LEGISLATIVE REGULATION OF THE LEGAL STATUS OF FOREIGN CITIZENS IN THE RUSSIAN FEDERATION

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1 April 2015 LEGISLATIVE REGULATION OF THE LEGAL STATUS OF FOREIGN CITIZENS IN THE RUSSIAN FEDERATION Newsletter Contents 1. Permits to Stay in Russia Page Temporary Stay Page Temporary Residence Page Permanent Residence Page 5 2. Employment of Foreign Citizens Page General Provisions Page Foreign Employees Arriving Page 6 in Russia on the Basis of a Visa 2.3 Foreign Employees Arriving Page 7 in Russia on a Visa-Free Basis 2.4 Highly Qualified Foreign Specialists Page Foreign Employees from the Page 9 WTO member countries 3. Liability for Violation of the Law on Page 9 the Legal Status of Foreign Citizens The main regulatory act in the area of regulation of issues of the entry and presence of foreign citizens in Russia is the Federal Law On the Legal Status of Foreign Citizens in the Russian Federation No. 115-FZ dated 25 July 2002 (hereinafter the Law on the Legal Status of Foreign Citizens or the Law ). The adoption of the Law initiated the formation of an integrated legislative base regulating the legal status of foreign citizens and provided the prerequisites for further developing the legislation in this sphere, including the regulation of certain practical aspects. On the basis and in pursuance of the Law, the Government of the Russian Federation and the Federal Migration Service of Russia adopted a number of regulatory documents regulating, in particular, matters concerning the establishment of quotas for the issuance of invitations to foreign citizens for purposes of working and temporary residence in Russia, as well as the procedure for issuance of temporary residence documents and work permits. The main provisions of the legislation regulating the legal status of foreign citizens in Russia are commented on below. 1. Permits to Stay in Russia The Law on the Legal Status of Foreign Citizens establishes the following system of differentiation of legal grounds for stay of foreign citizens in Russia and the respective permits: 1. temporary stay on the basis of a visa corresponding to the purpose of the visit; 2. temporary residence on the basis of a temporary residence permit; 3. permanent residence on the basis of a residence permit. Each type of stay and the conditions for receiving the necessary permits for a respective type of stay are described in detail below. 1.1 Temporary Stay General Provisions A visa is a document that grants the right to a temporary stay and determines the length of such stay in Russia. The validity periods of visas as well as the procedure for their issuance may differ depending on the purpose of the visit. The rules for issuing and extending Russian visas are established by the Federal Law On the Procedure for Exit from the Russian Federation and Entry to the Russian Federation No. 114-FZ dated 15 August 1996, and Decree of the Government of the Russian Federation On Approval of the Provisions on Establishing the Form of the Visa, the Procedure and Conditions for Processing and Issuing, Extending, Restoring it in case of Loss, and the Procedure for Annulling a Visa dated 9 June 2003 No. 335 (hereinafter Russian Federation Government Decree No. 335 ). A foreign citizen must leave the Russian Federation upon visa expiration, except for cases where the term of the visa or the term of temporary residence is extended on the date of visa expiration, or a new visa, temporary residence permit or residence permit is issued as well as some other cases. Foreign citizens arriving in the Russian Federation on a visa-free basis are entitled to stay in the Russian Federation without a visa, only on the grounds of a duly executed migration card. This category of foreign citizens comprises

2 Page 2 April 2015 citizens of states with whom the Russian Federation has concluded an agreement on reciprocal visa-free travel of citizens (including Ukraine, Armenia, Kazakhstan). As a general rule, such foreign citizens may temporarily stay in the Russian Federation for a maximum of 90 days in total during each period of 180 days. If such a foreign citizen concludes an employment agreement or a civil law agreement on executing works (rendering services), the term of temporary residence is extended by the term of the concluded agreement, but not by more than one year; a note on this is made on the migration card. This term limitation does not apply to highly qualified foreign specialists, for whom the term of temporary residence is determined on the basis of the term of the employment or civil agreement (service, work) concluded thereby. It should be noted that for the purposes of ensuring the optimal balance of labour resources and assisting in employing the citizens of the Russian Federation on a priority basis, the Government of the Russian Federation is entitled to reduce the term of temporary stay of foreign citizens who have arrived in the Russian Federation on a visa-free basis Issuance of Invitations to Russia As a rule, visas to the Russian Federation are issued based on invitations from Russian organisations and citizens. Branches and representative offices of foreign commercial companies accredited in the Russian Federation are also entitled to issue invitations to foreign citizens. Invitations are issued by either state authorities or other parties, namely: The Ministry of Foreign Affairs issues invitations applied for by state authorities, diplomatic missions and consular offices of foreign states in the Russian Federation, international organisations and their representative offices in the Russian Federation, as well as representations of foreign states of international organisations located in the Russian Federation. Federal Migration Service of Russia and its territorial bodies issues invitations applied for by local