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25/11/2018

PARTICULARITIES OF REGISTRATION OF FOREIGN CITIZENS AT WORK

According to the Law #115-FZ, foreign citizens have the right to work in the territory of the Russian Federation on the basis of a work permit or a patent. In practice, the employer takes part in the obtaining of a work permit, such permit indicates the name of the employer, the date of issue of a work permit, its validity and the territory where the employee can work.

According to article 13.3. Law #115-FZ, foreign citizens who arrived in the Russian Federation in the order that does not require a visa, can carry out work on the basis of a patent (for example, citizens of Ukraine).

Since 2015, The Treaty on the Eurasian economic Union has come into force, according to which citizens of the Republics of Belarus, Kazakhstan, Armenia and Kyrgyzstan are partially equal to citizens of the Russian Federation in employment. Citizens of the EAEU have an advantage-they do not need to obtain a work permit (clause 1 of article 97 of the EAEU Treaty).
As for the documents to be provided by a foreign employee, in addition to the standard documents specified in article 65 of the Labor code, as well as work permits, such employee must provide the employer:
* the contract (policy) of voluntary medical insurance at the conclusion of the employment contract with the foreign citizen or stateless person temporarily staying in the Russian Federation. The specified policy can be issued both in the territory of the Russian Federation, and abroad (on condition of coverage of the territory of the Russian Federation), thus, it has to provide primary health care and specialized medical care in an emergency form;
* temporary residence permit or residence permit in the Russian Federation.

In addition to the verification of presence of the above-mentioned documents, the employer has the obligation to register a foreign citizen for migration purposes and to submit a number of notifications related to the conclusion of an employment contract.
The employer hiring a foreign citizen is considered as a host party, in this connection, in accordance with part 3 of article 20 of the Federal law dated 18.07.2006 #109-FZ it needs to put data on foreign citizens registration at the place of stay, that is their legal address.

Point 8 of Art. 13 of the Law #115-FZ establishes the obligation of the employer to notify territorial authority in the field of migration on the conclusion and the termination of the employment contract with the foreign citizen.
Besides, concerning foreign citizens-highly qualified specialists it is necessary to notify on the actual salary payment – quarterly, no later than the last working day of the month following the reporting quarter (p. 13 of Art. 13.2 of the Law # 115-FZ);

The next important issue is the amount of personal income tax and contributions to the funds for foreign employees.

Foreign citizen PFR FOMI FSS
Temporarily staying 22% — 1,8%
Temporarily residing 22% 5,1% 2,9%
Permanently residing 22% 5,1% 2,9%
Foreign citizen – a highly skilled specialist who are temporarily staying in territory of the Russian Federation is exempted from paying contributions to the funds, with the exception of the contribution of FS to the insurance against accidents in the workplace.
If a highly qualified specialist has a temporary residence permit or a residence permit in the Russian Federation, the contributions to the funds will be 22% in the PFR and 2.9% in the FSS.

According to the Law #115-FZ, foreign citizens have the right to work in the territory of the Russian Federation on the basis of a work permit or a patent. In practice, the employer takes part in the obtaining of a work permit, such permit indicates the name of the employer, the date of issue of Rea...

25/11/2018

Legal aspects of personal data processing

Personal data – any information relating directly or indirectly to a specific or identifiable individual (subject of personal data).

Operator – a state body, municipal body, legal entity or individual, independently or jointly with other persons organizing and (or) carrying out the processing of personal data, as well as determining the purposes of processing of personal data, the composition of personal data to be processed, actions (operations) performed with personal data.

Processing of personal data – any action (operation) or a set of actions (operations) performed using automation or without the use of such means with personal data, including the collection, recording, systematization, accumulation, storage, clarification (update, change), extraction, use, transfer (distribution, provision, access), depersonalization, blocking, deletion, destruction of personal data.

According to Art. 24 of the Constitution of the Russian Federation, the collection, storage, use and dissemination of information about the private life of a person without his consent is not allowed.
Art.6of the law No. 152-FZ dated 27.07.2006 sets cases of PD processing without the consent of the PD subject.
Prohibited data. The law prohibits to receive and process PD, relating to certain categories of his membership in public associations or trade Union activities (paragraph 4, 5 of article 86 of the Labour code), data relating to race, national origin, political, religious and other beliefs of the worker, his private life, health, love life (p. 1 article 10 of the law No. 152-FZ), biometric data – that is, the information describing the physiological characteristics and on the basis of which to establish his identity (p. 1 of article 11 of the law No. 152-FZ).

