|
Server : Apache/2.4.62 System : FreeBSD fbsdweb2.web.rcn.net 14.1-RELEASE FreeBSD 14.1-RELEASE releng/14.1-n267679-10e31f0946d8 GENERIC amd64 User : www ( 80) PHP Version : 8.3.8 Disable Function : NONE Directory : /domains/russinvecchi/pub/ |
Upload File : |
<html>
<head>
<title>Russin & Vecchi - attorneys</title>
<meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1">
<meta name="keywords" content="Russia, Russian, attorney, attorneys, lawyer, lawyers, law, counselors, counsellors, firm, legal, international, Moscow, Vladivostok, Sakhalin, Bangkok, Hanoi, Ho Chi Minh City, New York, Puerto Plata, Taipei, Santo Domingo, and Washington, D.C., DC, Yangon, Yuzhno-Sakhalinsk, Vietnam, Thailand, United States, US, USA, Dominican Republic, Taiwan, Myanmar, Burma, far east, maritime, shipping, trade, oil, gas, petroleum, Russin, Vecchi, business, commercial, bilingual, local, global, banking, finance, litigation, arbitration, securities, recovery, taxation, minerals, energy, trademark, patent, copyright, contract, real estate, insurance, labor, technology, transportation, e-commerce, internet
">
<meta name="description" content="Russin & Vecchi is an international law firm with eleven independent offices spanning the globe and offers many business and commercial legal services.
">
</head>
<body bgcolor="#FFFFCC" onLoad="" leftmargin="0" topmargin="0" marginwidth="0" marginheight="0" text="#000000" link="#660000" vlink="#660000" alink="#FF3333">
<table width="100%" border="0" cellspacing="0" cellpadding="0">
<tr align="center" bgcolor="#003366">
<td>
<table width="392" border="0" cellspacing="0" cellpadding="0">
<tr>
<td><a href="../index.html"><img src="../graphics/hdr_logo.gif" width="118" height="111" alt="Home" border="0"></a></td>
<td><img src="../graphics/hdr_logotype.gif" width="266" height="111" alt="Russin & Vecchi L.L.P."></td>
<td><img src="../graphics/shim.gif" width="126" height="10"></td>
<td> </td>
</tr>
</table>
</td>
</tr>
<tr align="center">
<td height="1" background="../graphics/bgnd.gif">
<table width="392" border="0" cellspacing="0" cellpadding="0">
<tr>
<td background="../graphics/bgnd.gif" valign="top"><img src="../graphics/office_nav010405.jpg" width="750" height="37" border="0" usemap="#MapMapMapMap" align="top">
<map name="MapMapMapMap">
<area shape="rect" coords="2,7,48,26" href="../subpage/bangkok.html">
<area shape="rect" coords="52,9,83,27" href="../subpage/hanoi.html">
<area shape="rect" coords="84,8,170,29" href="../subpage/hcm.html">
<area shape="rect" coords="218,8,270,25" href="../subpage/newyork.html">
<area shape="rect" coords="171,8,216,26" href="../subpage/moscow.html">
<area shape="rect" coords="272,8,338,27" href="../subpage/plata.html">
<area shape="rect" coords="339,10,421,26" href="../subpage/santo.html">
<area shape="rect" coords="424,7,455,28" href="../subpage/taipei.html">
<area shape="rect" coords="457,10,521,25" href="../subpage/vladivostock.html">
<area shape="rect" coords="606,6,647,28" href="../subpage/yangon.html">
<area shape="rect" coords="649,5,746,28" href="../subpage/yuzhno.htm">
<area shape="rect" coords="524,9,603,26" href="../subpage/wash.html">
</map>
<map name="MapMapMap">
<area shape="rect" coords="4,9,43,28" href="../subpage/bangkok.html">
<area shape="rect" coords="46,10,77,28" href="../subpage/hanoi.html">
<area shape="rect" coords="78,9,144,29" href="../subpage/hcm.html">
<area shape="rect" coords="188,9,227,27" href="../subpage/newyork.html">
<area shape="rect" coords="148,8,186,27" href="../subpage/moscow.html">
