Taxes on operations with cryptocurrencies (CFA) in Russia

The main articles are:

• Cryptocurrencies in Russia
• Taxes in Russia

2024: Digital currencies recognized property and determined taxes on income from them

On November 26, 2024, the State Duma adopted in the second and third readings amendments to the Tax Code on taxation of cryptocurrencies.

Digital currencies will be considered property for tax purposes.

Income taxation:

• Revenues up to 2.4 million rubles - 13%, over 2.4 million rubles. - 15%.
• Mining income is subject to income tax (from 2025 - 25%).

2023: Russian Finance Ministry backs project to levy income tax on cryptocurrency mining

On January 25, 2023, the Russian Ministry of Finance supported a project to levy income tax on companies operating in the field of cryptocurrency mining. This decision was made by the ministry, taking into account the fact that the Tax Code of the Russian Federation already includes the provisions necessary to introduce such a measure.

The agency was supported by Anatoly Aksakov, Chairman of the State Duma Committee on the Financial Market, noting that in this case an analogue of a single tax on imputed income will be established, the rate of which will vary from 7.5 to 15 percent. He also allowed that she could reach 20 percent.

Industry representatives say that while there is no legislation in the country regulating the mining industry as a whole, the introduction of its tax will not bring the expected effect. Such decisions will not benefit the development of the financial sector of the country's economy, industry players are sure, since the legalized part of the cryoplecurrency market in the country is minimal and limited, and has only an infrastructure character. It should be noted that as of January 2023, no one pays income tax on mining activities and operations with cryptocurrency - Mining Hotels pay taxes as data centers that provide information infrastructure for rent, that is, computing power and space for storing data and there is no talk of any cryptocurrency transactions in the tax sense.

An important element of the actions of the tax authorities is the ability to control the turnover of assets, which is technically very difficult in relation to cryptocurrencies, most of the turnover is decentralized using crypto exchanges located outside the domestic jurisdiction.

Bill No. 237585-8, proposing to amend the Federal Law "On Digital Financial Assets, Digital Currency and on Amendments to Certain Legislative Acts of the Russian Federation," was submitted to the State Duma in November 2022 and sent for preliminary consideration to the Financial Market Committee, as well as for legal examination. Despite the lack of the necessary legislative regulation, mining of digital currencies in Russia has already begun to develop actively, which has become an incentive for a group of deputies and experts of the Ministry of Finance, the Bank of Russia and the Ministry of Digital Development of Russia to begin work to quickly bring the current situation in line with the norms of Federal Law No. 259-FZ on the 31.07.2020 and legitimization of the issue and turnover of digital currencies.

2022

Russia adopted a law on the taxation of digital financial assets

At the end of June 2022, the State Duma of the Russian Federation in the third (final) reading adopted a law on the taxation of digital financial assets (CFA). The document fixed the rates of corporate income tax and personal income tax, as well as the imposition of value added tax (VAT) on the implementation of the CFA.

As the authors of the initiative explained, the need to determine a separate procedure for taxing activities with such digital assets is one of the key conditions for the effective functioning of the digital economy, the full implementation of digital projects and the development of a competitive digital rights market in the Russian Federation.

Russia adopted a law on the taxation of digital financial assets

According to the law, VAT will not be subject to the services of operators of information systems in which digital financial assets are issued, as well as the services of operators of the exchange of digital financial assets under the admission of digital rights issued in accordance with the law "On digital financial assets, digital currency and on amendments to certain legislative acts of the Russian Federation" (excluding consulting services and services for granting rights to use programs for electronic computers).

In addition, the law establishes tax rates on income received from the sale of digital assets. Previously, the rate on transactions was 20%, the same as for standard assets. And under the new law, the tax will be 13% for Russian companies and 15% for foreign ones.

The calculation, withholding and payment of personal income tax on income from digital assets will be carried out by tax agents, that is, operators of InformSystems or exchange of CFAs.

