Russian Taxes in 2026 for Foreign-Owned Companies
What foreign investors need to know about the 22% VAT rate, 25% profit tax, USN restrictions, payroll costs and cross-border payments.
Position as at 6 August 2026
Position as at 6 August 2026
A Russian-incorporated company generally pays the same domestic taxes regardless of whether its shareholders are Russian or overseas. Foreign ownership is nevertheless important when determining whether the company may use the Simplified Tax System, known as USN ("упрощённая система налогообложения", "УСН"), and how payments to foreign shareholders and group companies are taxed.
This article focuses on a Russian subsidiary — typically a limited liability company, or OOO — rather than a branch or permanent establishment of a foreign company.
This article focuses on a Russian subsidiary — typically a limited liability company, or OOO — rather than a branch or permanent establishment of a foreign company.
Tax | General rule |
VAT | 22% standard rate; reduced rates of 10% and 0% remain |
Corporate profit tax | 25% |
USN | Generally 6% of income or 15% of income minus expenses |
Employment personal income tax | Progressive rates from 13% to 22% |
Employer social contributions | Generally 30% up to the annual contribution base and 15.1% above it |
Dividends paid to a foreign company | Generally 15% withholding tax |
These are the general federal rates — regional incentives, industry-specific regimes and tax-treaty provisions may produce a different result.
VAT
Beginning from 2026, the standard Russian VAT ("NDS", "НДС", "налог на добавленную стоимость") rate is 22%. The 10% rate continues to apply to qualifying socially important goods, while the 0% rate remains available for qualifying exports and certain other transactions.
For contracts spanning 2025 and 2026, the date of supply is generally decisive. Goods, works or services supplied in 2026 are normally taxed at 22%, even where the contract was signed or an advance was received in 2025. A supply completed in 2025 does not become subject to 22% merely because payment is made in 2026.
Under the general VAT system, a company calculates output VAT on its taxable sales and may deduct qualifying input VAT charged by suppliers or paid on imports. The availability of a deduction depends on the nature of the transaction and the required supporting documents.
Contracts should clearly state whether prices include VAT, whether VAT is charged in addition to the agreed price and which party bears the consequences of a tax-rate change.
A further rule introduced by Federal Law No. 293-FZ takes effect on 1 October 2026. In certain continuing contracts affected by a subsequent change in tax law, where the seller becomes liable for VAT and the buyer cannot deduct it, VAT may have to be calculated from within the agreed contract price rather than added on top. The rule is subject to detailed statutory conditions concerning price adjustment and contractual mechanisms for allocating the additional tax burden. No invoice is issued in the cases covered by the new provision.
A Russian company purchasing electronic services from a foreign supplier will generally act as the Russian VAT tax agent. Depending on the place-of-supply rules, tax-agent VAT may also arise for other services purchased from abroad. This must be analysed separately from withholding tax on the payment to the foreign supplier.
For contracts spanning 2025 and 2026, the date of supply is generally decisive. Goods, works or services supplied in 2026 are normally taxed at 22%, even where the contract was signed or an advance was received in 2025. A supply completed in 2025 does not become subject to 22% merely because payment is made in 2026.
Under the general VAT system, a company calculates output VAT on its taxable sales and may deduct qualifying input VAT charged by suppliers or paid on imports. The availability of a deduction depends on the nature of the transaction and the required supporting documents.
Contracts should clearly state whether prices include VAT, whether VAT is charged in addition to the agreed price and which party bears the consequences of a tax-rate change.
A further rule introduced by Federal Law No. 293-FZ takes effect on 1 October 2026. In certain continuing contracts affected by a subsequent change in tax law, where the seller becomes liable for VAT and the buyer cannot deduct it, VAT may have to be calculated from within the agreed contract price rather than added on top. The rule is subject to detailed statutory conditions concerning price adjustment and contractual mechanisms for allocating the additional tax burden. No invoice is issued in the cases covered by the new provision.
