Russia payroll is now two questions, and the sanctions question comes first. Since 2022, US sanctions have prohibited new investment in Russia and banned US persons from supplying a widening set of services to the Russian market, so for many American companies the compliant answer to running Russian payroll is that they cannot, or can only within narrow licensed channels. For companies that can lawfully operate, whether foreign-owned entities still active in Russia or non-US groups, the payroll mechanics themselves are well defined: a unified employer contribution with a regressive threshold, a progressive personal income tax introduced from 2025, and employer withholding at source. Both layers are set out below from the sources linked.
The sanctions layer comes first
The US Treasury's Office of Foreign Assets Control administers the Russian Harmful Foreign Activities Sanctions program under a series of executive orders, including EO 14071 of April 2022, which bans new investment in and certain services to the Russian Federation. OFAC determinations have prohibited US persons from providing categories of services to persons in Russia including accounting, management consulting, and information technology and software services, alongside sweeping financial sector designations that complicate simply moving money. For payroll this bites twice: a US company generally cannot make new investments to establish or expand Russian operations, and US providers are constrained from delivering the back-office services payroll depends on. Anyone considering employment in Russia, including through intermediaries, needs sanctions counsel and, where applicable, OFAC general license review before touching the mechanics; a payroll structure that works technically can still be a sanctions violation.
Employer contributions, for those who can operate
For employers lawfully running Russian payroll, social contributions are consolidated: the standard employer rate is 30% of pay up to the unified maximum base, set at RUB 2,759,000 for 2025, and 15.1% on pay above it, per Awara's published guide to Russian taxation. On top of the unified contribution sits mandatory accident insurance at 0.2% to 8.5% depending on industry risk class, with 0.2% typical for office work. Certain categories carry preferential treatment, including exemptions tied to highly qualified specialist status for some foreign employees. These contributions are an employer cost above gross salary, not a withholding from it, so the full cost of a Russian employee is salary plus roughly a third at ordinary salary levels, with the marginal rate dropping once cumulative pay passes the base. Contribution parameters are reset annually, so any figure should be checked against the current year before it goes into a budget.
Income tax withholding and the resident question
Russia moved to a progressive personal income tax scale from 2025: tax residents pay 13% on annual income up to RUB 2,400,000, with the rate stepping up through bands to 22% on income above RUB 50,000,000. Non-residents face a 30% flat rate on Russian-source income, though several categories, including highly qualified specialists and remote workers, are taxed at the resident progressive scale despite non-resident status. The employer is the tax agent: companies paying income to employees are obliged to calculate, withhold and remit personal income tax to the budget, so the compliance burden sits on the payroll, not the employee. Residency turns on presence in Russia, and for distributed teams the interaction between residency, remote-worker rules and the sanctions layer above is exactly where mistakes concentrate. Statutes and current-year parameters control; nothing on this page is legal or tax advice, and both layers move often enough that the sources below should be checked at the point of decision.
Questions people ask about russia payroll
Can a US company run payroll in Russia at all?
Often not compliantly. EO 14071 bans new investment in and certain services to Russia, and OFAC determinations prohibit US persons from supplying several service categories to the Russian market. Sanctions review comes before any payroll design.
What do Russian employer contributions cost?
The standard consolidated rate is 30% of pay up to the 2025 unified base of RUB 2,759,000 and 15.1% above it, plus accident insurance of 0.2% to 8.5% by industry. The parameters reset annually.
What income tax applies to employees in Russia?
From 2025 residents pay a progressive scale starting at 13% up to RUB 2,400,000 and reaching 22% at the top band. Non-residents generally pay 30% flat, with exceptions taxed on the resident scale, and the employer withholds at source.
Do EOR providers still cover Russia?
Most Western providers withdrew or suspended Russian coverage after 2022, and US-linked providers face the same sanctions constraints as their clients. Where coverage is offered, sanctions exposure sits with you as well as the provider, so counsel review is essential.