The document also prescribes that the financial result of operations with digital financial assets is determined on the date of payment of income. The tax base for CFA transactions can be reduced by the amount of loss on such transactions.^[1]

The Russian authorities believe that up to 1 trillion rubles of taxes can be collected from the crypto industry

The authorities believe that even with a simplified taxation system, the amount of taxes collected from the crypto industry can be up to 1 trillion rubles a year. These estimates from February 2022 refer to data from the Coinmarketcap platform, from which it follows that the average capitalization of the global cryptocurrency market in 2021 was $1.87 trillion, and the daily turnover ranged from $50 billion to $200 billion. Russia's share in this market could be at least 12%.

Chainalysis calculated that in 2020, Russian users sold and bought cryptocurrencies for about $16 billion. Thus, even at a simplified rate of 6%, tax fees can range from 146 billion rubles to 1 trillion rubles.

2021

Digital currency tax plans

Following the release of the law on digital assets, the Federal Tax Service (FTS) proposed appropriate amendments to the Tax Code. This became known on May 24, 2021. Even at the stage of forming changes, the provisions of the bill raised questions from representatives of the crypto market, but were adopted by the State Duma in the first reading in February 2021.

What is proposed:

• Tax cryptocurrency, since it is now officially recognized as property.
• Oblige each citizen who owns digital assets to inform the Federal Tax Service about them if the amount of transactions exceeded 600 thousand rubles.
• Introduce fines: for being late in providing information about transactions - in the amount of 10% of the amount, for evading cryptocurrency tax - in the amount of 40%. At the same time, the date, no later than which information must be given, is still indicated on April 30, 2022.

How does this threaten crypto investors? On the one hand, the market confidently enters the legal field and becomes clearer and more transparent for new players. The law provides for the legal protection of asset owners.

On the other hand, there are additional difficulties. It is not legally worked out how to determine the market value of assets in cryptocurrency. They can be tied to the bitcoin or US dollar exchange rate. Given the high volatility of digital money, it is difficult to correctly fix and declare income from operations, and how the tax authorities will do this is not yet clear.

The controversial point is the introduction of criminal liability if the owner of the cryptocurrency did not provide information about the ownership of assets. Abroad, this is not practiced, but in our country it can become a reality.

At the end of 2020, the Ministry of Finance developed amendments to the Criminal Code. According to the changes, systematic tax evasion can be punishable by a fine, forced labor and even imprisonment if the amount of operations for three years is indicated on a large or especially large scale.

Until^[2] amendments take effect, investors have more questions^[3] Tax answers^[4].

Bills on fines and criminal liability for tax evasion from operations with cryptocurrencies have been submitted to the State Duma

At the beginning of February 2021, an additional 259-FZ "On digital financial assets" was submitted to the State Duma of the Russian Federation... a package of four bills tightening the regulation, first of all, of cryptocurrency turnover. The bills provide for amendments to the Tax Code, the Code of Administrative Offenses, the Criminal Code and the Criminal Procedure Codes, as well as to Federal Law No. 115-FZ "On countering the legalization (laundering) of proceeds of crime and the financing of terrorism."

The amendments to the Tax Code enshrine the status of property in relation to cryptocurrencies, and also provide for both individuals and legal entities the obligation to report to the tax authorities on all transactions with cryptocurrencies and their account balances, if "the amount of receipts or debits for a calendar year exceeds the amount equivalent to 600,000 rubles." At the same time, the amendments provide for a number of fines:

• in the amount of 10% of the largest amount of receipt or write-off of digital currency for the reporting period for untimely or inaccurate filing of a declaration;
• in the amount of 50,000 rubles for failure to notify the tax authority about transactions with cryptocurrencies on time; and
• in the amount of 40% of the amount of unpaid tax for non-payment or incomplete payment of tax on cryptocurrency transactions.

Repeated refusal to file a tax return on operations with cryptocurrencies within three years may lead to criminal liability provided for by the relevant bill. Systematic violation of the requirements of the law can be punishable by a fine, forced labor for up to two years, or arrest for up to six months, while the amount of the fine will depend on the amount in respect of which the person did not report. They are provided as a large size, for operations in the amount of more than 15 million rubles, and an especially large size for operations in the amount of 45 million rubles for three years, respectively.