The purpose of PD processing. In accordance with article 86, paragraph 1, of the Labour code, the processing of an employee’s PD may be carried out solely for the purpose of ensuring compliance with laws and other regulatory legal acts, assisting employees in finding employment, training and promotion, ensuring personal security, monitoring the quantity and quality of work performed and ensuring the safety of property. In addition, in accordance with the principles of PD processing set out in article 5 of law No. 152-FZ, the scope and nature of PD should correspond to the purposes of their processing, which are defined and declared in advance when collecting data. Therefore, when drawing up the list of PD required by the employer, it should be specified for what specific purposes certain data are required.

Requiring PD from the third parties. All PD of the employee should be received from him (p. 3 of Art. 86 of the Labor code). Exceptions are cases where the PD is necessary for the employer in connection with the employment relationship, and the employee cannot provide them, but at the same time these data may be obtained from a third party. In this case, the employer is obliged to notify the employee and obtain his / her written consent to receive the data.
Internal data transfer. The order and the purposes of transfer of PD within the company must be established in the local regulation, which must be introduced under the signature of each employee. The right of access to employees’ PD can only be granted to persons specially authorized by the employer. Moreover, these persons are entitled to receive only the data that they need to perform specific functions (Art. 88 of the Labor code).

The transfer of data to third parties. The employee’s PD may be disclosed to third parties only with his / her written consent (article 88 of the Labor code). There are two exceptions to this rule: first, when it is necessary to prevent a threat to the life and health of an employee, and second, in other cases provided for by the Labour code or other Federal laws.

Data storage on the territory of the Russian Federation (article 18 of the law № 152-FZ)
When collecting PD, including through the information and telecommunication network “Internet”, the operator is obliged to provide record, systematization, accumulation, storage, specification (updating, change), extraction of personal data of citizens of the Russian Federation with use of the databases which are in the territory of the Russian Federation.

Cross-border transfer of PD (Art. 12 of law No. 152-FZ) is possible in the following cases:
* consent in writing of the personal data subject to cross-border transfer of his / her personal data;
• stipulated by international treaties of the Russian Federation;
* provided by Federal laws, if necessary to protect the foundations of the constitutional system of the Russian Federation, to ensure national defense and state security, as well as to ensure the security of sustainable and safe functioning of the transport complex, to protect the interests of the individual, society and the state in the field of transport complex from acts of illegal interference;
* ex*****on of the agreement to which the personal data subject is a party;
* protection of life, health, other vital interests of the personal data subject or other persons if it is impossible to obtain the consent in writing of the personal data subject.

Personal data – any information relating directly or indirectly to a specific or identifiable individual (subject of personal data). Operator – a state body, municipal body, legal entity or individual, independently or jointly with other persons organizing and (or) carrying out the processing of...

25/11/2018

EXHAUSTION OF EXCLUSIVE TRADEMARK RIGHTS IN RUSSIA

This principle means that after the sale of goods marked with a trademark, either by the right holder himself or by another person with his consent, the right holder loses the wright to control the further sale of such goods, as well as any other form of its commercial use.

The principle of exhaustion of rights is inherently territorial, depending on the territory of the introduction of goods into circulation, distinguish between national, regional, international and mixed principles of exhaustion of the right.

At the moment, the relevant governing document is the Treaty on the Eurasian economic Union dated 29th of May, 2014, namely – article V of the Protocol on the protection and enforcement of intellectual property rights, which retained the regional principle of exhaustion of exclusive rights to the trademark.

The principle of exhaustion of trademark rights is closely related to the problem of “parallel import” (import of the original goods without the permission of the right holder).

At the moment, the judicial practice on the exhaustion of trademark rights and the prohibition of parallel import is well-established. Court decisions are made with reference to the national (or regional) principle of exhaustion of trademark rights.

The courts justify the fact that the import into the territory of the Russian Federation of goods with a trademark placed on it, the use of which was not given the consent of the owner, is a form of use of the trademark, such import is qualified as a violation of exclusive rights. Meanwhile, the arguments of the defendants that the goods are rejected.

Judicial practice develops in favor of the right holders, the courts agree that in accordance with art. 1484 and 1487 of the civil code import into the territory of the Russian Federation of goods with trademark on them is an independent way of using this trademark; the importer of such goods into the territory of the Russian Federation without the consent of the right holder, thus carries out unauthorized use of such trademark and, therefore, is a violator of the exclusive rights of the plaintiff, even if the goods are original.