authorities, Russian legal entities, branches and representative offices of foreign commercial companies, citizens of the Russian Federation, and foreign citizens permanently residing in Russia. In order to have invitations issued, inviting legal entities, branches and representative offices of foreign commercial companies must be registered with the Federal Migration Service of Russia or a territorial body thereof. Such registration is performed in accordance with the procedure established by Order of the Federal Migration Service of Russia No. 390 dated 30 November Other parties International treaties of the Russian Federation may establish a simplified procedure for issuance of visas, which in particular may apply to requirements for invitations to enter Russia. For example, the Agreement between the Russian Federation and the European Community on the Facilitation of the Issuance of Visas to the Citizens of the Russian Federation and the European Union (entered into on 25 May 2006 in Sochi) stipulates that multiple business visas may be issued to business people and representatives of business organisations regularly travelling to Russia on the basis of a simple written request of an inviting organisation. The Law on the Legal Status of Foreign Citizens establishes that the inviting party must guarantee financial and medical coverage as well as accommodations for the foreign citizen during the stay in Russia. Such guarantee must be confirmed by a guarantee letter submitted by the inviting party along with the invitation application or included in the text of an invitation Obtaining Russian Visas. Categories, Types and Validity Periods of Visas Russian visas can be issued by the following authorities: Russian diplomatic and consulate institutions abroad issue all types and categories of visas; Ministry of Foreign Affairs issues diplomatic and official visas, and prepares short-term visas at consulate offices at the Russian border; Federal Migration Service of Russia and its territorial bodies issue transit visas, temporary residence visas, multiple work and study visas, extend visas, as well as renew and cancel visas. As stipulated by the Federal Law On the Procedure for Exit from the Russian Federation and Entry to the Russian Federation No. 114-FZ dated 15 August 1996 and Russian Federation Government Decree No. 335, Russian visas, depending on the intended purpose and duration of the visit, may be of various categories and types. Pursuant to the classification based on the number of permitted entries, visas may be of the following types: single entry visas, double entry visas, or multiple entry visas. Depending on the purpose of visit, visas may be of the following categories: 1 Diplomatic visa (ДП) prepared for foreign citizens having diplomatic passports; 2 Official visa (СЛ) issued to foreign citizens having official passports (for example, members of official foreign delegations);

3 Page 3 April Transit visa (ТР1, ТР2) ТР1 single entry, and ТР2 single or double entry; 4 Temporary residence visa (ВП) there are two types of such visa: 1) single-entry visas for up to four months for entering the Russian Federation for temporary residence; 2) upon receipt of a temporary residence permit the visa term is prolonged by way of issuance of a multi-entry temporary residence visa for the term of the temporary residence permit; 5 Ordinary visa (О) a detailed description of the main types of ordinary visas is provided below: 5.1. Ordinary business visa Д : For purposes of business trips to Russia. Validity period is up to three months (single or double entry visas) or up to one year (multiple entry visas). Under a multiple entry visa, a foreign citizen s total stay in the Russian Federation is determined during processing of the visa by the authorised state body, but may not be more than 90 days within each 180 day period Ordinary work visa Р : For purposes of employment in Russia. Validity period is up to three months. After entering Russia the visa is extended for the term of the employment (or civil legal) agreement, although not for more than one year. A visa for a highly qualified foreign specialist is issued for the term of the employment or civil agreement concluded therewith, but not for more than three years Ordinary private visa Ч : For purposes of private guest visits. Validity period is up to three months (single or double entry visas) Ordinary tourist visa Т, or ordinary group tourist visa ТГ : For purposes of tourism. Validity period is up to one month (single or double entry visa). A group visa is issued to foreign tourists arriving in a tourist group (from 5 to 50 persons) Ordinary study visa У : For purposes of study at a Russian educational institution. The validity period is up to three months. Upon entry into Russia, the visa is extended for the term of study, although not for more than one year for each subsequent extension Ordinary humanitarian visa Г : For purposes of scientific, cultural, socio-political, sporting or religious relations and contacts, or pilgrimage, charity work delivering humanitarian aid. Validity period is up to three months (single or double entry visa) or up to one year (multiple entry visa). Under a multiple entry visa, a foreign citizen s total stay in the Russian Federation is determined during processing of the visa by the authorised state body, but may not be more than 90 days within each 180 day period Ordinary entry visa to obtain asylum А : Validity period is up to three months (single entry visa). A decision of the Federal Migration Service to recognise the foreign citizen as a refugee serves as the basis for obtaining this visa Ordinary visa to enter for the purpose of conferment of Russian citizenship: Validity period is up to one year (multiple entry visa). The basis of issuance of the said visa is a decision on recognition of a foreign