Moscow expat Life Breakfast Forum at the Intercontinental

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The introduction of the ‘Highly Qualified Specialist’ (HQS) visa in 2010 has made it easier for expats working for companies to get visas and work permits here. It has not made it easier for everybody else. Over a long, impeccable breakfast at the Intercontinental Hotel Moscow, Paul Sprague, Director, Russia Consulting; David Gilmartin, General Manager, Troika Relocations, Marina Gordeeva, Director of Business Services at TIM Services & TIM Advisers; and John Harrison, editor of Moscow expat Life magazine, discuss the issues.

The introduction of the ‘Highly Qualified Specialist’ (HQS) visa in 2010 has made it easier for expats working for companies to get visas and work permits here. It has not made it easier for everybody else. Over a long, impeccable breakfast at the Intercontinental Hotel Moscow, Paul Sprague, Director, Russia Consulting; David Gilmartin, General Manager, Troika Relocations, Marina Gordeeva, Director of Business Services at TIM Services & TIM Advisers; and John Harrison, editor of Moscow expat Life magazine, discuss the issues.

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John Harrison: What are the advantages and disadvantages of getting a work permit?

Marina Gordeeva: Russian legislation is changing all the time, so we advise our clients to keep a constant eye on changes. If you want to feel safe it is better to get a work permit. If a company employs an individual without permission, company activities can be suspended for up to 90 days, and fined up to one million roubles per person employee hired illegally.

Does that ever happen?

David Gillmartin: Yes, often. I think the good old days ten years ago when you could go down to a travel house and buy a one year’s business visa for $300, and work here long term by renewing those visas, are gone. Everybody has to comply now. You wouldn’t go to the UK or to the States and be able to work illegally, and Russia is the same now. It is incumbent on us to follow the rules. The HQS visa has made it a lot easier to do that. There are disadvantages, but the advantages are that you are legal.

Paul Sprague: Amongst my clients, I would say even a couple of years ago, people were still coming over to work on a business visa. One client told me that their workers were being sent to a work location, an airport in this case, working 8 hours a day on business visas, and they wanted to know what’s the risk? We did some checking and we were told by the Federal Migration Service that if the workers don’t have labour contracts then they aren’t performing labour and they don’t need work permits. Clearly, this isn’t logical from a western perspective but shows the mentality and how the system works. Today, the government is getting smarter and I would say it’s very risky to continue on work visas.

David Gillmartin: We continually get the question asked: “Can’t we come in for 6 months to complete this contract”. Not really. If you come in on a business visa, you are not supposed to work or provide services, you can just come for a meeting and sign documents; that happens all the time.

Selection_265How easy is it for companies to supply their foreign employees with labour contracts?

Paul Sprague: There are two types of work permits, the old type, and the new HQS kind. The old system worked within a quota system and the company concerned had to request a year in advance how many such permits were needed. There were and are all sorts of technical difficulties, such as the medical exam, the results of which are valid for only 30 days, so it was nearly impossible to send the results to Russia and have it translated and notarised in this short period. For new companies coming into the market, that was a bit too challenging. You needed to know a year in advance what you needed to do today. The new system with HQS visas is much easier because labour contracts can be issued when they are actually needed and there is no quota system, but it is not for everybody.

David Gillmartin: But the new system comes with the caveat that the employee is going to be paid over 2 million roubles a year. So we are getting fewer blue collar workers, more white collar workers and senior management, in this sense Russia is becoming less of an open market, that is there are fewer people getting a flight here to look for a job. This is encouraging some employers, such as banks, to hire people who are already here. You need to have a job before you come to Russia, with a sponsor that is going to pay for getting a work permit. You can get a three year HQS visa in 30 days. Under the old system, you have to apply under the quota system, then spend 3, 4 or 5 months to get the one year work permit, this is becoming less and less viable. You are lumped in together with TCN (Third Country Nationals), from Uzbekistan and some other countries of the previous Soviet Union.

There is also the issue of travelling around the country. Under the old system, only one location was shown on your work permit. So if you wanted to travel to another city you might have a problem, because this city was not on your visa. Now you can put multiple cities on your work permit, and that simplifies things a lot.

To get the HQS visa you now need a medical certificate, which is something new. But in general, the new immigration laws are all about compliance. Now, if a company wants to bring a specialist in from abroad, the company has to declare the full salary and pay the full tax. The new system makes it very difficult for companies to pay a very small salary here, and a large amount offshore or in his or her home country. The company has to submit a quarterly report to the immigration authorities that they have paid the tax on that salary. If the tax isn’t paid, the work permit is cancelled.

