The Federal Tax Service of Russia (FNS) has announced significant changes to the system for determining tax residency status, aimed at strengthening control and automating the process. These updates may materially affect the financial position of individuals who earn income or own assets in Russia while frequently staying abroad.
Who should pay attention?
This information is critically important for:
Individuals receiving income from the Russian Federation
Owners of property located in Russia
Citizens regularly spending extended periods outside Russia, including expats, digital nomads, holders of multiple passports, remote employees, and company beneficiaries
What is changing in tax residency determination?
The key change will be the automation of tax residency status determination. Under the Federal Tax Service’s 2025 roadmap, residency status will be assigned automatically based on border crossing data.
This information will be transmitted directly to the “Nalog-3” automated tax system from the “Mir” system used for passport control.
When will the changes take effect?
The project is currently being implemented, and it is expected that by 2026 the new system will be fully operational, making manual day-counting and potential manipulation of residency status practically impossible.
Why is this important?
Currently, the calculation of days spent in Russia is largely manual, which in some cases creates room for incorrect or even abusive determination of tax residency.
The new system aims to eliminate these gaps.
Incorrect determination of tax status — whether intentional or accidental — may lead to serious financial consequences:
Tax underpayment: significant additional tax liabilities owed to the budget
Penalties and fines: accrual of penalties and fines for each day of delay and incorrectly paid tax
Higher personal income tax rate: for non-residents the rate is 30%, while for residents it ranges from 13% to 22%. The difference can be substantial
What should be done to minimize risks?
In light of increased tax authority control, it is essential to be proactive:
Accurate tracking: maintain strict records of days spent in Russia and abroad
Planning: schedule business trips, relocations, and major financial transactions in advance, taking into account potential changes in tax residency status
Expert consultation: in case of uncertainty regarding tax status or obligations, it is strongly recommended to seek professional advice from tax consultants or legal experts. Proper guidance helps avoid significant financial risks and ensures compliance with applicable law