citizen as a Russian native speaker in accordance with the legislation on the citizenship of the Russian Federation. In certain cases stipulated by Russian Federation Government Decree No. 335, visas may be extended. A visa is extended by an authorised local state body at the foreign citizen s actual place of stay on the basis of the foreign citizen s written application and a written petition for visa extension prepared by the organisation (or individual) that invited such foreign citizen Migration Registration of Foreign Citizens The migration registration of foreign citizens is carried out pursuant to provisions of the Federal Law On Migration Registration of Foreign Citizens and Stateless Persons in the Russian Federation dated 18 July 2006 No. 109-FZ (hereinafter the Law on Migration Registration ). In accordance with the said Law and Decree of the Government of the Russian Federation On the Procedure for Conducting Migration Registration of Foreign Citizens and State less Persons in the Russian Federation No. 9 dated 15 January 2007, the migration registration of foreign citizens is carried out within the framework of one of two procedures: registration at the place of residence; registration at the place of stay (for foreign citizens temporarily staying, as well as with regard to temporarily and permanently residing foreign citizens staying at a place other than the place of residence). According to the rules stipulated by the Law on Migration Registration, registration at the place of stay in the Russian Federation shall be conducted as follows:

4 Page 4 April 2015 Foreign citizens temporarily staying in the Russian Federation shall be registered at the place of stay upon the lapse of seven business days from the day of arrival at the place of stay. Temporarily and permanently residing foreign citizens shall be registered at the place of stay if they are not present at their place of residence. The term for registration is seven business days from the date of arrival at the place of stay. Upon arriving at the place of stay, a foreign citizen shall present the receiving party with its passport and migration card (or residence permit or temporary residence permit), which is filled out during entry to the Russian Federation. The employer or a legal entity or individual with which the foreign citizen is actually residing (located) may act as the receiving party. If a foreign citizen arrives at a hotel, within 24 hours the hotel administration is obligated to notify the territorial body of the Federal Migration Service of the foreign citizen s arrival at the place of stay. The receiving party shall fill out a special arrival notification form and submit it along with a copy of the foreign citizen s passport and migration card to the territorial body of the Federal Migration Service directly or through a multipurpose center for provision of governmental and municipal services or by mail. The detachable part of the arrival notification form for a foreign citizen is given to the citizen. A foreign citizen is entitled to independently notify the migration registration authorities of his / her arrival at the place of stay given documented, valid reasons preventing the receiving party from sending the notification to the migration registration authorities itself, as well as if during the stay in the Russian Federation the foreign citizen will reside in his / her own residential premises. The notification procedure and required set of documents are established by the Law on Migration Registration. Special preferences in the area of migration registration are granted to foreign citizens performing labour activities in Russia as highly qualified specialists, as well as to members of their families. These persons are exempt from mandatory migration registration for 90 days from the date of their entry into Russia and for 30 days from the date of arrival at a new place of stay in the event they move within Russia. Upon the expiry of the 90-day or 30-day term, the said foreign citizens must be registered at the place of stay within seven business days. 1.2 Temporary Residence General Provisions A temporary residence permit, which is granted for a three-year period, is the basis for a foreign citizen s temporary residence in Russia. The temporary residence legal status is regulated by the Law on the Legal Status of Foreign Citizens (Article 6). The procedure for applying for a temporary residence permit and the procedure for preparing the necessary documents are specified in detail in Order of the Federal Migration Service of Russia No. 214 dated 22 April Temporary residence permits are issued within the quota annually established by the Government of the Russian Federation for each administrative unit of the Russian Federation. Certain categories of foreign citizens are not subject to the quota, including, in particular, foreign citizens who were previously citizens of the USSR, foreigners married to Russian citizens residing in Russia, foreign citizens making investments in Russia in certain amounts (the amount of such investments is yet to be established), foreign citizens having a minor or disabled child with Russian citizenship Procedure for Issuing a Temporary Residence Permit An application for issuance of a temporary residence permit shall be filed personally by a foreign citizen either with a territorial body of the Federal Migration Service of Russia or, if the foreign citizen is in the country of his / her permanent residence, with a diplomatic mission or consular office of the Russian Federation located abroad. The following documents must be enclosed with the application: 1) proof of identity and citizenship (international passport), as well as a residence permit or other document issued by an authority of a foreign state confirming the foreign citizen s residence outside the