13% or more: taxes on income from crypto in Russia

taxes on income from crypto in Russia

Over the past couple of weeks, two bills have been submitted to the State Duma of the Russian Federation. The Digital Financial Assets Bill legitimizes blockchain technology, mining, and initial coin offerings (ICOs). The second bill amends the Russian Civil Code to introduce terms such as “digital money” and protect the rights of crypto investors. The bills are expected to be passed by early summer, but changes in tax legislation will follow later.

Tax liabilities

At the same time, individuals in the Russian Federation are not exempt from the obligation to inform the tax authorities about their income from operations with cryptocurrencies. According to the standard financial regulation, the standard tax rate of 13% also applies to profits made from trading cryptocurrencies. The Notice of Clarification was issued in response to a private request (No. 03-04-05 / 66994) filed in October last year.

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While the letter is only a recommendation, tax lawyers say it reflects the ministry’s position and should be used as a reference before the new rules are passed. The income tax rate and other crypto-related tax parameters will be officially confirmed with the changes in the tax code. The Russian parliament and the Ministry of Finance are currently working on these changes, which are expected to take effect by the end of the year.

Until that happens, Russian citizens are required to declare their income generated from working with crypto in their tax returns and regularly pay income tax at a flat rate of 13 percent. Foreign citizens staying on the territory of the Russian Federation for at least 183 days a year are considered and taxed as residents of the country. In all other cases, the rate is doubled to 30 percent. Dividends are taxed at 6% and 15% respectively for non-residents.

Mining and taxes

The bill, currently under consideration in the lower house of the Russian parliament, defines cryptocurrency mining as “entrepreneurial activity.” This means that miners will either have to register as individual entrepreneurs or register as a legal entity. In any case, they will have to report their profits and pay taxes. The applicable tax rates and tax rights depend on the type of registration they choose. Income tax for legal entities in Russia is 24%.

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Many aspects of cryptocurrency taxation require further clarification. Legal experts say Russian tax officials lack the knowledge needed to adequately address the issue. Federal Tax Service inspectors are trying to understand how crypto exchanges work and have no idea how to identify the owner of a cryptocurrency wallet.

At the same time, traditional rules clash with the principles of anonymity and independence on which cryptocurrencies are based. However, people and businesses run the risk of being held accountable if they do not report their cryptocurrency income.


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