<area shape="rect" coords="233,9,285,26" href="../subpage/plata.html">
<area shape="rect" coords="288,10,353,26" href="../subpage/santo.html">
<area shape="rect" coords="355,8,386,29" href="../subpage/taipei.html">
<area shape="rect" coords="387,9,441,26" href="../subpage/vladivostock.html">
<area shape="rect" coords="506,6,547,28" href="../subpage/yangon.html">
<area shape="rect" coords="548,9,628,29" href="../subpage/yuzhno.htm">
<area shape="rect" coords="441,8,505,25" href="../subpage/wash.html">
</map>
<map name="MapMap"><area shape="rect" coords="4,9,43,28" href="../subpage/bangkok.html"><area shape="rect" coords="46,10,77,28" href="../subpage/hanoi.html"><area shape="rect" coords="82,9,161,28" href="../subpage/hcm.html"><area shape="rect" coords="207,10,255,29" href="../subpage/newyork.html"><area shape="rect" coords="166,8,205,29" href="../subpage/moscow.html"><area shape="rect" coords="259,8,322,28" href="../subpage/plata.html"><area shape="rect" coords="329,9,400,28" href="../subpage/santo.html"><area shape="rect" coords="404,8,435,29" href="../subpage/taipei.html"><area shape="rect" coords="438,9,502,29" href="../subpage/vladivostock.html"><area shape="rect" coords="585,7,626,29" href="../subpage/yangon.html"><area shape="rect" coords="512,7,583,27" href="../subpage/wash.html"></map></td>
</tr></table></td></tr>
<tr align="center" bgcolor="#000000">
<td height="1"><img src="file:///L|/new%20site/graphics/footer_holder.gif" width="1" height="1"></td>
</tr>
</table>
<table width="597" border="0" cellspacing="0" cellpadding="0" align="center">
<tr>
<td width="14" height="1343" valign="top">
<P><img src="../graphics/footer_holder.gif" width="11" height="76"></p>
</td>
<td width="583" valign="top">
<P> </p>
<P align="center"><font color="#660000"><b><font face="Arial, Helvetica, sans-serif" size="4" color="#990000">Frequent
Legal Issues for Contractors on <br>
Sakhalin Oil and Gas Projects<br>
</font></b></font><font size="2" face="Arial, Helvetica, sans-serif">(Appearing soon in the Russian Energy Law Journal)</font></p>
<p align="center"><font color="#990033" size="2" face="Arial, Helvetica, sans-serif"><strong>VII.
Secondment Contracts, Direct Employment and Body Shops</strong></font></p>
<p align="left"><font size="2" face="Arial, Helvetica, sans-serif"><em><br>
Presented by <a href="../subpage/attorneys.html#rpg_vlad">Natalia Prisekina</a>, senior associate attorney and Director
of the Vladivostok branch office of Russin & Vecchi. </em></font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Companies with expatriate workforces in Russia must consider the most
appropriate manner for structuring such employment. Expatriates may be
seconded, which entails continued employment by an offshore entity with
the subsequent provision of the expat under a secondment agreement to
the entity with operations in Russia. In the alternative, expats may
be directly employed by a Russian legal entity or a foreign legal entity
with a representative office in Russia. Which approach to take depends
on an evaluation of the taxation and human resource issues involved.</font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">A seconding company’s only responsibility is to provide staff
to the receiving company. The seconding company is not involved in a
secondee’s work and is not responsible for its quality. The secondment
fee paid by the receiving company may cover a secondee’s salary
and certain additional expenses, such as accommodation and business trips.