state of his / her citizenship; 2) document issued by the competent authority of the state where the foreign citizen permanently resides regarding the non-existence of a criminal record; 3) a document confirming that the foreign citizen is HIV negative and a document confirming that the foreign citizen (his / her family members) is not addicted to narcotics and does not have any of the infectious diseases specified in the list approved by the Government of the Russian Federation; 4) certificate confirming knowledge of the Russian language, the history of Russia and the fundamentals of legislation of the Russian Federation that may be obtained by a foreign citizen from an authorised educational institution both in and outside of the territory of Russia after a respective examination has been passed successfully. Foreign citizens not subject to the quota for the issuance of temporary residence permits shall additionally submit documents confirming this right, for example:

5 Page 5 April ) marriage certificate and spouse s passport (if the spouse is a Russian citizen); 2) birth certificate or passport of a USSR citizen (for former USSR citizens). Both the abovementioned documents and documents confirming family relations shall be submitted for each member of the foreign citizen s family that is indicated on the application as an applicant for a temporary residence permit. The application shall be considered within six months from the date of filing the application and all necessary documents. The foreign citizen shall be notified of the decision within three business days of the date of such decision. In case of a positive decision, the foreign citizen is issued a visa to enter Russia. A foreign citizen who has entered Russia on the basis of such visa shall apply to a body of the Federal Migration Service of Russia for issuance of a temporary residence permit. A temporary residence permit is issued in the form of a special mark in the passport. If the recipient s passport is lost or replaced, this mark is placed in the new passport Practical Comments Temporary residence status is a transition between temporary stay status and permanent residence and allows a foreign citizen to apply for a residence permit upon the expiration of one year from the date of receiving a temporary residence permit (the particularities of this legal status are described in Section 1.3 below). At the same time, temporary residence status has particular restrictions: it is not possible to extend a temporary residence permit upon expiration of its three-year validity period. In this case, a new permit must be obtained in accordance with the procedure described above; mandatory fingerprint registration is required for foreign citizens temporarily residing in Russia; foreign citizens temporarily residing in Russia are not entitled to freely change their place of residence in Russia (the permission of the authorised state body is required); a foreign citizen temporarily residing in Russia must personally submit to the territorial migration authority notification, in the established form, of confirmation of his / her residence in the Russian Federation with an attached certificate of income, a copy of the tax return, or other document confirming the amount and source of his / her income for the year, within two months from the end of the year following the foreign citizen s receipt of a temporary residence permit; a foreign citizen temporarily residing in the Russian Federation is entitled to work exclusively within the Russian Federation administrative unit in which the foreign citizen is permitted to temporarily reside. 1.3 Permanent Residence A residence permit, which is issued for a maximum term of five years and may be extended an unlimited number of times, is the document which provides foreign citizens the right to permanently reside in Russia. Residence in Russia for 1 year on the basis of a temporary residence permit is the obligatory condition for obtaining a residence permit (the application must be filed no later than 6 months prior to expiration of the temporary residence permit). Order of the Federal Migration Service No. 215 dated 22 April 2013 determines both the list of required documents and the procedure for obtaining a residence permit. In particular, a foreign citizen must present the following documents: evidence of income, evidence confirming availability of residential accommodation at the place of residence in the Russian Federation, certificate confirming that the foreign citizen is free of HIV, drug addiction and infectious diseases as stipulated by legislation, certificate confirming knowledge of the Russian language, the history of Russia and the fundamentals of legislation of the Russian Federation. The advantages of permanent residence status are: ability to work in any part of Russia without a special permit (work permit); freedom of movement and choice of place of residence in Russia; ability to issue, in one s own name, visa invitations to Russia for other foreign citizens. A special simplified procedure for obtaining a residence permit is established for foreign citizens carrying out labour activities in the Russian Federation as highly qualified specialists. First, a foreign highly qualified specialist and members of his / her family are entitled to apply for a residence permit regardless of their possession of a temporary residence permit, as well as without the necessity of preliminarily residing in the Russian Federation for a certain period. The term of a residence permit is limited only to the term of the employment or civil agreement concluded with the foreign citizen. Furthermore, a ground for denial to issue a residence permit may not be lack of evidence of the existence of means of subsistence, leaving the Russian Federation for more than six months and certain other bases.

