Russia has taken another step towards regulating cryptocurrencies by approving a law that governs the taxation of cryptocurrency transactions. The law, prepared by the Ministry of Finance, grants cryptocurrencies the status of property, meaning that both companies and individuals will be required to pay income tax.
Key Changes in Cryptocurrency Taxation
Russian citizens will pay income tax on cryptocurrencies based on their income level, ranging from 13% to 22%. Cryptocurrency transactions will not be subject to VAT, but anyone whose total income and expenses exceed 600,000 rubles annually (approximately $6,000) must report these transactions to the Federal Tax Service.
How Will Mining Taxes Work?
Taxation of mining income will proceed in stages. Miners will first pay an advance tax when receiving cryptocurrency in their wallets. Subsequently, an additional tax will be imposed upon selling the mined cryptocurrency. If the value of the coins increases between these steps, the miners will be required to pay the corresponding tax. Conversely, if the value decreases, excess payments can be recorded as a loss.
Starting in 2025, the tax rate on cryptocurrency sales will be set at 13% if annual income does not exceed 2.4 million rubles. For higher incomes, the rate will increase to 15%.
Inspiration from North America
The mechanism for taxing cryptocurrencies is inspired by the North American approach. According to Oleg Ogienko from BitRiver, taxes are applied first on cryptocurrency income after deducting documented expenses and then again upon its sale.
Unlike Russia, the United States distinguishes between short-term and long-term holdings of cryptocurrencies, with long-term gains being taxed at lower rates. Russia adopts a similar model but adjusts it to its specific requirements.