Selection_266So it’s quite tricky then for an employee to leave a company unless he can find another position with at least an equal salary?

Paul Sprague: Yes, that is correct. I terminated my labour contract and I had 30 days to sign a new labour contract, which I did with another employer and there were no problems.

Marina Gordeeva: The law says that you have 30 days to find another job and 30 days to leave Russia, so in general, you have 60 days, under the HQS system.

David Gillmartin: And they are starting to join up their computers as well. There is a new law about breaking laws, nicknamed ‘two strikes and you’re out’. It could be small things like traffic fines, whereby if you have two offences you may lose your visa, so don’t put the car in the expat’s name.

How difficult is it for Mr Jones to get his family out here?

David Gillmartin: If he has agreed it with his family in advance, there is no difficulty. The trouble is, of course, getting the company to pay for it. Dependant visas themselves are not an issue. ‘Dependents’ have to supply documents proving a family relationship such a birth certificate, marriage certificate and so on. Common law marriage is not recognised. We’ve had a situation where we had to advise a couple to get married to come here.

Marina Gordeeva: There may be some problems because Mr Jones employed under the standard procedure (not HQS) may be a British citizen, but he has a Ukrainian wife, who cannot stay for the duration of her husband’s post because she does not need a visa, and therefore falls into the category of people who can only stay for 90 days. The only way round this is for her to sign a labour contract with a company that will offer her one, to get a work permit, or to apply for a residence permit. This new rule applies to all nationals from countrieswhich are former members of the Soviet Union which are not members of the EU.

Selection_267I can’t apply for a work permit unless I’m in Russia, but how do I get into Russia in the first place?

Marina Gordeeva: At the moment the only thing you can do is come to Russia on an ordinary business visa, complete all the necessary paperwork, then leave Russia and come back again on an HQS work visa, because you cannot change your business visa into a work visa in Russia. If you change your employer you don’t have to leave the country because a work visa can be exchanged for another work visa.

But sometimes, what choice do people have?

David Gillmartin: Sometimes no choice, if someone’s setting up an office and they need to send in an IT technician for 3 months, that person wont be able to get a work permit for 23 moths.

If you really need to be here in a hurry, a tourist visa is faster to organise. You make a hotel reservation in Moscow and get them to organise the visa invitation. This can all be done in an hour. There is the new 3 day visa if you fly on a Russian airline, but not so many business people want to do that. It’ll be very good for tourists though.

Marina Gordeeva: Companies can now employ foreign students, if they are full time students of Russian universities, they will be able to apply for work permits without quotas.

What about residence permits?

David Gillmartin: Once you’ve got a HQS visa, you can apply for a temporary residency permit.

Paul Sprague: I was told that if I apply for a temporary and then a permanent residency permit on the basis of my HQS visa, then if I quit my job, I would lose residency. So the word ‘permanent’ is confusing.

Marina Gordeeva: Getting this kind of permanent residence permit would be useful if you intend to apply for Russian citizenship because usually you would have to apply for temporary residency, then permanent and only then apply for citizenship. But this route is mainly used by CIS citizens.

Paul Sprague: Additionally, under the HQS visa, the employer pays very low taxes, only 02%, but when the employee gets temporary residency status or citizenship, then the employer has to pay full payroll taxes as if the employee is a Russian citizen. This will have a financial impact on the company, so employing people on HQS visas makes sense for the company although they may pay more in wages than they would do otherwise.

But there are all sorts of other people who have to get visas in a hurry, I’m thinking about performers, artists, how do they get visas?

David Gillmartin: The people who bring these kind of people in frequently have their own contacts and their own way of sorting things out. Elton John isn’t going to come to us looking for a work permit.

Paul Sprague: This is a country where networking and contacts are very important.

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Any final comments?

Paul Sprague: I would say that in general the process is becoming more understandable, but there are still frequent changes in legislation which can be difficult. However I think we can overcome these.

David Gillmartin: I agree that the system is definitely becoming easier, the HQS visa has simplified things for the majority of staff. There are still issues, however, like when you try and do something new because the first people who follow the new regulations always have difficulties until problems are ironed out. But in general, it’s definitely getting better.

Marina Gordeeva: In my opinion it is not getting easier, things are getting more difficult, because the process involves a lot of steps. There are a lot of new laws, appearing every day, which you have to familiarise yourself with, and you have to be very careful with all of them.

Moscow expat Life is grateful to the management and staff at the Intercontinental for an excellent breakfast!