6 Page 6 April Employment of Foreign Citizens 2.1 General Provisions As a general rule, foreign citizens must obtain a special permit in order to perform labour activities in Russia. The Law on the Legal Status of Foreign Citizens requires that a work permit be issued both in the case of employment pursuant to a contract (employment contract or contract for rendering services) and in the case of a foreign citizen acting as a private entrepreneur. Article 13.4 of the Law on the Legal Status of Foreign Citizens provides a list of the categories of foreign citizens not required to obtain work permits, in particular: foreign citizens having permanent and temporary residence status in Russia; foreign citizens participating in State Programs for rendering assistance for voluntary relocation of nationals living abroad to the Russian Federation, as well as members of their family; employees of diplomatic missions, consular offices of foreign countries in the Russian Federation, employees of inter national organisations as well as their private household employees; employees of foreign legal entities (manufacturers or suppliers) performing installation (installation supervision) works, service and warranty maintenance as well as post-warranty repairs of technical equipment delivered to the Russian Federation; journalists accredited in the Russian Federation; foreign citizens studying in the Russian Federation at professional educational institutions or higher education institutions and working (1) during holidays or (2) during time free from studies (in the second case as educational support personnel at their educational institutions or commercial companies or partnerships established thereby); foreign citizens invited to the Russian Federation as researchers or teachers to perform research and development or teaching activities (with the exception of religious educational institutions) as well as foreign citizens that entered Russia on the basis of a business, work or humanitarian visa and performing teaching activities in academic organisations and higher education institutions (except for theological education institutions); foreign citizens who are accredited employees of representative offices of foreign legal entities accredited in the territory of the Russian Federation in accordance with the established procedure; foreign creative specialists aged up to 14 years involved in activities of cinema companies, theatre and concert organisations, circuses; foreign sportspeople aged up to 18 years; foreign citizens recognised as refugees or those who were granted temporary asylum in the territory of Russia. The conditions and procedure for employing foreign citizens are set forth in the Law on the Legal Status of Foreign Citizens and the Administrative Regulation for the Federal Migration Service and other state authorities rendering state services for issuing permits to attract foreign citizens and work permits to foreign citizens 1. In accordance with the Law, a special type of invitation and an ordinary work visa are issued to foreign citizens entering Russia for employment purposes. In addition, the Government of the Russian Federation annually establishes a quota for the issuance of invitations to enter the Russian Federation for the purpose of employment and a quota for the issuance of work permits. Moreover, the Government annually approves an admissible proportion of foreign employees engaged in various branches of economy. As a rule, this restriction is established with respect to such branches as retail sale of alcoholic drinks, tobacco products, pharmaceutical goods as well as retail sale via stalls, markets and non-shop retailing. 2.2 Foreign Employees Arriving in Russia on the Basis of a Visa The following documents are required in order to hire foreign employees arriving in Russia on the basis of a visa: a permit to hire foreign employees (to be prepared by the employer for one or more employees); a work permit (to be prepared for each employee). The procedure for hiring foreign employees includes the following steps: 1. The employer files an application on labour requirements for filling vacant and newly created work places with foreign em - ployees (application for a quota). 1 Order of the Federal Migration Service No. 1, of the Ministry of Healthcare and Social Development of the Russian Federation No. 4, of the Ministry of Transportation of the Russian Federation No. 1, of the State Fishery Committee of the Russian Federation No. 2 dated 11 January 2008 On approval of the Administrative Regulation for the Federal Migration Service, executive bodies of Russian Federation administrative units exercising assigned powers of the Russian Federation in the area of assisting in employing the population, the Federal Agency for Sea and River Transportation and the State Fishery Committee of the Russian Federation rendering state services for issuing opinions on attracting and engaging foreign citizens, permits to attract and engage foreign citizens, as well as work permits to foreign citizens and stateless persons.

