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. Last Updated: 07/27/2016

Taxman vs. Landlord: Tips on Fighting Back

If your landlord threatens to throw you out on the street or to double your rent in violation of a lease agreement, knowing a few tax facts may come in handy.


All Russians are obliged to pay taxes on their income, whether they earn their living through street selling, office work, or apartment rentals. A progressive scale applies, starting with a 19 percent rate on the first million rubles ($1, 230), 20 percent on the next million, and 30 percent on all subsequent earnings.


Muscovites had until April 1, 1993 to declare 1992 income.


Many seek to avoid paying taxes, not unusual anywhere in the world. But in Russia it seems easier to flaunt these obligations.


"People who work for Russian firms have their taxes deducted from their pay", said Vladimir Voronkov, who oversees Moscow's tax laws affecting foreigners. "But we have problems with people in free professions that have to make declarations".


In some cases, neighbors have stepped forward to tell tax inspectors that the guy next door is renting his place without reporting the income, officials say. Such informants usually furnish a name, place of residence, telephone number, and other concrete details.


"By law, if someone does not fill out a tax declaration and we learn of it, it is considered hidden income, subject to 100 percent confiscation", said Olga Shakhova, head of the Moscow's first tax investigation division, one of 36 such city offices. "If we learn of something, we'll summon the person at once".


In Shakhova's experience, an irate tenant has never brought in the information, although typically the tenant possesses all the key documentation. To prove tax evasion, the more papers, the better, Shakhova said. Such documents should include a signed contract, preferably notarized, as well as monthly payment receipts.


"If there is no evidence, there is no way we can make a case", she said.


Another potential trap for Moscow's landlords renting to foreigners is their insistence on hard-currency, according to Oleg Utkin, head of the Finance Ministry's hard-currency department.


He said that a February 1993 regulation from the Central Bank of Russia, called Instruction 11, allows trade in hard currency only when production costs were paid in hard currency.


"Renting an apartment for dollars breaks this rule", said Utkin. "I doubt that there are apartments that were built with hard currency, except for private embassies and so on".


For the forgetful landlord, a gentle reminder of these obligations may help smooth wrinkles in the relationship with a tenant.