New crypto haven or US competitor: Russia approves crypto taxation

The Russian government has approved a bill regulating the taxation of crypto transactions. What will change now in the country’s tax base?

The Russian government has passed a bill regulating cryptocurrency taxation. According to local media reports, the bill prepared by the Ministry of Finance grants crypto asset status. This means that companies must pay income tax on crypto transactions, while individuals will be subject to personal income tax.

For Russian citizens, this rate will vary between 13% and 22% from next year, depending on their income. However, crypto transactions will not be subject to value added tax. Citizens and legal entities are obliged to report crypto transactions to the Federal Tax Service if collections and offsets exceed 600,000 rubles per year (about $6,000 as of press time).

Crypto mining infrastructure operators will need to transfer data on services offered to the tax service. If information is not received within the specified time, the site will face a fine of 40,000 rubles (about $400). It is noteworthy that the bill was prepared in December 2020, but its consideration stopped at that time. The adoption of this provision comes after crypto mining was legalized in Russia on November 1, 2024. Companies and individual entrepreneurs can mine crypto (for example, Bitcoin) after registering in a special register of the tax service.

How will tax be paid on profits from crypto?

The tax on mining profits will consist of two steps. First, miners will make a prepayment when receiving cryptocurrencies into their wallets. Additional taxes will then be applied when digital assets are sold. Miners will owe more taxes if the value of mined coins increases after the initial payment. Conversely, if the value decreases, overpayments may be recorded as losses.

According to the latest proposal from the Russian Ministry of Finance, the tax rate on cryptocurrency sales could be 13% from 2025 and 15% if the citizen’s income exceeds 2.4 million rubles (about $24,000) annually. As Russian state-controlled media Interfax reported, digital currency is recognized as property for the purposes of the Tax Code.

The same principle was incorporated into the bill during its first reading more than three years ago. Income from transactions with digital currency will be included in the general tax base, as well as income from the sale of shares, bonds, investment units, repo transactions with securities and transactions with securities in individual investment accounts and deposits in Russian banks. This will come into force in 2025.

If the total annual income of an individual from all these sources does not exceed 2.4 million rubles, personal income tax will be 13%. If this amount is exceeded, the tax will be 15% of the amount exceeding 2.4 million rubles plus a fixed amount of 312,000 rubles (approximately $3,100), corresponding to 13% of 2.4 million rubles. In addition, the ministry will determine the tax amount as follows: The tax base will be determined based on the market price of the digital currency at the time the income is generated.

Foreign trade organizations will determine the market price (closing price) according to the transactions made during the day. Foreign trade organizations are organizations whose digital currency trade volume exceeds 100 billion rubles ($1 billion) per day.

If transactions for the same cryptocurrency were carried out on two or more foreign crypto exchanges, the taxpayer can independently choose the market price. In this case, the proceeds from the sale of the cryptocurrency will be calculated based on the actual sale price, but not lower than the market price, reduced by 20%.

Russia follows North America’s path

The media noted that the mechanism for paying taxes through cryptocurrency was created according to the North American approach.

As Oleg Ogienko, BitRiver’s deputy general manager of communications, explained, the miner’s profit tax is charged upon receipt of crypto in a wallet, minus reasonable and documented charges. Miners can also claim back some of the tax paid if their expenses are proven to be necessary.

“Apparently, the proposed mechanism was created according to the North American approach. Well. First, the miner’s profit tax is levied upon receipt of the cryptocurrency in his wallet, minus reasonable and documented expenses. The miner is then charged capital gains tax when the cryptocurrency is disposed of from its original wallet.”

Oleg Ogienko

Unlike Russia, taxation in the US varies depending on how long the cryptocurrency is held. Short-term assets are taxed at rates between 10% and 37%, depending on income. Long-term owners benefit from lower rates such as 0%, 15% or 20%.