Not all expenses may be covered by the fee. The receiving company does
not pay for services provided, but rather for the time of the seconded
staff. Secondment fee payments and other amounts paid in accordance with
secondment agreements should be accompanied by an act issued by the receiving
company stating that the staff was provided by the seconding company,
not that the payment is for the provision of services. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Russian tax laws contain specific rules for secondment, in accordance
with which secondment is not deemed to form a permanent taxable presence
for the sending entity and the costs of secondment are deductible for
the receiving company. Income received by the seconding company pursuant
to a secondment agreement is treated as passive income and is subject
to tax exemption. The seconding company is not required to pay payroll
taxes on amounts received by the expat as pay, in accordance with an
agreement with the Russian entity. The receiving company must pay value
added tax on the secondment fee. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">These benefits, however, apply only to corporate profit taxes. There
is no tax relief with respect to the payment of personal income tax and
social taxes, however, in a secondment arrangement, taxes may be collected
through tax returns and self-assessment. There are no personal income
tax withholding obligations. Beginning in 2004, expatriate employees
seconded to Russian companies who spend more than 183 days in Russia
and are therefore Russian tax residents, must not only file returns with
the Russian tax authorities, but also pay their own personal income tax
to the Russian Government from their own Russian bank account. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">There are also human
resource benefits with regard to secondment of foreign personnel. For
instance,
secondment is beneficial when contemplating
confidentiality of labor relations, retaining home country benefits,
continuity of service and maintaining an employee’s seniority with
the seconding company. In addition, local human resource documentation
is not required. Noteworthy, however, is that Russian labor law is applicable
in substance to secondment arrangements. According to Russian labor law,
a Russian receiving company utilizing the seconded employee will be treated
as the employer and a full employment relationship under Russian laws
will follow. Payments to seconded employees may be continued in hard
currency. The entity with operations in Russia using seconded personnel
is responsible for obtaining visas and work permits for its foreign seconded
employees. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">Direct employment of expatriates by the company with operations in Russia
allows for salary to be fully deductible from profits tax, if the employment
agreement is properly structured. An added expense to the employer is
the requirement to pay the unified social tax and other payroll taxes,
however, in direct employment, VAT is not applied. A direct employer
is obligated to withhold personal income tax. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif">From a human resource perspective, confidentiality issues are greater
with direct employment, and the employee may sacrifice certain home country
benefits, continuity of service and seniority. Direct employers must
maintain local human resource documentation and Russian labor law applies
to direct employment in both form and substance. Payments in rubles may
be required, with potential practical difficulty in repatriating earnings. </font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif"><strong>Body Shops</strong></font></p>
<p><font size="2" face="Arial, Helvetica, sans-serif"> Russian job-contracting
firms, known as "body shops" are companies
that lease personnel, and may be used to recruit local professionals
and contract them out to foreign companies. Foreign companies may use
body shops in order to meet Russian content requirements for man-hours
under the Production Sharing Agreement regimes. As a general rule, the
foreign company makes payments to a local Russian company employing local
professionals. An employment agreement is concluded between the employee
and the local Russian company; therefore, the Russian company withholds
all taxes. Russian employees perform work at the instruction of the foreign
companies. <br>
</font><font size="1" face="Arial, Helvetica, sans-serif"> </font> </p>
<table width="100%" border="0">
<tr>
<td width="29%"><div align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="chapter_VIII.html">Next</a></font></strong></div></td>
<td width="36%"><div align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="chapter_VI.html">Previous</a></font></strong></div></td>
<td width="35%"><div align="center"><strong><font size="2" face="Arial, Helvetica, sans-serif"><a href="RusEnergyLaw_index.html">Table of Contents</a></font></strong></div></td>
</tr>
</table>
</td>
</tr>
<tr>
<td colspan="2">
<p><img src="../graphics/bottom_navbar.gif" width="598" height="23" usemap="#Map2" border="0"><map name="Map2">
<area shape="rect" coords="280,3,367,19" href="mailto:[email protected]">
<area shape="rect" coords="412,4,466,19" href="../subpage/links.html">
<area shape="rect" coords="512,3,561,20" href="../index.html">
<area shape="rect" coords="169,3,224,20" href="../subpage/offices.html">
<area shape="rect" coords="37,4,119,20" href="../subpage/attorneys.html"></map></p>
</td>
</tr>
<tr>
<td width="14" height="210"> </td>
<td width="583">
<table width="284" border="0" cellspacing="0" cellpadding="0">
<tr>
<td> </td>
<td><img src="../graphics/footer_logo_rv.gif" width="143" height="76"></td>
</tr>
<tr>
<td> </td>
<td>
<p> <font face="Arial, Helvetica, sans-serif" size="2">815
Connecticut Ave, N.W.<br>
Suite 650 <br>
Washington, D.C. 20006-4047<br>
T: (202) 822-6100<br>
F: (202) 822-6101<br>
<a href="mailto:[email protected]">[email protected]</a></font></p>
<p> </p>
</td>
</tr>
</table>
</td>
</tr>
</table>
</body>
</html>