Do you sell goods through social media, offer fitness training, or sew clothing to order? The key question is: do you need to pay taxes? Yes — otherwise a hobby becomes an unlicensed commercial activity. Since 2019, the Russian government has introduced a convenient mechanism to address this.
What Is Self-Employment
Since January 1, 2019, Russia has had a professional income tax (nalog na professionalny dokhod, NPD) — a special tax regime for individuals working independently without registering as a sole proprietor. The regime launched in four regions (Moscow, Moscow Oblast, Kaluga Oblast, and Tatarstan) and as of July 1, 2020 is available across all of Russia.
A self-employed person is an individual who:
- works without registering as a sole proprietor (IP)
- does not employ any staff
- earns annual income of no more than 2,400,000 rubles
- registers online — through the My Tax (Moy Nalog) application or a bank
How Self-Employment Differs from a Sole Proprietorship
| Parameter | Self-Employed | Sole Proprietor (IP) |
|---|---|---|
| Employees | Not permitted | Permitted |
| Tax reporting | Not required | Required |
| Cash register | Not required | Depends on tax regime |
| Income ceiling | 2,400,000 ₽/year | None |
| Pension contributions (SFR) | Optional | Mandatory |
| Tax rate | 4% (individuals) / 6% (legal entities and IP) | Depends on tax regime |
Permitted Types of Activity
The NPD regime covers a wide range of services: tutoring, beauty services, repairs, design, software development, residential rental, delivery, catering, and the sale of handmade goods.
Self-employed individuals also actively work through marketplaces (Wildberries, Ozon, Yandex Market) and platforms (Yandex Taxi, Avito, YouDo) — the regime is fully compatible with such platforms.
How to Register
Registration is entirely online — through the Federal Tax Service application My Tax (Moy Nalog) or through an authorized bank. No visits to the tax office are required. Receipts are issued through the app and income is automatically reported to the tax authority.
Limitations and Risks
- Resale of third-party goods is not permitted — only the results of one’s own work
- Agency arrangements on behalf of third parties are not permitted
- Self-employed status cannot be used to provide services to one’s current employer, or to a former employer within two years of termination
- Exceeding the 2.4 million ₽ annual income ceiling triggers automatic transition to the standard tax regime for the remainder of the year
- Pension tenure and pension points do not accrue unless voluntary contributions are made to the Social Fund of Russia (SFR)
Frequently Asked Questions
Can you be self-employed and work under an employment contract at the same time? Yes, the law does not prohibit this. Your employer withholds income tax on your employment earnings. You pay the professional income tax (NPD — 4% or 6%) on your self-employment income yourself through the My Tax app.
Does pension experience accrue for the self-employed? Not automatically. Pension insurance experience accrues only through voluntary contributions to the Social Fund of Russia (SFR). Professional specialty experience — yes, but without contributions there is no pension entitlement.
What happens if annual income exceeds 2,400,000 rubles? The NPD regime ends automatically for the remainder of the year. All subsequent income is taxed under the standard regime. You may re-register as self-employed from 1 January of the following year.
Can a self-employed person provide services to a former employer? No. Providing services to a former employer under the self-employment regime is prohibited for two years after termination. This is a direct statutory rule — the Federal Tax Service identifies such arrangements and treats them as concealed employment.
Read Also
- Employment Contract vs. Civil Contract: Key Differences and Employer Risks
- Proving Professional Experience in Russia: What Counts for the Self-Employed and Sole Traders
- Workplace Fines Are Illegal: Why Salary Deductions by Employer Order Violate the Labour Code
Uncertain whether self-employed status is right for you, or whether a sole proprietorship is preferable? Tell us about your situation — we will help you choose the optimal structure and avoid tax risks.