the Tax Code with commentary.

Main categories

Article 208 of the Tax Code of the Russian Federation, paragraph 1, to the proceeds received from objects on the territory of Russia, relates:

1. Interest and dividends paid by domestic companies as well as individual entrepreneurs or foreign organizations from the activities of their separate divisions in the Russian Federation.
2. Payments listed upon occurrence of insured events. These include, inter alia, periodic payments (annuities, annuities) or funds received in connection with the participation of policyholders in the investment income of the insurer, redemption received from a domestic company or foreign company from the activities of its unit in Russia. Taxation under art. 208 of the Tax Code of the Russian Federation are also subject to amounts transferred to the assignees of insured citizens in cases established by law.
3. Revenues from the use of related and copyright.
4. Profit earned from the rental of property or other use of objects located in Russia.

Revenues from sales

In paragraph 1 of Art. 208 of the Tax Code of the Russian Federation, it was established that the proceeds from the sale of the assets received from objects on the territory of Russia are:

1. Property located in the country.
2. Shares and other securities, contributions to the capital of companies in Russia.
3. The rights of claim to domestic enterprises or foreign companies in connection with the work of their separate divisions.
4. Shares, securities, contributions to the capital of organizations received from membership in an investment partnership.
5. Other property owned by an individual and located in Russia.

Rewards

In paragraph 1 of Art. 208 of the Tax Code of the Russian Federation to payments received in Russia include the amounts:

1. For the performance of labor or other duties, work performed, services provided, other actions performed in the country. Directors ’remuneration and other similar receipts received by members of the administrative body of a company that is a tax resident of a country whose location (control) Russia is acting as are recognized as payments arising from sources in the Russian Federation. Moreover, it will not matter where exactly the administrative duties assigned to these entities were actually fulfilled, or where the amounts came from.
2. Remuneration and other income received by crew members of ships flying the flag of Russia.

Scholarships, benefits, pensions

The specified payments, as well as similar receipts received by the taxpayer in accordance with applicable law or transferred by a foreign company in connection with the work of its separate subdivision, are considered under paragraph 1 of article 208 of the Tax Code of the Russian Federation profit from objects located in Russia. At the same time, an important nuance must be taken into account. In accordance with Art. 217, paragraph 2, state pensions are not subject to personal income tax. Additional payments assigned by enterprises and deducted at their expense are subject to taxation under the general rules at a rate of 13%. According to Art. 217, p.11 most of the scholarships are exempted from personal income tax.

Profit from the operation of facilities

Article 208 of the Tax Code of the Russian Federation (the current edition) includes the amounts received from use as income subject to taxation:

1. Any transport. Including aircraft, sea, river vessels, cars operated for transportation through the territory of Russia, to or from the country.
2. Pipelines, power lines, wireless / fiber optic communication lines, computer networks and other means of communication.

Taxation under art. 208 of the Tax Code of the Russian Federation are also subject to fines and other sanctions imputed for simple transport at unloading / loading points in Russia.

Exceptions

They are established in paragraph 2 of Art. 208 of the Tax Code of the Russian Federation. Incomes that are not received on the territory of Russia include the income of an individual arising as a result of foreign trade operations (including exchange of goods) solely in his own interests and on his own behalf. Moreover, they should relate to the acquisition / purchase of products, the provision of services, the performance of work in the country, as well as the import of goods into it. This is the provision of Art. 208 of the Tax Code of the Russian Federation applies to import operations in the customs regime of release for domestic consumption when implementing the following provisions:

1. Delivery is made by an individual not from storage places (including customs warehouses) located in Russia.
2. Products are not sold through separate divisions of a foreign company operating in the Russian Federation.

If at least one of the specified conditions is not met, the proceeds from the facilities in Russia related to the sale of products will recognize a portion of the profits related to the activities of the citizen on its territory. In the case of further sale of goods purchased by an individual in connection with foreign trade operations provided for in paragraph 2 of Art. 208 of the Tax Code of the Russian Federation, the funds subject to taxation will include any proceeds. They will be considered, including proceeds from resale, pledges of rented or operated warehouses and other places for storing products owned by the citizen and located in the country. An exception is the amount received from the sale abroad of Russia from the customs warehouse.

P. 3 Art. 208 of the Tax Code

This clause defines the receipts that are considered to be received from objects located abroad. To them Art. 208 of the Tax Code relates:

1. Interest and dividends paid by a foreign company, other than those specified in clause one, as well as the amount of securities provided, received from the issuer of depositary (Russian) receipts.

2. Amounts transferred upon the occurrence of insured events by foreign organizations, other than those specified in paragraph 2 of the rule in question.

