It’s no secret that real estate can be not only a place to live, but also a source of income. For example, real estate that is rented out or sold some time after purchase can bring its owner a good income.
However, we must not forget that any receipt of income, including from real estate, entails tax consequences for the recipient of such income. It is worth remembering that income received from owning real estate may be of interest not only to the tax authority of the country where the real estate is located, but also to the tax authority of the state that considers the owner of the property to be its tax resident, if these countries do not coincide.
Today, a person is considered a tax resident of Russia if he spent more than 183 days on Russian territory during the year. Please note that in the near future this period is planned to be reduced to 90 days.
Thus, income received by tax residents of Russia in a foreign country is subject to taxation in Russia at a rate of 13%. For non-payment of tax, a person can be fined 20% of the amount of unpaid tax.
The Russian tax authority can find out about the receipt of income regardless of the country in which the bank to which the income was received is located. This became possible thanks to the automatic international exchange of financial information, as well as the interaction of the tax authorities of Russia and other countries within the framework of international cooperation.
There is good news: if a person is a tax resident of Russia and received income in Spain, on which he paid tax in Spain, then the tax payable in Russia can be reduced by the amount of tax paid in Spain. To do this, you need to submit a tax return to the Russian tax authority and provide documents confirming the payment of tax in Spain. Such rules may also apply to income earned in other countries with which Russia has entered into tax treaties.
If the income received can be attributed to income from business activities, then such business activities must be registered with the Russian tax authorities as the activities of an individual entrepreneur or as the activities of a legal entity. Conducting business activities without registration with the tax authorities entails prosecution in the form of a fine.
Also, both owning foreign real estate and owning a bank account or deposit in a bank located outside of Russia is a common occurrence. Such accounts may be credited with income from the rental and sale of real estate, income from the ownership of securities and other income.
Russian citizens who live on Russian territory for more than 183 days during the year are required to declare their accounts, otherwise they may be fined. If illegal currency transactions were carried out on the account, the amount of the fine may range from 75% to 100% of the amount of the illegal transaction.
Undeclared foreign bank accounts and deposits can be legalized until February 29, 2020 under an amnesty. An amnestied bank account, as well as all transactions on it, are considered legal on the date of submission of documents for amnesty. Also, Russia will not require payment of taxes on income from amnestied accounts if such income was received before 2018. Income received in 2018 must be declared, and the tax can be reduced by the amount of foreign tax.