At the moment there are ongoing he discussions on parallel import, the replacement of the national principle by the international principle of exhaustion of the right to a trademark is being lobbied.
The issue remains relevant, as there is a conflict between the free transfer of goods and the territorial principle of exhaustion of trademark rights, which prevents the expansion of trade opportunities. On the one hand, in case of preservation of the national principle of exhaustion of trademark rights, Russia will look like a more attractive market for foreign trade houses, as right holders will be more protected and will have more tools to deal with parallel importers. On the other hand, the application of the international principle of exhaustion of rights can give a positive impetus to the development of competition and lower prices on goods.

This principle means that after the sale of goods marked with a trademark, either by the right holder himself or by another person with his consent, the right holder loses the wright to control the further sale of such goods, as well as any other form of its commercial use. The principle of exhausti...

15/11/2018

Mandatory registration of foreign companies providing services in electronic form

Features of taxation of foreign companies providing services in electronic form were introduced in the tax code of Russian Federation on January 01, 2017. Initially, the «tax on Google» was directed to foreign companies without presence in Russia, selling services in electronic form to buyers – individuals.

The services in electronic form according to the art. 174.2 of the tax code include: granting the rights to use computer programs (including computer games), databases through the Internet; rendering advertising services in the Internet, providing the advertising space in the Internet; rendering services in placement of offers on acquisition of goods in the Internet; granting rights to use electronic books (publications) and other electronic publications through the Internet, including by providing remote access to them for viewing or listening through the Internet.

Such companies had to be tax registered in the Russian Federation, maintain a register of buyers of services, report on income and pay VAT.
At October 31st, 2018, only 174 foreign companies rendering services in electronic form were registered in tax authority as VAT payers.

Since January 01, 2019, the tax code will enter into force another set of amendments relating to work with foreign companies providing services in electronic form.

The essence of the changes:

Foreign companies providing services in the electronic form will include not only those companies that provide services to individuals in the territory of the Russian Federation, but also those that provide services to legal entities in the territory of the Russian Federation.

What a foreign company should do:

1. The providers of electronic services for legal entities having a direct contract and settlements with the buyer of services must be registered in the tax authority of the Russian Federation in the period up to 15.02.2019 (p.4.6. of article 83 of the tax code).

Exceptions: if there is an intermediary between the buyer and the seller of services who will act as a tax agent (can act on the basis of an Agency agreement/ order/ Commission, etc.) and transfer payments to the tax office for a foreign company (p. 10 of article 174.2 of the tax code).

Registration is possible by submitting an application on the website https://lkioreg.nalog.ru/ru. After submitting the application, the contact person will receive a login and password to access the account, as well as a certificate of registration.

2. To report and pay the VAT.

A foreign company must submit reports through its personal account on a quarterly basis, by the 25th day following the last month of the quarter. Payment of tax must be made within the same period.
The tax will be calculated based at the rate of 15.25%.

3. In addition to registration, it is recommended to open an account in a Russian Bank in order to pay the VAT and be sure that the tax service received it.

https://lmasupport.com/en/mandatory-registration-of-foreign-companies-providing-services-in-electronic-form/

Features of taxation of foreign companies providing services in electronic form were introduced in the tax code of Russian Federation on January 01, 2017. Initially, the «tax on Google» was directed to foreign companies without presence in Russia, selling services in electronic form to buyers – ...

03/11/2018

Risks of re-qualification of fixed-term contracts

What can happen if the employer does not comply with the restrictions for the conclusion of fixed-term employment contracts, and enters into a fixed-term employment contract, instead of an employment contract for an indefinite period? According to the art. 59 of the Labor code, an employment contract concluded for fixed-term period in the absence of sufficient grounds established by the court is considered to be concluded for an indefinite period. The same applies to the repeated conclusion of fixed-term employment contracts with the same employee for the performance of the same work function.

03/11/2018

Conclusion of employment contracts and civil law contracts with employees

At the moment of hiring a new employee of the company there raise the question of possibility of concluding with the employee not an employment contract, but civil contract (usually a services contract), or the conclusion of a fixed-term employment contract instead of an employment contract for an indefinite period. The company's interest is not so much in saving, but rather in the ability to quickly terminate the contract if the employee does not meet expectations, or in the case if the need in such employee disappears.

The conclusion of employment contracts is governed by the mandatory provisions of labor legislation, while the civil contract is governed by the dispositive provisions of civil legislation.

The main difference between employment contracts and civil contracts is the subject of the contract. At the conclusion of the employment contract, the employee undertakes to perform the labor function indicated in the contract, under the civil contract the contractor undertakes to provide certain services and transfer their result to the customer. That is, within the framework of the employment contract, the subject is the process of performing the labor function by the employee, and under the civil contract – the final result of the contractor's services. Moreover, if under the employment contract the employee is obliged to perform the labor function personally, then under the civil contract the contractor has the right to involve third parties to perform their duties.
Special attention should be paid to the degree of independence of relations between the two types of contracts. The employee, associated with the employer by the employment contract, is directly subordinated: he must obey the job description, daily routine, the requirements of the supervisor, the employer undertakes to create the employee necessary working conditions for the performance of labor functions. The contractor under the civil contract is independent in methods, order, time of performance of the duties, he doesn't submit to the customer.