The administrative code is also expected to undergo changes. The bill under consideration establishes administrative responsibility for the illegal organization of the issue, the illegal performance of transactions with digital financial assets, as well as for the illegal reception of digital currency as a counter representation for goods, works or services (that is, in violation of Article 14 of the 259-FZ "On Digital Financial Assets"...). Illegal circulation of digital financial assets and violation of the rules for transactions will be punished with a maximum fine of up to 2 million rubles, and illegal acceptance of digital currency as payment for goods and services will be punished with a maximum fine of up to 1 million rubles, respectively.

2018: Cryptomainers will be extended to the norms of the Tax Code

Main article: Cryptocurrency mining in Russia

The current norms of the Tax Code will be extended to miners and cryptocurrency owners. Personal income tax will be levied on an individual engaged in the circulation of digital money, taxation of legal entities will correspond to the form of business, Izvestia reported in July with reference to the head of the State Duma Committee on the Financial Market Anatoly Aksakov.

According to him, the bill on digital financial assets (cryptocurrencies) is planned to be adopted in the autumn session of the State Duma. He clarified that the document will not describe separate tax regimes for owners of digital money, that is , all approaches in force in the Tax Code will be applied to mining and cryptocurrency turnover.

At the same time, the head of the State Duma Committee on Financial Markets admitted that certain tax regimes for mining and cryptocurrency turnover may appear in the future if the government expresses the initiative to create them.

"If they want to describe separately for these types of business, they will write. So far, we do not describe tax issues in any way, "he added

2017

Ministry of Finance of the Russian Federation: Russians are obliged to pay tax on bitcoins

The Ministry of Finance of Russia confirmed that operations for the purchase and sale of bitcoin are subject to personal income tax (NDFL) in the same exact order as any other operations from which this tax is paid. The ministry refers to the fact that chapter 23 of the Tax Code of Russia "Personal Income Tax" does not establish any special taxation for cryptocurrency income, which means that they are subject to the general rule^[5]

The statement is contained in a written explanation that the Ministry of Finance sent on October 13, 2017 to Consultant Plus, which is developing a reference system of the same name, in response to a corresponding request. Recall that according to article 34.2 of the Tax Code, the ministry gives taxpayers written explanations on the application of Russian tax legislation. Clarifications were given by the Department of Tax and Customs Policy.

The Ministry of Finance also recalled that according to Article 41 of the tax code, taxable income is any economic benefit received in cash or in kind and subject to assessment. As established by subclause 1 of paragraph 1 and paragraphs 2 and 3 of Article 228 of the Tax Code, if an individual has received remuneration from another individual under the contract, then he himself calculates the amount of tax and pays this amount in the manner prescribed by Article 225 of the Tax Code. The payment of tax is recorded in the tax return, which is submitted to the tax authority at the place of accounting.

FTS announced an official position on the status of cryptocurrencies in Russia

The Federal Tax Service of Russia in the reference and legal system "Consultant Plus" published a letter that displays the official position of the authorities on the status of cryptocurrencies in ^[6].

The document contains the following abstracts:

1) The legislation of the Russian Federation does not enshrine such concepts as a money surrogate, cryptocurrency, virtual currency.

2) The legislation of the Russian Federation does not contain a ban on Russian citizens and organizations conducting operations using cryptocurrency.

3) The use of cryptocurrencies in making transactions is the basis for considering the issue of classifying such transactions as transactions (operations) aimed at legalizing (laundering) proceeds from crime and financing terrorism.

4) According to the Federal Tax Service of Russia, transactions related to the acquisition or sale of cryptocurrencies using foreign currency values ​ ​ (foreign currency and external securities) and (or) the currency of the Russian Federation are foreign exchange transactions.

5) The existing currency control system does not provide for the receipt by currency control authorities from residents and non-residents of information on cryptocurrency purchase and sale transactions.

Notes