7 Page 7 April 2015 The employer files the said application annually with the competent authority of the particular administrative unit of the Russian Federation; the state authorities use the application to shape the quotas for permit documents for foreign citizens. If the application is not filed, the employer faces the risk of being denied issuance of the permit documents on the basis of the quota approved for the current year. Employers hiring foreign employees having professions, to which quotas on work permits do not apply, are exempt from the obligation to file quota applications. The list of such professions is approved by Order of the Ministry of Labour and Social Protection of the Russian Federation No. 768н dated 12 December 2013 and includes, in particular, the positions of general director of an enterprise, general director of a joint stock company, director of a representative office, branch, firm, chairman of the board and deputy thereto. 2. The employer obtains a permit to engage and use foreign citizens. This procedure includes the following actions: 2.1. Submitting an application for providing the employer with state services for selecting the required employees, as well as information on existing vacancies for entry in the database; 2.2. Obtaining a permit to engage and use foreign employees from the territorial body of the Federal Migration Service of Russia. 3. An application is filed with a territorial body of the Federal Migration Service of Russia for issuance of a work permit (and an application for issuance of an invitation to enter the Russian Federation). 4. The employer obtains an invitation for work purposes and a work permit for each foreign employee. 5. The employer ensures migration registration of the invited foreign citizen following his / her entry to Russia with the terri torial body of the Federal Migration Service of Russia and extension of his / her visa. 6. The employer notifies the territorial body of the Federal Migration Service of Russia of the employment agreement entered into with the foreign citizen. The foreign employee obtains a certificate confirming know - ledge of the Russian language, the history of Russia and the fundamentals of legislation of the Russian Federation and submits it to the territorial body of the Federal Migration Service of Russia. The state duties for issuing the permit documents required for attracting foreign employees for labour activities are as follows: permit to hire foreign employees 10,000 rubles for each foreign employee; work permit 3,500 rubles for each foreign employee; invitation to enter the Russian Federation 800 rubles for each foreign employee. 2.3 Foreign Employees Arriving in Russia on a Visa-Free Basis The Law on the Legal Status of Foreign Citizens establishes particular features of the labour activities of foreign citizens arriving in the Russian Federation on a visa-free basis. Foreign citizens of this category are hired on the basis of a patent. A patent is a document giving the right to perform labour activities in the territory of Russia provided that a foreign citizen pays individual income tax in the form of a lump-sum advance payment calculated in accordance with tax legislation (Article of the Tax Code of the Russian Federation). The patent is issued for the period from 1 to 12 months and is valid in the territory of the administrative unit of the Russian Federation where it was issued. If the patent specifies any profession, the respective foreign employee may be hired only in accordance with this profession. The procedure for hiring a foreign citizen who arrived in Russia on a visa-free basis is comprised of the following stages: 1. The foreign citizen obtains a certificate confirming knowledge of the Russian language, the history of Russia and the fundamentals of legislation of the Russian Federation. 2. The foreign citizen files an application with a territorial body of the Federal Migration Service of Russia for issuance of a patent. 3. The foreign citizen pays individual income tax in the form of a lump-sum advance payment for the period of validity of the patent specified in the application. 4. The foreign citizen obtains the patent from the territorial body of the Federal Migration Service of Russia. 5. An employment agreement is entered into with the foreign citizen. 6. The employer notifies the territorial body of the Federal Migration Service of Russia of the employment agreement entered into with the foreign citizen. 7. The foreign citizen sends a copy of the employment agreement to the territorial body of the Federal Migration Service of Russia. Once the patent has expired, it may be extended or reissued. The patent may be extended if it was issued for a period of no longer

8 Page 8 April 2015 that 12 months, whereas the total period of validity of the patent taking into account any extension periods may not exceed 12 months from the date of issuance thereof. Once 12 months have lapsed from the date of issuance of the patent, labour activities may be continued if only the patent is reissued. The patent may be reissued for a period of from 1 to 12 months. The foreign citizen is obligated to pay individual income tax in the form of a lump-sum advance payment for the period, for which the patent is extended or reissued. 