Another significant difference is the period of the employment contract and the civil contract. The civil code does not contain a limitation on the duration of contracts. At the same time, the labor code expressly provides that an employment contract is concluded for an indefinite period (Art. 58). The labor code also provides for the possibility of concluding fixed-term employment contracts for a period of not more than five years, when labor relations cannot be established for an indefinite period (art.58) But the employer needs to carefully assess the possibility of concluding a fixed-term employment contract with an employee, according to the labor code, a fixed-term employment contract is rather an exception, the situations in which it is possible to conclude it are specified in article 59 of the labor code, the list is exhaustive.

Thus, at the conclusion of the civil contract companies are encouraged to assess the essence of legal relations and carefully check the content of contracts for features of employment relations. A similar recommendation concerning the conclusion of fixed-term contracts - you need to make sure that there are sufficient grounds for the conclusion of this type of contract.

If, in fact, between an individual and the company is formed an employment relationship, but the company formalizes them as civil contract, it is possible to say that the rights of the employee are violated, he loses the guarantees provided by the labor legislation.

The labor code contains a special procedure for judicial protection of violated rights of an employee – an employee has the right to apply to the state labour inspection, to the court in, or to send a corresponding application to the prosecutor's office; in the trial there is a mandatory prosecutor, the employee is released from the obligation to pay court costs. According to statistics, in most cases, the court takes the side of the employee.

Risks of re-qualification of fixed-term contracts
What can happen if the employer does not comply with the restrictions for the conclusion of fixed-term employment contracts, and enters into a fixed-term employment contract, instead of an employment contract for an indefinite period? According to the art. 59 of the Labor code, an employment contract concluded for fixed-term period in the absence of sufficient grounds established by the court is considered to be concluded for an indefinite period. The same applies to the repeated conclusion of fixed-term employment contracts with the same employee for the performance of the same work function.

At the moment of hiring a new employee of the company there raise the question of possibility of concluding with the employee not an employment contract, but civil contract (usually a services contract), or the conclusion of a fixed-term employment contract instead of an employment contract for an i...

31/10/2018

Controlled foreign companies

Since 01.01.2015, the Tax code has been significantly reformed in terms of international taxation. The concept of controlled foreign companies is introduced and the order of accounting of their profit as a part of profit of the Russian resident is established.

A controlled foreign company (CFC) is a foreign organization, the controlling person of which is an organization and (or) an individual recognized as tax residents of the Russian Federation.
This institution was introduced in order to control and account for the receipt of profits by Russian residents in foreign jurisdictions, and, as a consequence, in order to obtain taxes by the state.
The controlling person must meet certain requirements: 1) he must be a resident of the Russian Federation, and 2) must have a certain minimum share in a foreign company.
The minimum share of participation in a foreign company, both for individuals and legal entities is 25%, or 10 % - if the share of participation of all persons recognized as tax residents of the Russian Federation in this company (for individuals - together with spouses and minor children) is more than 50%. It should be noted that the share of both direct and indirect participation in a foreign company is taken into account

Taxpayers recognized as tax residents of the Russian Federation are required to submit the following notifications to the territorial tax office:
- About the participation in the foreign organizations (about establishment of foreign structures without formation of legal entity) within three months from the date of emergence (change of the share) of participation in such foreign organization;
- About CFC no later than March 20 of the year following the tax period.

CFC profit is equal to the profit of the organization (income of individuals) and is taken into account in determining the tax base for taxes from taxpayers recognized as its controlling persons. The supporting documents are the financial statements of the CFC or the auditor's report.
The first payment of income tax, as well as the first reporting of taxpayers taking into account the profit of the CFC should be provided before 28.03.2017. Thus, persons having business abroad still have time to analyze the requirements of the law and prepare all the necessary documents. We should not forget that, despite the fact that the liability in the form of a fine for non-payment/ incomplete payment of tax (in the amount of 20% of the amount of unpaid tax) will be applied from 2018, there is another responsible for failure to submit notifications about participation in a foreign organization and the CFC.

Since 01.01.2015, the Tax code has been significantly reformed in terms of international taxation. The concept of controlled foreign companies is introduced and the order of accounting of their profit as a part of profit of the Russian resident is established. A controlled foreign company (CFC) is a...