A Russian company purchasing electronic services from a foreign supplier will generally act as the Russian VAT tax agent. Depending on the place-of-supply rules, tax-agent VAT may also arise for other services purchased from abroad. This must be analysed separately from withholding tax on the payment to the foreign supplier.
Corporate profit tax
The general corporate profit-tax rate is 25%. In 2026, it is normally divided into an 8% federal component and a 17% regional component. Special rates may apply to qualifying IT businesses, special economic zone residents and certain other categories, but foreign ownership alone does not create a reduced rate.
Taxable profit is broadly calculated as taxable income minus recognised expenses. Expenses must be economically justified, properly documented and connected with the company’s business.
Foreign-owned companies should pay particular attention to:
A contract and an invoice may not be sufficient to support a deduction. The Russian company should be able to demonstrate what was supplied, why the service was required, how the price was calculated and what commercial benefit the company received.
Tax losses may be carried forward. However, through 2030, previous losses generally cannot reduce the current positive tax base by more than 50%.
Taxable profit is broadly calculated as taxable income minus recognised expenses. Expenses must be economically justified, properly documented and connected with the company’s business.
Foreign-owned companies should pay particular attention to:
- management and consultancy fees paid to group companies;
- royalties and licence payments;
- intragroup interest;
- shared-service charges; and
- marketing, technical and IT services supplied from abroad.
A contract and an invoice may not be sufficient to support a deduction. The Russian company should be able to demonstrate what was supplied, why the service was required, how the price was calculated and what commercial benefit the company received.
Tax losses may be carried forward. However, through 2030, previous losses generally cannot reduce the current positive tax base by more than 50%.
Can a foreign-owned company use USN?
It depends.
A Russian company generally cannot use USN where one or more other legal entities own more than 25% of its capital. Therefore, a Russian subsidiary wholly owned by a foreign corporate parent will normally be ineligible.
Foreign corporate ownership of exactly 25% does not, by itself, violate this particular test. The restriction concerns participation by legal entities, so ownership by a foreign individual is not automatically disqualifying under this rule. All other USN conditions must still be satisfied, and statutory exceptions may apply to particular structures.
The main 2026 USN limits include:
Eligible companies may generally choose between paying 6% of income or 15% of income minus recognised expenses. Regional legislation may provide reduced rates for qualifying activities.
USN does not remove payroll obligations and no longer necessarily means exemption from VAT.
A Russian company generally cannot use USN where one or more other legal entities own more than 25% of its capital. Therefore, a Russian subsidiary wholly owned by a foreign corporate parent will normally be ineligible.
Foreign corporate ownership of exactly 25% does not, by itself, violate this particular test. The restriction concerns participation by legal entities, so ownership by a foreign individual is not automatically disqualifying under this rule. All other USN conditions must still be satisfied, and statutory exceptions may apply to particular structures.
The main 2026 USN limits include:
- annual income not exceeding RUB 490.5 million;
- residual value of qualifying fixed assets not exceeding RUB 218 million; and
- an average workforce of no more than 130 employees.
Eligible companies may generally choose between paying 6% of income or 15% of income minus recognised expenses. Regional legislation may provide reduced rates for qualifying activities.
USN does not remove payroll obligations and no longer necessarily means exemption from VAT.
VAT under USN
A USN taxpayer is generally exempt from VAT in 2026 where its income for 2025 did not exceed RUB 20 million. The exemption applies automatically; no separate application is normally required.
Where the company exceeded RUB 20 million in 2025, it became liable for VAT from 1 January 2026. Where its 2025 income was within the limit but cumulative income exceeds RUB 20 million during 2026, the VAT obligation generally begins from the first day of the following month.
Federal Law No. 228-FZ of 4 July 2026 preserved the RUB 20 million threshold for income earned in 2025–2028. The threshold is scheduled to fall to RUB 15 million for income earned in 2029 and RUB 10 million for income earned from 2030.
A USN taxpayer required to charge VAT may generally choose between:
For an existing USN taxpayer entering 2026, the initial special rate is determined by its 2025 income:
During 2026, the indexed thresholds of RUB 272.5 million and RUB 490.5 million are used to determine whether the taxpayer must move from the 5% rate to the 7% rate or loses the right to use the special USN VAT rates and USN itself.
