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Views: The competence of the Russian tax authorities in the field of cryptocurrencies has not yet reached the level where it is possible to draw up a full-fledged regulatory framework for income from digital assets. The reason for this is the complexity of calculations, as cryptocurrency has many more nuances than fiat currencies.
There is no taxation for the simple storage of cryptocurrencies and the absence of purchase and sale transactions. It comes when an individual or legal entity sells a digital asset and receives fiat currency for it.
Taxes on cryptocurrency in the Russian Federation are payable:
- Individuals receiving income from transactions with cryptocurrencies
- Legal entities conducting business related to cryptocurrencies
- Miners who receive remuneration for mining cryptocurrencies and consume a large amount of electricity.
How does the tax payment process work?
- Individuals report cryptocurrency income on their annual tax return
- Legal entities account for cryptocurrency transactions in accounting and tax records
- Miners pay taxes as self-employed or as part of the activities of a legal entity
Cryptocurrency law by August 2024
The legislation on cryptocurrencies in Russia is in the stage of active formation. Let us consider the main provisions and specifics of the regulation of this sphere:
1. Federal Law “On Digital Financial Assets”:
- Entered into force on January 1, 2021
- Establishes the concepts of “digital currency” and “digital wallet”, but does not clearly define them
- Prohibits the use of digital currencies as a means of payment in Russia
2. Taxation:
- Profits from cryptocurrency transactions have personal income taxation (PIT) at the rate of 13% (for residents of the Russian Federation)
- Legal entities account for transactions with cryptoassets under the general taxation system
- There are no special tax regimes for cryptocurrency activities
3. Regulation of mining:
- Mining is not prohibited and has recently been added to OKVED 72.40 “Activity on creation and use of databases and information resources”.
- Legal entities are allowed to engage in mining without restrictions, for individuals there are restrictions on energy consumption.
4. Outlook:
- The introduction of legal status for digital currencies is being discussed
- Creation of a national digital currency (digital ruble) is planned.
- Further development of legislation in the field of cryptoassets is expected
Russian legislation is in the process of formation, trying to find a balance between regulation and the development of innovative financial technologies. Cryptocurrency market participants need to carefully monitor changes in the regulatory framework.
When does the obligation to pay tax arise?
For persons who are not engaged in mining, but simply carry out transactions with cryptocurrencies, there is an obligation to pay tax in the case of profit fixation when withdrawing cryptocurrency into fiat money.
For example: you bought bitcoin at a rate of $40.000 for $100 and do not carry out any further transactions with it. The exchange rate of the coin has increased to $44,000, i.e. by 10%. Even in this case, the individual does not pay any taxes, as his funds remain in the cryptocurrency and the profit was not fixed in any way.
Having decided to fix the profit, you sell bitcoin, and your income amounted to $10 and 13% should be paid from this amount.
Who pays tax on cryptocurrency and what is the rate?
Taxes on cryptocurrencies in the territory of the Russian Federation must be paid by absolutely all persons carrying out transactions with cryptocurrencies.
The rate of taxation on income from cryptocurrency transactions for individuals is 13%
For legal entities the rate is 20%, but they rarely pay taxes, because all wallets are often registered on individuals, as on cryptocurrency exchanges there is no such concept as a legal entity account.
How to calculate the tax correctly?
A citizen of the Russian Federation, during 2022 made the following transactions with cryptocurrency:
- Purchase of 1 BTC for 3,000,000 rubles.
- Selling 1 BTC for 4,000,000 rubles.
- Mining 0.5 ETH, the resulting market value is 100,000 rubles.
Let's calculate the taxes he has to pay.
Step 1. Determine the types of income:
- Income from the sale of 1 BTC (4,000,000 rubles - 3,000,000 rubles = 1,000,000 rubles).
- Income from mining 0.5 ETH (100,000 rubles).
Step 2: Calculation of the tax base:
- Income from the sale of 1 BTC: 1,000,000 rubles.
- Income from mining 0.5 ETH: 100,000 rubles.
Total tax base = 1,000,000 + 100,000 = 1,100,000 rubles.
Step 3: Applying the tax rate:
For personal income, the personal income tax rate is 13%.
Step 4. Calculation of tax amount:
Tax amount = Tax base × Tax rate
Tax amount = 1,100,000 rubles × 0.13 = 143,000 rubles.
Thus, the citizen must pay personal income tax in the amount of 143,000 rubles on income received from operations with cryptocurrencies in 2022.
VAT - does it have to be paid?
