An individual investment account is a way to store money with a return higher than on a bank deposit or invest it in securities, currency and other financial instruments, where the profit may be higher than the market.
How is IIS
IIS is an account for an investor. He has been working in Russia since 2015 – the state introduced him to stimulate the investment activity of the population.
What is the difference between an IMS and a brokerage account
IMS is similar to a regular brokerage account, but it has an advantage. You can get one of the tax benefits:
- Return part of the tax on personal income (for example, which is taken from salary).
- Do not pay income tax on investments.
An individual investment account can only be opened to a citizen and tax resident of the Russian Federation. Resident – one who lives and earns in the territory of the Russian Federation for more than 6 months in a year.
IIS conditions:
- You can buy and sell Russian and foreign securities. But the account needs to be replenished in rubles. Because the FTS does not make deductions in foreign currency. Already on the account, you can change them and buy securities for dollars or euros.
- IIS can only be opened with a Russian broker.
- IIS does not give access to foreign exchanges: only to Moscow or St. Petersburg.
- You can replenish the amount of not more than? 1? 000 000 per year.
- The minimum replenishment amount is not limited – you can start at least from 1000 rubles.
- Money that the owner transfers to the account can be withdrawn. But if this is done earlier than 3 years after the opening of the IIA, a tax deduction is not available. If the account is open on January 5, 2019, do not withdraw money from it until January 6, 2022.
- An investor can have only one IMS. To open a new account, you need to close the old one. This can be done at any time. But if the account is closed before 36 months after opening, the deductions burn out. Moreover, you need to return the money to the state if you received deductions in the past or the year before last..
- The deduction is charged once a year.
IIS tax deduction: what are and how do they differ
There are two types of IMS – they differ in the type of deduction:
- Type A – deduction on contributions. The FTS returns the personal income tax paid for the year. The deduction is 13% of the amount allocated to the IIS, but not more than 400? Thousand rubles.
- Type B – income deduction. The Federal Tax Service does not take tax on profits received from investing with IIS. The deduction amount is unlimited.
The type is not set in advance – the owner can decide at any time until the account is closed.
The deduction is received only by those who pay personal income tax: from salaries, sale of property, winnings in lotteries. Individual entrepreneurs and self-employed people pay other taxes to which this benefit does not apply..
Pros and cons of IIS with a deduction on contributions
How it works:
- You opened an account and replenished it for 400? Thousand rubles in a year. You have a job with a “white” salary, with which you paid more than 52 thousand personal income tax for this year. In January of next year, you request from the Federal Tax Service a deduction for IIS from 400? Thousand. This is 13% – 52? Thousand.
- You opened an account and replenished it with 300? Thousand. Here you can count on a deduction of 39? Thousand (13%). But your official salary is 20 thousand, that is, for a year personal income tax amounted to 2600 x 12 = 31,200 rubles. The Federal Tax Service will not return more than this amount.
The advantage is guaranteed income. You know how much money was deposited into the account, how much personal income tax was paid for the year and you can calculate how much will be returned.
Minus – the maximum amount of deduction does not exceed 52 thousand.
Pros and cons of IIS minus income
How it works:
You opened an account, replenished it by 800 thousand, invested half in OFZ bonds, and half in stocks. By the end of the year, stocks doubled in price. You sold them. The purchase was for 400 thousand, the sale was for 800 thousand. Profit – 400 thousand rubles.
By default, these 400 thousand should take 13% of the tax, that is 52 thousand. But you choose the deduction type B and do not pay it.
Advantage: no need to pay income tax, no matter how big it is.
Minus: you need to invest successfully. In type A, you can simply keep money in your account and receive additional money from the Federal Tax Service. This is not possible here.
What type of tax deduction to choose?
- Deduction for contributions – for a beginner and passive investor. It reduces the effect of inflation. You can not buy securities at all, but keep money in the account and receive a deduction. But it is better to invest, even in the most conservative securities – OFZ bonds. Then the profit on the IIA may exceed the yield on the bank deposit.
- Income deduction – for an experienced investor who earns a lot from securities.
How to open IIS
To open an account, you need to contact a Russian broker. It is enough to ask a question to an employee of the company on the site, ask him about the conditions of service, what documents will be needed, can I open IIS online or go to the office.
Now most brokers allow you to do this through a smartphone or website – just a passport, TIN and SNILS are enough.
Where to open IIS
Choose brokers who have a reliable reputation, extensive experience and low commissions. Here are a few companies that lead in the field of brokerage services in the Russian Federation. Full rating can be viewed at Moscow Exchange website.
Compare IIS from different brokers
- Sberbank
- BCS
- Finam
- Tinkoff Investment
- VTB
- Opening
- Alfa Bank
The best IMS are those where:
- Offer low transaction fees.
- Do not charge a depositary fee or percentage of contributions.
- Do not charge a minimum monthly fee.
- Accrue interest on the balance of the account.
How to get a tax deduction according to IIA: instruction
1. Log in to the website of the Federal Tax Service
If you have not used your personal account before, 3-4 days before the declaration log in using login and password. Such a period is needed so that information about you is added to the cabinet: 2-personal income tax certificates, objects of taxation, taxes assessed on them, reports on taxes paid.
2. Make an electronic signature
For the first time you have to make an electronic signature: open the profile and go to “Get ES”. Choose storage in the FTS system, create a password for access. An unskilled signature will be created for you, that is, it can only be used on the website of the Federal Tax Service.