2.4 Highly Qualified Foreign Specialists The Law on the Legal Status of Foreign Citizens provides for a special category of foreign highly qualified specialists, recognised as foreign citizens engaged for labour activities in the Russian Federation under employment agreements or agreements of a civil nature (contracting, services) and meeting the following requirements: 1. existence of work experience, skills or achievements in the particular area of activities; 2. the salary (fee) pursuant to the concluded employment or civil agreement (contracting, services) amounts to at least 167,000 rubles per month. The right to invite and hire highly qualified specialists is had by both Russian commercial organisations and branches and representative offices of foreign legal entities duly accredited in Russia. Moreover, the competency and level of qualifications of foreign citizens engaged as highly qualified specialists are verified and evaluated by the employer (customer of works / services) independently, at its own risk and peril and beyond the control of any state authorities. Several preferences are established for foreign highly qualified specialists, some of which are already described above in the respective sections. The main advantages in terms of engaging the said persons for labour activities are set forth below: An employer inviting a foreign highly qualified specialist is exempt from the obligation to file an application for receiving a quota for the issuance of work permits and a quota for the issuance of invitations to enter the Russian Federation for the purpose of employment. These types of quotas do not apply to foreign highly qualified specialists. In order to engage a highly qualified specialist for work an employer is not required to obtain a permit to engage and use foreign employees. A simplified procedure is established for applying to an authorised body of the Federal Migration Service for issuance of a work permit. To obtain a work permit an employer sends a petition 2 to engage a highly qualified specialist with several documents attached, in particular the employment agreement or civil agreement for performing works (rendering services), the entry into force of which is conditional upon the highly qualified specialist receiving a work permit, also containing a provision on voluntary medical insurance of the foreign worker and his / her accompanying family members. The time period for considering an employer s application to engage a highly qualified specialist amounts to no more than 14 business days. A permit is issued to a foreign specialist only personally upon presentation of an identification document. The term of the work permit for a highly qualified specialist and the term of the work visa will correspond to the term of the employment or civil agreement with the specialist, but not more than three years, with the possibility of unlimited prolongation for three years each subsequent time. If in accordance with the concluded agreement it is intended that the highly qualified specialist will work in two or more regions of the Russian Federation, he / she is granted a work permit in all such regions. Highly qualified specialists are exempt from the obligation to obtain a certificate confirming knowledge of the Russian language, the history of Russia and the legislation of the Russian Federation. Furthermore, a reduced income tax rate is established for highly qualified specialists: 13 per cent. This rate is applicable from the first day of labour activities in Russia. In the event of premature termination of the employment agreement with a highly qualified specialist, within 30 business days the specialist may search for another place of employment and receive a new work permit. Given a positive outcome, the new employer organises the foreign citizen s receipt of a new work permit in the usual manner. Furthermore, the previous work permit, visa and residence permit (if any) of the foreign highly qualified specialist and family members are considered valid up to the issuance of the new work permit or denial to issue it. In the latter case, or if the foreign citizen does not enter into a new employment or civil agreement within 30 business days, he / she and the family members must leave the Russian Federation within the subsequent 30 business days. 2 The form of this petition is approved by Decree of the Government of the Russian Federation dated 30 June 2010 No. 487.

9 Page 9 April 2015 Simplifying the procedure for engaging highly qualified foreign specialists for work is accompanied by additional requirements for employers to notify bodies of the Federal Migration Service of Russia of the occurrence of events stated in the law (engagement for labour activities, payment of salary, etc.). Furthermore, an employer that has breached provisions of the employment agreement with a foreign specialist or is held responsible for an administrative offense in connection with engaging foreign citizens for work loses the right to engage foreign highly qualified specialists for two years. 2.5 Foreign employees from the WTO member countries Article 13.5 of the Law On the Legal Status of Foreign Citizens provides for the possibility to hire foreign citizens sent to work for Russian representative offices, branches and subsidiary companies of foreign commercial companies registered in the WTO member countries in accordance with a simplified procedure. These foreign citizens (hereinafter referred to as key employees ) are entitled to perform labour activities in Russia on the basis of a work permit and a work visa issued for the period of validity of the employment agreement but for up to three years. This period may be repeatedly extended but every time for no longer than three years. Quotas for issuance of invitations to enter Russia and work permits do not apply to key employees. Moreover, in order to hire key employees employers are not required to obtain a permit to engage and use foreign employees. A foreign citizen sent to Russia to work is recognised as a key employee and enjoys the advantages of the procedure for performance of labour activities described above if he / she has worked for the sending foreign commercial company (hereinafter referred to as the sending company ) for at least one year immediately prior to being sent to Russia and if such employee is sent to: 1. a representative office of the sending company to occupy the position of the executive officer of the representative office or any other position that involves management and coordination of activities of the representative office. In this case, there are no requirements as to the amount of salary; 2. a branch or subsidiary company of the sending company to occupy the position of: the executive officer of the branch