In some cases, transactions involving cryptocurrencies in Russia may give rise to an obligation to pay value added tax (VAT).
Let us consider the key points relating to VAT and cryptocurrencies:
1. Transactions by individuals
For individuals carrying out personal transactions with cryptocurrencies (purchase, sale, exchange), the obligation to pay VAT, as a rule, does not arise. Income of individuals from such transactions is subject to personal income tax.
2. Entrepreneurial activity
If a legal entity or an individual entrepreneur provides services related to cryptocurrencies (e.g., exchange, storage, consulting), such activities may be subject to VAT under the general rules.
3. Sale of goods/services for cryptocurrency
If an organization accepts cryptocurrency as payment for goods, work or services sold, then there is an obligation to calculate and pay VAT. The basis for calculating VAT in this case will be the cost of goods/services expressed in cryptocurrency, converted into rubles at the market rate.
4. Cryptocurrency mining
Income from cryptocurrency mining for legal entities may also be subject to VAT, as this activity may be regarded as the provision of services to maintain the operability of the blockchain.
How to pay tax and what documents to fill in?
Individuals who have received income from cryptocurrency transactions must reflect it in an annual tax declaration in the form of 3-NDFL. Legal entities account for cryptocurrency transactions as part of accounting and tax reporting.
The taxpayer independently calculates the amount of tax to be paid. For individuals, it is 13% of the tax base (the difference between income and documented expenses).
For legal entities, the income tax rate of 20% is applied. Individuals pay personal income tax not later than July 15 of the year following the reporting year. Legal entities make advance payments of income tax quarterly, and final payment is made at the end of the year.
For individuals, it is necessary to keep documents confirming income and expenses on transactions with cryptocurrencies: contracts, statements from crypto wallets, checks, etc. Legal entities keep accounting and tax records in accordance with general rules.
Liability for non-payment of tax
Main types of liability:
1. Administrative liability:
- Failure to submit or late submission of a tax return - fine from 1,000 to 30,000 rubles (Art. 15.5 of the CAO RF)
- Failure to pay or incomplete payment of tax amounts - a fine of 20% of the unpaid tax amount (Article 116 of the Tax Code of the Russian Federation)
2. Criminal liability:
- Large-scale tax evasion (over 2.7 million rubles) - up to 3 years of imprisonment (Art. 199 of the RF Criminal Code)
- Tax evasion on a particularly large scale (over RUR 13.5 mln) - up to 6 years of imprisonment (Art. 199 of the RF Criminal Code).
In addition, in case of non-payment of taxes the procedure of collection of arrears and penalties may be applied in a compulsory manner.
It is important to note that the responsibility comes regardless of whether a citizen is a resident or non-resident of the Russian Federation. It also applies to both individuals and legal entities.
How are those who do not pay tax tracked?
The Tax Service has access to data on transactions conducted through Russian cryptocurrency exchanges and platforms. They analyze this information to identify suspicious transactions and atypical income.It also cooperates with cryptocurrency exchanges and regulators in other countries, sending requests about transactions of Russian users. This helps to obtain information about income that was not reflected in declarations.
Tax officials are studying open information on transactions with cryptocurrencies in social networks, forums and blogs. This may help to identify persons who have not declared their income.
If signs of underpayment of taxes on cryptocurrency income are detected, the tax authorities have the right to conduct on-site tax audits. They will demand primary documents confirming transactions.
There is interaction between tax authorities and internal affairs bodies, Rosfinmonitoring and other agencies to exchange information and conduct joint activities to identify evaders.
Law on Cryptocurrency dated 08.08.2024
There were no special changes in the legislation on cryptocurrencies after 08.08.2024.
Mining activity now has OKVED and in addition, the Russian Federation has adopted a law on cross-border settlements in and exchange trading in digital currency.
Also from 30.08.2024 in Russia is allowed circulation of foreign digital financial assets.
Frequently Asked Questions
1. What % of income from cryptocurrency transactions should be paid and to whom?
For individuals, the % of income is 13%, and for legal entities 20%. Everyone should pay taxes on income from cryptocurrency transactions.
2. What is the responsibility for non-payment of taxes?
On the territory of the Russian Federation there is criminal and administrative responsibility. For the fact that the person did not submit a tax declaration, the fine is up to 30000 rubles. And for tax evasion can be imprisonment up to 6 years.
3. What OKVEDA code does mining have?
Mining has recently been added to OKVED 72.40 “Activity in the creation and use of databases and information resources”. Vladimir Putin signed a decree to l