The economically preferable option depends on the business model. Importers, distributors and manufacturers with substantial input VAT may benefit from the general 22% system because qualifying supplier and import VAT can be deducted. Service businesses with little input VAT may find the 5% or 7% rates more attractive.
Where the company exceeded RUB 20 million in 2025, it became liable for VAT from 1 January 2026. Where its 2025 income was within the limit but cumulative income exceeds RUB 20 million during 2026, the VAT obligation generally begins from the first day of the following month.
Federal Law No. 228-FZ of 4 July 2026 preserved the RUB 20 million threshold for income earned in 2025–2028. The threshold is scheduled to fall to RUB 15 million for income earned in 2029 and RUB 10 million for income earned from 2030.
A USN taxpayer required to charge VAT may generally choose between:
- the ordinary VAT rates, including 22%, with the right to deduct qualifying input VAT; or
- the special USN rates of 5% or 7%, without input VAT deductions.
For an existing USN taxpayer entering 2026, the initial special rate is determined by its 2025 income:
- 5% where 2025 income exceeded RUB 20 million but did not exceed RUB 250 million;
- 7% where 2025 income exceeded RUB 250 million but did not exceed RUB 450 million.
During 2026, the indexed thresholds of RUB 272.5 million and RUB 490.5 million are used to determine whether the taxpayer must move from the 5% rate to the 7% rate or loses the right to use the special USN VAT rates and USN itself.
The economically preferable option depends on the business model. Importers, distributors and manufacturers with substantial input VAT may benefit from the general 22% system because qualifying supplier and import VAT can be deducted. Service businesses with little input VAT may find the 5% or 7% rates more attractive.
Payroll taxes
Russian payroll normally consists of personal income tax withheld from employees and social contributions paid by the employer.
Personal income tax
For ordinary employment income, the 2026 progressive rates are:
These are marginal rates: the higher percentage applies only to the part of income exceeding the relevant threshold.
The default rate for most Russian-source income received by a non-resident individual is 30%. However, employment income of several categories of foreign workers is taxed under the 13–22% progressive scale irrespective of tax residence. These categories include nationals of Eurasian Economic Union states, highly qualified specialists, foreign nationals working under patents and certain qualifying remote workers of Russian companies.
Employers should therefore determine the employee’s tax residence, nationality, immigration status, place of work and the legal nature of each payment.
Annual taxable income | Marginal rate |
Up to RUB 2.4 million | 13% |
RUB 2.4 million to RUB 5 million | 15% |
RUB 5 million to RUB 20 million | 18% |
RUB 20 million to RUB 50 million | 20% |
Above RUB 50 million | 22% |
These are marginal rates: the higher percentage applies only to the part of income exceeding the relevant threshold.
The default rate for most Russian-source income received by a non-resident individual is 30%. However, employment income of several categories of foreign workers is taxed under the 13–22% progressive scale irrespective of tax residence. These categories include nationals of Eurasian Economic Union states, highly qualified specialists, foreign nationals working under patents and certain qualifying remote workers of Russian companies.
Employers should therefore determine the employee’s tax residence, nationality, immigration status, place of work and the legal nature of each payment.
Employer social contributions
For an ordinary employer in 2026, the general unified contribution rate is:
The contribution base is calculated separately for each employee on a cumulative basis from the beginning of the year. Occupational accident insurance is charged separately, generally at rates between 0.2% and 8.5%, depending on the employer’s professional-risk category.
Reduced contribution rates for small and medium-sized enterprises are no longer universally available. From 2026, the reduced tariff may depend on the company’s principal activity, inclusion of that activity in a government-approved list and satisfaction of a qualifying-revenue test.
- 30% on annual remuneration up to RUB 2,979,000 per employee; and
- 15.1% on remuneration above that amount.
