On January 1, 2021, the law “on digital financial assets and digital currency” came into force and is in force in Russia (abbreviated as the law on CFA or FZ 259). What actions with cryptocurrency can be carried out based on the above document, will it be necessary to pay taxes for it?
Law on digital currency in Russia was adopted on July 31, 2020… With its entry into force in the Russian legal field, for the first time, definitions of the concepts of cryptocurrency and blockchain, called “digital currency” and “distributed ledger” in FZ-259, have been given.
Definition of blockchain in FZ-259:
a distributed ledger is understood as a set of databases, the identity of the information contained in which is ensured on the basis of established algorithms (algorithm).
Definition of cryptocurrency in FZ-259:
a set of electronic data (digital code or designation) contained in the information system, which are offered and (or) can be accepted as a means of payment that is not a monetary unit of the Russian Federation, a monetary unit of a foreign state and (or) an international monetary or unit of account, and (or) as an investment and in respect of which there is no person obliged to each owner of such electronic data, with the exception of the operator and (or) nodes of the information system, only obliged to ensure compliance with the procedure for the release of these electronic data and the implementation of actions in relation to them (change) entries in such an information system to its rules.
For comparison: the definition of cryptocurrency (‘virtual currency’) in Estonia.
According to the latest edition of the Estonian Money Laundering and Terrorist Financing Prevention Act, cryptocurrency in Estonia is considered a digital form of value that can be digitally transferred, stored or exchanged, which is accepted by individuals or legal entities as a means of payment, but which is not legal tender of any country. (‘virtual currency’ means a value represented in the digital form, which is digitally transferable, preservable or tradable and which natural persons or legal persons accept as a payment instrument, but that is not the legal tender of any country).
Difference between digital financial assets and digital currency
Often, users confuse these two formulations, considering them synonymous. In fact, these are different concepts. According to the law on CFA, digital financial assets are recognized digital rights, including monetary claims, the possibility of exercising rights on equity securities, the right to participate in the capital of a non-public joint stock company, the right to demand the transfer of equity securities, which are provided for by the decision on the issue of digital financial assets in the manner prescribed by this Federal Law, issue, accounting and The circulation of which is possible only by making (changing) records in the information system based on the distributed register, as well as in other information systems.
In other words, digital financial assets are digital rights for equity securities, equity investment in a non-public JSC, monetary claims). Their primary difference is the existence of an obligated person (issuer).
Whereas digital currency is called electronic money pegged to the national currency, precious metals used to buy real goods and services (as opposed to, for example, online games). It is not a monetary unit of the Russian Federation or a foreign state, but it can be used as a means of payment. This includes Bitcoin, Ethereum, Litecoin, and other coins running on the blockchain. There is no obligated person in relation to them.
According to Article 14 of the Federal Law, it is forbidden to pay with cryptocurrency in Russia for the goods and services provided. It is recognized as property, so transactions with it must be declared.
From January 1, 2021, all individuals, Russian, foreign companies must submit to the tax authorities a report on the received right to dispose of the cryptocurrency, including through third parties, the actions taken, and its balances. Submission of a declaration is mandatory for transactions in cryptocurrency, the amount of which will exceed 600,000 rubles per year. The deadline for submitting the first declaration is April 30, 2022.
Reference: In the Russian Federation, the issue of digital financial assets is possible only through operators entered in the register of the Central Bank.
Other proposals of the Russian government
The Ministry of Finance has prepared a bill on punishment for the systematic failure to submit reports (for 2 or more reporting periods), the introduction of deliberately false data on the crypt and its balances into the report. To do this, the Criminal Code is proposed to introduce a new Art. 199.5, according to which to provide the following punishment:
for concealing large-scale cryptocurrency transactions – a fine from 100 thousand rubles to imprisonment for up to six months;
for concealment on an especially large scale – a fine from half a million rubles to imprisonment for up to 3 years.
In both cases, the convicted person may be deprived of the right to hold certain positions, to carry out certain types of activities for up to 3 years.