or the subsidiary company. In this case, there are no requirements as to the amount of salary; or other position that involves labour activities related to the rendering of services in Russia while the salary amounts to at least two million rubles per year. At the same time, the foreign citizen must be highly qualified and (or) have outstanding knowledge meeting the requirements established by the Government of the Russian Federation and necessary for the rendering of the services by the branch or subsidiary company. The total number of key employees performing labour activities in representative offices of companies that sent them may not exceed five persons, and in the banking sector two persons. It should be noted that the status of key employees is similar, to some extent, to that of highly qualified specialists who are engaged in accordance with a simplified procedure for issuance of permitting documents (see Section 2.4). However, unlike the said specialists, key employees may not enjoy a reduced individual income rate. The income tax rate applicable to key employees shall be determined in accordance with the general rules and depends on the period of stay in Russia: 13 per cent for employees staying in Russia for at least 183 calendar days within 12 consecutive months and 30 per cent for employees staying in Russia for less than that. Moreover, key employees are not exempt from the obligation to obtain a certificate confirming knowledge of the Russian language, the history of Russia and the fundamentals of legislation of the Russian Federation. Practical comment: Some details of the procedure for engagement of key personnel have not been regulated yet, due to which at present this procedure is not applied. For example, requirements for the qualification and knowledge of key employees and the list of services of branches and subsidiary companies of sending companies, for rendering of which key employees may be engaged, must be established. Upon approval of the respective regulatory acts, the procedure for engagement in Russia of key employees from the WTO member countries will be applied in practice. 3. Liability for Violation of the Law on the Legal Status of Foreign Citizens The Law on the Legal Status of Foreign Citizens contains general provisions on liability for violations of the rules established therein. Specific types of violations and liability are defined in Chapter 18 of the Russian Federation Code of Administrative Offenses (CAO) as follows:

10 Page 10 April 2015 Types of offenses Liability of foreign citizens (employees) Liability of officers of the inviting organisations Liability of legal entities 1. Violation of the rules for staying in the Russian Federation, e. g. amount of from 2,000 to 7,000 rubles amount of from 40,000 to 50,000 rubles amount of from 400,000 to 500,000 rubles violation of the procedure for executing documents for the right of foreign citizens to stay and to reside, migration registration rules, length of stay, choice of place of residence (Art. 18.8, 18.9 of the CAO) In addition: administrative expulsion from Russia may be applied (at the discretion of the authorities imposing the sanction, except for Moscow, St. Petersburg, Moscow and Leningrad Regions where expulsion is obligatory) In case of violation of the rules for staying (residing) in the Russian Federation for foreign citizens in relation to 2 or more invited foreign citizens, administrative liability shall accrue in relation to each foreign citizen severally (Article 18.9 of the CAO) (Art of the CAO) (Art of the CAO) 2. Unlawful performance of labour activities by a foreign citizen in the Russian Federation and unlawful hiring of a foreign citizen in the Russian Federation (Art , of the CAO) amount of from 2,000 to 5,000 rubles In addition, administrative expulsion from Russia may be applied (at the discretion of the authority that imposed the sanction, except for Moscow, St. Petersburg, Moscow and Leningrad Regions where expulsion is obligatory) amount of from 25,000 to 50,000 rubles (in relation to each foreign citizen unlawfully hired) (Art of the CAO) amount of from 250,000 to 800,000 rubles, or administrative suspension of activities for from 14 to 90 days (in relation to each foreign citizen unlawfully engaged for labour activities) (Article of the CAO) (Art of the CAO) 3. Failure to notify the territorial body of the Federal Migration Service of Russia in cases stipulated by legislation of the Russian Federation (parts 3-5, art of the CAO) amount of from 35,000 to 70,000 rubles amount of from 400,000 to 1,000,000 rubles, or administrative suspension of activities for from 14 to 90 days

11 Page 11 April 2015 Imprint Elena Sapegina Lawyer BEITEN BURKHARDT St. Petersburg Natalia Wilke Lawyer, Partner Head of the Representative Office BEITEN BURKHARDT St. Petersburg This publication is issued by BEITEN BURKHARDT Rechtsanwaltsgesellschaft mbh Ganghoferstrasse 33, D Munich Registered under HR B at the Regional Court Munich / VAT Reg. No.: DE For more information see: Editor in charge Natalia Wilke Please note This publication cannot replace consultation with a trained legal professional. Should any questions arise, our team of BEITEN BURKHARDT will be pleased to offer advice in more detail. If you no longer wish to receive this newsletter, you can unsubscribe at any time by (please send an with the hea ding Unsubscribe to bblaw-stpetersburg@bblaw.com) or any other declaration made to BEITEN BURKHARDT. BEITEN BURKHARDT Rechtsanwaltsgesellschaft mbh. All rights reserved You will find further interesting topics and infor mation about our experience on our website. BEITEN BURKHARDT RECHTSANWÄLTE (ATTORNEYS-AT-LAW) MOSCOW TURCHANINOV PER. 6/ MOSCOW TEL.: FAX: FALK TISCHENDORF FALK.TISCHENDORF@BBLAW.COM ST. PETERSBURG MARATA STR LIT. A OFFICE ST. PETERSBURG TEL.: FAX: NATALIA WILKE NATALIA.WILKE@BBLAW.COM 04/2015 BEIJING BERLIN BRUSSELS DUSSELDORF FRANKFURT AM MAIN MOSCOW MUNICH NUREMBERG SHANGHAI ST. PETERSBURG

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