The contribution base is calculated separately for each employee on a cumulative basis from the beginning of the year. Occupational accident insurance is charged separately, generally at rates between 0.2% and 8.5%, depending on the employer’s professional-risk category.
Reduced contribution rates for small and medium-sized enterprises are no longer universally available. From 2026, the reduced tariff may depend on the company’s principal activity, inclusion of that activity in a government-approved list and satisfaction of a qualifying-revenue test.
Minimum contributions for a company director
From 2026, special minimum-contribution rules apply to the individual acting as the sole executive body of a commercial company — commonly its general director — and recorded in the Unified State Register of Legal Entities as entitled to act for the company without a power of attorney.
For a full month, the contribution base generally cannot be lower than the federal minimum monthly wage of 27,093 rubles. At the standard 30% rate, this produces minimum contributions of 8,127.90 rubles per month.
Subject to statutory exceptions, the rule may apply even where the director receives no salary, has no employment contract or the company conducts no active business. Where the director exercises authority for only part of a month, the minimum base is calculated proportionately.
For a full month, the contribution base generally cannot be lower than the federal minimum monthly wage of 27,093 rubles. At the standard 30% rate, this produces minimum contributions of 8,127.90 rubles per month.
Subject to statutory exceptions, the rule may apply even where the director receives no salary, has no employment contract or the company conducts no active business. Where the director exercises authority for only part of a month, the minimum base is calculated proportionately.
Payments to foreign shareholders and group companies
Payments abroad require a separate Russian withholding-tax analysis.
Dividends paid by a Russian company to a non-domestic corporate shareholder are generally subject to 15% withholding tax, unless valid treaty relief or another applicable rule provides a lower rate.
For other taxable Russian-source income of a foreign organization that is not attributable to a Russian permanent establishment, 25% is the general domestic withholding rate unless the Tax Code provides a special rate. Examples:
The 25% rate does not apply automatically to every foreign invoice. Ordinary purchases of goods and many services from unrelated overseas suppliers may fall outside Russian withholding tax where the supplier has no Russian permanent establishment and the payment is not included in the taxable Russian-source categories listed in Article 309.
Russia has suspended significant provisions of tax treaties with a number of jurisdictions. Consequently, a historic treaty rate should not be assumed to remain available. Before paying dividends, interest, royalties or service fees abroad, the Russian company should verify the current status of the relevant treaty article, the foreign recipient’s tax-residence documents and its entitlement to the income.
Dividends paid by a Russian company to a non-domestic corporate shareholder are generally subject to 15% withholding tax, unless valid treaty relief or another applicable rule provides a lower rate.
For other taxable Russian-source income of a foreign organization that is not attributable to a Russian permanent establishment, 25% is the general domestic withholding rate unless the Tax Code provides a special rate. Examples:
- 15% for certain services supplied by a related foreign company under Article 309(1)(9.4) of the Russian Tax Code; and
- 10% for specified income connected with international transportation.
The 25% rate does not apply automatically to every foreign invoice. Ordinary purchases of goods and many services from unrelated overseas suppliers may fall outside Russian withholding tax where the supplier has no Russian permanent establishment and the payment is not included in the taxable Russian-source categories listed in Article 309.
Russia has suspended significant provisions of tax treaties with a number of jurisdictions. Consequently, a historic treaty rate should not be assumed to remain available. Before paying dividends, interest, royalties or service fees abroad, the Russian company should verify the current status of the relevant treaty article, the foreign recipient’s tax-residence documents and its entitlement to the income.
Need a Clear Route Through Russian Tax Rules?
Russian tax compliance is rarely just a matter of applying the headline rates. Ownership structure, contract wording, payroll arrangements and the classification of cross-border payments can materially change the result. As a Russian lawyer with more than 20 years of professional experience, I assist foreign investors and foreign-owned companies with VAT and profit-tax issues, USN eligibility, payroll risks, intragroup transactions, withholding tax and disputes with the Russian tax authorities. I provide realistic, legally grounded advice in clear English, helping clients identify risks early, structure transactions correctly and protect their interests in Russia.