3. Funds received from the use of related / copyright rights abroad.

4. Profit from leasing or other use of property located on the territory of a foreign state.

5. Sales revenue:

• real estate located abroad;
• securities, contributions to the capital of firms in foreign countries;
• rights of claim to foreign companies, except those specified in paragraph one of the norm;
• other facilities not located in Russia.

6. Remuneration received in the implementation of labor or other professional activities, work performed, services rendered, actions performed abroad. Payments to directors and other similar income received by members of the administrative structure in a foreign company are considered income from sources located outside the Russian Federation. Moreover, there will be no significance in the place in which the duties were actually performed.

7. Benefits, scholarships, pensions and other similar amounts received by the subject in accordance with the legislation of a foreign country.

eight.The proceeds from the use of any transport, including aircraft, watercraft, cars, sanctions, fines for the delay of such vehicles at the unloading / loading points, except for those specified in sub. 8 points of the first considered norm.

9. Profit of a controlled foreign company, the amounts of which are determined by the provisions of domestic legislation on fees and taxes, for individuals who are recognized as controlling entities.

10. Other amounts received by the payer in carrying out activities abroad of Russia.

Additionally

If the provisions of Art. 208 of the Tax Code of the Russian Federation do not allow unambiguous recognition of the amounts received by the entity as receipts from objects located on the territory of Russia or beyond its borders, the classification of such profit by one or another category is carried out by the Ministry of Finance. Similarly determined and shares in such funds. In paragraph 5 of Art. 208 of the Tax Code of the Russian Federation it is established that the amounts received from operations related to property and non-property relations of citizens considered as relatives (close) or family members are not recognized as taxable income, according to the UK. The exception is the profit arising from the conclusion of labor agreements or civil contracts between these persons.

Explanations

The definition of the dividend used for taxation purposes is given in Art. 43 of the Tax Code. It is any profit received by the participant (shareholder) from the company in the process of distributing the proceeds remaining after deduction of obligatory budget payments to the shares belonging to it in proportion to all contributions to capital. Personal income tax is subject to interest and dividends received from a foreign enterprise related to the operation of its separate division in Russia. Real estate is considered plots of land, subsoil, individual water bodies, as well as everything that is firmly connected with the surface. The latter are objects whose movement without causing disproportionate harm to their purpose is not possible. Real estate includes, among other things, forest, perennial plantations, structures, buildings, ships, aircraft, space objects. Securities are government bonds, promissory notes, checks, savings and certificates of deposit, shares, bill of lading, bearer passbook and other documents defined by law.

Article 208 of the Tax Code of the Russian Federation: judicial practice

A lot of disputes arise regarding the need to withhold personal income tax from the advance received by an individual in connection with the execution of a civil contract. In sub. 6.1 of the considered norm it is established that the profit received from objects in Russia includes, among other things, remuneration for the services provided, work performed. Along with this, sub. 1 clause 1 of Article 223 of the Tax Code determines that the date of receipt of income in cash is the day of payment itself. According to Art. 226 (paragraph 4), the tax agent must withhold personal income tax during the actual implementation of the transaction. In this regard, part of the courts makes decisions that the collection of tax on advance payments received under a civil law contract is not carried out. This is due to the fact that to assess the benefits of a citizen in this case is possible only after acceptance of work. This, in turn, means that an advance cannot be considered income until the signing of the relevant acceptance certificate.

Specificity of the norm

In determining the object of taxation, the territory in which the taxpayer performed duties under the terms of the employment contract is of great importance. For example, if a citizen received remuneration outside the Russian Federation, while not being a tax resident of the country, then this profit cannot be attributed to income from sources in Russia. Accordingly, the subject does not have an obligation to pay personal income tax. In practice, there may be a situation where it is impossible to uniquely determine the source of income. In such cases, the decision of the issue lies with the Ministry of Finance.The taxpayer or, in established cases, the agent in such a situation is obliged to send a corresponding request to the Ministry. It should be noted that from January 1, 2015, paragraph three of Art. 208, which provides a list of types of income from sources outside the country, is supplemented by a new category. In accordance with sub. 8.1, introduced by Federal Law No. 376, to the profit of this type include the amount received from the controlled company. This provision applies to specific citizens. They, in accordance with the Tax Code, should be recognized as controlling persons of such companies.

Conclusion

The practice of applying the considered norm shows that courts often make different decisions in similar situations. As a rule, this is due to the complexity of a particular situation. Legislative provisions are also important, allowing you to remove from the entities the obligation to pay personal income tax on certain types of profit. These, in particular, include state pension income, some scholarships. In general, when applying the provisions of the problem does not arise. Nevertheless, to exclude disputes with the Federal Tax Service, it is necessary to carefully study the rate and clearly determine the source of your income. In order to avoid difficulties in calculating taxes, experts recommend seeking advice from the tax inspectorate. Late payment or evasion of personal income tax shall entail liability.