Tax Planning
Simplified Taxpayer System (УСН) vs Patent System (ПСН) in Russia: Strategy for Small Businesses
Russia’s recent changes allow small businesses who lost patent privileges (ПСН) due to income limits to transition more flexibly into the Simplified Tax System (УСН). Here's how to make that switch advantageously.
By NomadicTax Research Team • 5-8 min read • August 24, 2026
## Overview of УСН vs ПСН
- **УСН (Упрощённая система налогообложения)** is a simplified taxation regime where small businesses can choose between taxing **income only**, or **income minus expenses**.
- **ПСН (Патентная система налогообложения)** is a scratch-tax regime where individuals pay for a “patent” based on expected income. Used by sole proprietors or small firms.
## What Has Changed (2026 Law No. 104-ФЗ)
- Some businesses using **ПСН** in December 2025, whose *actual income* exceeded **20 million rubles**, **lost the right** to continue using ПСН starting January 2026. However, they are now given a **grace period** to switch to УСН. ([nalog.gov.ru](https://www.nalog.gov.ru/rn77/news/activities_fts/16620580/?utm_source=openai))
- These taxpayers may notify the tax authority no later than **1 June 2026**, to transition back-date to **1 January 2026** under УСН or change the tax object (e.g. from “income” to “income less expenses”). Forms KND 1150001 and 1150016 are used. ([nalog.gov.ru](https://www.nalog.gov.ru/rn11/news/activities_fts/16624604/?utm_source=openai))
## Strategic Planning Tips
### Choosing Object of Taxation under УСН
- If your business expenses are low, **УСН “income only”** may result in a lower tax. But if expenses are high, **УСН “income minus expenses”** usually better.
- When notified late: the opportunity was only available through the **June 1, 2026** deadline to apply retroactively to Jan 1. Missing that means no retro-application. Prepare ahead for next calendar shifts.
### Keep Records Carefully
- Maintain clear, documented **revenue records by type of activity**—this is key under the law as some thresholds (e.g., maintaining 70% revenue from core activities) affect eligibility for tax relief. (Though that part is more relevant to other reliefs introduced under УСН changes.) ([nalog.gov.ru](https://www.nalog.gov.ru/rn77/news/activities_fts/16620580/?utm_source=openai))
- If transitioning between regimes (ПСН to УСН), accurate accounting of **inventory, capital assets, income earned** under the old regime and their treatment is important—to avoid double taxation or unexpected liabilities.
## Example Scenario
**Scenario A:** An individual entrepreneur in Moscow used ПСН in Dec 2025, reported income of RUB 25 million (exceeding the 20 million limit). They can file form KND 1150001 by **1 June 2026**, to switch to УСН with effect from January 1, 2026. They choose the “доходы−расходы” (income minus expenses) object to deduct expenses and reduce taxable base. Missed the deadline? Then УСН transition only from next calendar year.
**Scenario B:** If income was just over 20 million due to bank interest, but operational income was under threshold, qualifying relief was sometimes permitted. Businesses should check whether their situation qualifies. Under УСН, those who exceeded limit only because of interest may still get some relief. ([nalog.gov.ru](https://www.nalog.gov.ru/rn77/news/activities_fts/16620580/?utm_source=openai))
## Watch-Outs
- **NA — Not Retroactive**: If you didn’t file by June 1, you cannot apply the rule retroactively—this can result in missed opportunities.
- **Penalties**: If notification about switching or changing object is not timely submitted, penalties or rejections may occur.
- **Interaction with VAT**: Once you are under УСН and cross income thresholds, you may be required to register for VAT. That has separate implications for your pricing, bookkeeping and cash flow.
## Practical Steps Going Forward
1. **Review your income** for December 2025: was it over RUB 20 million? Did excess come from interest or your core business?
2. If approaching or exceeding thresholds in coming years, plan ahead in Q4 to decide whether to stay under ПСН or move to УСН or general regime.
3. Monitor law changes: thresholds and rules may be adjusted further in future tax legislation.
4. Consult with local tax advisors on how expense deductions are treated, if switching tax objects, to plan your expense structure effectively.
## Final Takeaway
Switching from ПСН to УСН under the recent reforms offers more flexibility, especially for businesses that exceeded income limits. But timing, documentation, and object choice are critical for minimizing taxes and avoiding penalties.