3. Prepare documents:
- 2-personal income tax.
- Scan of the agreement on the opening of IMS (it is called differently by brokers, so it’s better to clarify).
- Confirmation of receipt of funds to the account: cash receipt order, payment order, money transfer order or broker report.
4. Fill out the 3-NDFL declaration in the section “Life situations”.
- Indicate the year during which the account was replenished.
- Note that in the declaration income is only from sources in the Russian Federation.
- Indicate that you include investment deductions in the declaration.
- Enter your earnings data. If the employer has already submitted annual reports, click “Download from the inquiry” – the data is imported from the system. If not, fill in according to 2-personal income tax.
- Indicate the amount of deduction: how much you contributed to IIS for the year, but not more than 400 thousand.
- Download scans of documents: 2-NDFL, agreement with a broker, confirmation of receipt of contributions.
- Before sending the declaration, you will see the preliminary deduction amount that you will receive. Enter the password for the digital signature and click “Verify and send”.
5. Submit a deduction application.
Wait a few days after sending – an overpayment will be displayed in the “My taxes” section. Click “Order.” Money can be received in a bank account, the details of which are indicated immediately.
Inspection and transfer of deduction to the account takes about 4 months.
IIS Risks
1. You may need money, but you cannot withdraw from your account – lose your deductions.
It is better to open an account as early as possible and start transferring free money to it. So, after 3 years you are guaranteed to receive income and be able to reinvest it. And if you need money sharply, the IIS closure date will be closer.
2. The broker may lose the license
If you choose reliable brokers, this is unlikely. In addition, the securities belong to the investor – information about this is stored in the national settlement depository. The broker is only an intermediary between the account holder and the exchange.
Therefore, if the broker loses his license or goes bankrupt, the securities will remain your property – it will be enough to transfer to another intermediary.
3. The state may cancel the tax deduction
The program for involving people in investments may change. Perhaps they will introduce new rules, cancel or reduce deductions, limit the choice of investment instruments.
But, most likely, this will concern only new accounts – old ones will be serviced until closing on the terms on which they were opened. Even if the new rules apply to previously opened IISs, this will not happen immediately..
Where can I invest through IIS
In theory, anywhere: stocks, bonds, futures, options, ETFs, currencies. You can invest in everything that is on the Russian stock exchange. Sometimes some brokers limit the choice of instruments. This must be watched at the conclusion of the contract..
IIS Profitability – How Much Can You Earn?
The potential profit depends on the strategy, on what tools you will use:
- Conservative strategy. Do nothing with the money in the account and receive income from deductions (for payroll taxes).
- The optimal strategy. Buy securities, for example, OFZ bonds, which are guaranteed to give 5-7% yield.
Conservative strategy
This plan is very simple: you replenish your account every year, for example, by 400,000 rubles and get deductions for these contributions. In the first year you need to postpone 400? 000, and in the second and third – 348? 000, because 52? 000 will receive deductions.
The investments for 3 years: 400? 000 + 348? 000 + 348? 000 = 1? 096? 000 rubles.
Profit due to deductions: 156? 000 rubles.
Profitability: 156/1096 = 14.23%.
Optimal strategy
If you buy government bonds (OFZ) using money on IIS, the profit will increase: you will receive both deductions and coupon income (bond income, which is paid at regular intervals).
OFZ is the financial instrument with the lowest risk. They are not taxed unless you sell them ahead of time. Therefore, investors hold them until the maturity date when the bond is redeemed back at its original cost..
How to close IIS
To close, you need to take three steps:
- Sell securities with IMS or transfer them to a brokerage account.
- Write a statement to the broker – how to fill out the application correctly and what to indicate in it, they will tell in the company’s support service.
- Wait for closing.
The broker himself contacts the tax service, checks what privileges you are entitled to, withhold taxes. At the end, the money is transferred to the account indicated in the application.
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Could you provide more information on how to receive up to 52,000 rubles from the state through IIS? What is the process involved and are there any specific criteria or requirements to be eligible for this financial support?
Can you please provide more information on how one can obtain up to 52,000 rubles from the state through IIS? Are there specific criteria or requirements that need to be met?
To obtain up to 52,000 rubles from the state through the Individual Investment Account (IIS) program in Russia, individuals need to first open an IIS with a licensed broker or bank. The maximum amount that can be contributed annually is 400,000 rubles, with a tax benefit of up to 13%. In order to qualify for the state subsidy of up to 13,000 rubles, individuals must meet certain criteria such as being a Russian tax resident, not withdrawing the funds for at least three years, and investing in approved financial instruments. Additionally, there are limits on the amount that can be invested in certain types of assets, such as stocks, bonds, and mutual funds. It is important to carefully review the regulations and guidelines of the IIS program to ensure eligibility and maximize the benefits.
To obtain up to 52,000 rubles from the state through IIS (Individual Investment Account), individuals must first open an IIS with a qualified financial institution. Once the account is open, they can then contribute funds to the account, up to a maximum of 400,000 rubles per year. To receive the maximum state subsidy of 13% on their contributions, individuals must not withdraw funds from the account for at least three years. Additionally, there are certain criteria that need to be met, such as being a Russian tax resident and not having an existing investment account. It is important to consult with a financial advisor or the specific financial institution for more detailed information on the requirements and process for obtaining the state subsidy through IIS.