Banking, Money and Taxes in Russia
The banking sector in Russia has a nasty history that’s loaned its locals more distrust than anything else. The crisis of 1998 and years of unattractive interest rates were enough incentive for the majority of Russians to favour the space beneath their mattress to the “security” of bank accounts.
That mentality is now changing, but nonetheless, it is recommended expats consider banking in Russia warily.
The official currency in Russia is the Ruble (Rouble), which is abbreviated as RUB. Each ruble is divided into 100 kopecks (copecks)
- Notes: 5,000, 1,000, 500, 100, 50 and 10 rubles
- Coins: 5, 2 and 1 roubles; 50, 10, 2, 1 kopecks
It is illegal to pay for products or services in Russia with US dollars or with Euro, even if the price is marked so (a common relic leftover from the ruble's devalued past).
Currency exchange offices can be found in airports, in major hotels, in train stations and on city streets. Do not change money outside of these established entities, as it’s likely you’ll be scammed.
Banking in Russia
Only 24 percent of Russian households have bank accounts, and the banking sector is small and remains somewhat fragmented. Even the largest local banks are miniscule, when compared to the likes of international powerhouses like HSBC and Barclays.
That said, foreign banks in Russia have fared poorly, and in recent years, some European and US banks (including HSBC) announced plans to close their doors or scale down their operations in the country; actions that have been the consequence of protectionist policies and the presence of state-owned banks that dominate the market.
There are ten major banks in Russia, most of them state-run, and though their service provision has become more comprehensive over the years, there are still reports that their policy is outdated. For example, Sberbank, the largest bank in Russia, has more than 98,000 outlets in the country, but still grants pensioners booklets, rather than cards, and in some situations requires you to go to the branch in which you opened your account to perform certain operations.
For these reasons, expats driven to use local banks due to the lack of international options, often choose to send their savings abroad, while maintaining a small Russian account for daily living purposes.
Raiffeisen and UniCredit are options that many expats support, while Citibank (an international bank) and Sberbank are privy to a larger number of “mixed” reviews.
Most banks have Internet banking services, and can issue credit cards.
Banking hours vary, but are normally from 9am to 6pm, Monday to Friday. Some banks are also open from 9am to 3pm on Saturdays.
Opening a bank account
Opening a bank account in Russia can be a frustrating experience or it can be a breeze. Do note that the language barrier can compound issues, and if possible, it’s advised expats bring a friend or interpreter with them.
The main problem expats face in opening a bank account is obtaining proper documentation, so if you can do this properly ahead of time, you can greatly minimise any stressful interaction.
Most banks require a copy of your passport and visa, a minimum cash deposit, and some banks require a letter from your employer and proof of residence.
Choose the branch at which you open your account carefully, as you may have to return to this entity specifically to manage your account operations.
ATMs and credit cards
ATMs (bankomats) are widely available in Russian towns and cities; just about every metro station and shopping mall has one. Expats are also able to draw rubles from a Russian ATM using a foreign card.
Russia is still largely a cash-based society, especially outside of the main city centres. That said, within Moscow, St Petersburg and all of the secondary cities, most establishments accept credit cards. Although expats are able to get a credit card from a Russian bank, many of these establishments are still reluctant to issue credit cards to foreigners.
Expats using credit cards in Russia should do so with extreme care as credit card fraud is still common in the country.
Taxes in Russia
Expats living in Russia will be deemed tax residents if they spend at least 183 days in the country in a single calendar year (twelve-month period); those who spend less than 183 days will be deemed tax non-residents.
Tax residents are taxed at a flat rate of 13 percent on their worldwide income, while those deemed tax non-residents are taxed 30 percent of only their Russian income. This amount is automatically deducted from your wage, but it’s still necessary to file tax returns by 30 April for the previous tax year.
Expats should also find out if a tax treaty exists between their home country and Russia; if there is a double taxation treaty in place you are exempt from paying taxes to both countries.
It is best to get professional advice on Russian taxation, as it can be very easy to fall foul of the law in this area.