Effective Tax Rate on Rental Income
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Rental income received by nonresident individuals is taxed at a flat rate of 20%, which is generally withheld at source.
Rental income earned by foreign legal entities without a permanent establishment in Russia is subject to withholding income tax levied on gross rentals at 20%.
Capital gains realized by nonresident individuals are subject to tax at a flat rate of 20%. Taxable gains are the gross proceeds or selling price, without deductions for acquisition costs or other expenses.
VALUE ADDED TAX (VAT)
VAT is levied at a flat rate of 20%.
- Generally, leasing land as well as property is subject to 20% VAT but lease of residential properties is exempt from VAT.
- Sale of land and residential property is exempt from VAT.
Land tax is a municipal tax levied on the cadastral land value and the applicable rate varies depending on the use of the land. Established maximum rates at the federal level are 0.3% for agricultural land and land used for housing, and 1.5% for other types of land. The applicable rates are set by the relevant municipality where the land is located.
The property tax is levied on buildings, apartments, constructions and garages. Established rates at the federal level range from 0.1% to 2.2%, depending on the cadastral value of the property. The applicable rates are set by the relevant municipality where the land is located.
The maximum rate for property tax is 2%, as stated in the tax code. For Moscow and other regions in the Russian Federation, the applicable rate is 2% in 2016.
Income and capital gains earned by companies are taxed at a flat rate of 20%. Income-generating expenses are deductible when calculating the taxable income.
Of the 20% corporate income tax rate, 2% is paid to the federal government and 18% is paid to regional authorities.