Letter No. BS-4-11/5190@ 'On the application of the provisions of article 227.1 of the Tax Code of the Russian Federation" of the Federal Tax Service ('FTS') dated 25 March 2016 introduces an improvement with respect to the income tax treatment of foreign worker's income earned on the basis of a patent.
 
In the labour migration policy context of this state measure, a "patent" means a specific work permit document introduced in the Russian Federation as of 1 January 2015 only with respect to foreign workers from visa-free countries (see the attached related GTA report No. 7793for more details). This particular group of economic migrants forms the vast majority of foreign workers in the Russian Federation in its post USSR period. The maximum validity of a patent is 12 months.
 
Article 227.1 of the Tax Code of the Russian Federation contains the rule that if foreign workers are hired by employers such as sole traders, legal offices and notaries, s/he must pay a reduced income tax. Concretely, from the due income tax are deducted the paid in advance sums in the respective due tax periods.

The FTS letter clarifies the application of Article 227.1 of the Tax Code when a foreign worker employed on the basis of a patent has more than one employer, belonging to the above-mentioned category. Specifically, the foreign worker can get the due income tax reduction only with respect to one employer at his/her choice.

By eliminating the existing legal gap, this FTS letter can be regarded as a liberalising state measure that improves the financial situation of foreign workers. For example, if a foreign worker was employed on the basis of a patent by several employers of the above-mentioned type under the conditions of Article 227.1 of the Tax Code, starting from 1 January 2015 only for several months, and then left the country, s/he incurred losses due to the lack of legal rules on how to calculate the reduction of the due income tax. The FTS letter eliminates this legal deficit.