A large amount will be understood as the amount of transactions completed in 3 years, in excess of the equivalent of 15 million rubles. Particularly large amounts – more than 45 million rubles. The amount of transactions will be calculated from the market price of the crypto. It was also proposed to make a number of amendments to the Code of Administrative Offenses concerning the establishment of administrative responsibility and the imposition of penalties:
For the illegal release of the CFA. For citizens, it is set in the amount of 50,000-500,000 rubles, for officials – either a fine of 100 thousand – 1 million rubles, or disqualification from six months to 1 year, for legal entities – a fine of 200 thousand – 2 million rubles.
For illegal transactions. The administrative penalty is similar to clause 1: for individuals, a fine of 50 thousand-500 thousand rubles is established, for officials – a fine of 100,000-1,000,000 rubles. or disqualification from six months to 1 year, for legal entities. persons – a fine of 200,000-2 million rubles.
For violation of the rules for making transactions and accepting cryptocurrencies as payment for goods, works, services. The fine for individuals will be 20,000-200,000 rubles, for officials – 50,000-400,000 rubles, for legal entities. persons – 100,000-1,000,000 rubles. The subject of the offense is then confiscated.
Information about transactions with cryptocurrency will need to be submitted to Rosfinmonitoring.
This is interesting: transactions for the purchase and sale of cryptocurrency, made outside of Russia, in a bank of another state, are considered as carried out on its territory, subject to taxation, if at the time of the transaction the citizen has the status of a Russian tax resident (stayed in the Russian Federation for at least 90 days within 1 year and submitted the corresponding application).
What is allowed to do with crypt in Russia
Since cryptocurrency in the Russian Federation is recognized as property, you can make any transactions with it that are not prohibited by Russian law, including:
It is prohibited only to accept coins as payment for goods sold, work performed, services provided.
Mining under Russian law
In the Russian law on digital currency and there was no definition and regulation of mining… The Ministry of Finance intends to introduce amendments that provide for administrative liability and prohibit miners from taking crypt as a payment for crypto mining. This will make mining a more complicated procedure, leading to the fact that the received coins will need to be immediately exchanged for fiduciary money.
What taxes are paid by cryptocurrency owners
The new Federal Law on CFA does not contain articles related to taxation. But, since the cryptocurrency is recognized as property by the current Russian legislation, it is subject to the tax rules applicable to property. It is subject to personal income tax. The personal income tax rate in Russia is 13%, and for annual income over 5 million rubles – 15%.
According to the letter of the Ministry of Finance dated August 24, 20, No. 03-03-06 / 1/73953 (which is informational and explanatory), cryptocurrency is subject to income tax. Since chapter 25 of the Tax Code of the Russian Federation does not specify a special procedure for taxing profits received from transactions with cryptocurrency, it is taxed in the general order: the amount spent on the purchase of a crypt is deducted from the amount of income received (even if the transaction was carried out more than 1 year ago ), the result is multiplied by the personal income tax rate. Payment must be made by July 15th.
For information: minor citizens of the Russian Federation can also own a crypt. In this case, when receiving income, the parents pay the tax for them.
In case of evasion of payment, the owner of the crypt will face the punishment established by Article 122 of the Tax Code:
in case of unintentional non-payment – 20% of the amount of tax accrued;
in case of non-payment with intent – 40% of the unpaid tax.
The taxpayer will have to pay the tax himself, the penalty amount, penalty interest.
Attention! If no operations were carried out with a cryptocurrency (it was stored on a cryptocurrency wallet), tax payments are not made on it.
Is mining taxable
The Federal Law on CFA does not contain the concept of cryptocurrency mining (mining), as a result of which there are no individual provisions on taxation. According to the letter of the Ministry of Finance dated October 16, 2018 No. 03-11-11 / 74252, the concept of mining and the legal status of miners are not defined at the legislative level, therefore the issue of taxation of this type of activity can be considered only after the formation of the legislative framework on this topic …
With a high degree of probability, the tax authorities will classify mining as an entrepreneurial activity. To determine the owner of the cryptocurrency for tax purposes, most likely, it will be necessary to disclose information about the owner of the cryptocurrency wallet, the transactions of purchase and sale. Setting the price of a currency is similar to setting the value of income in foreign currency – it must be recalculated into rubles. The rate of a crypt can be determined by comparing prices on the sites of several exchanges.