The Russian government’s stance on cryptocurrencies has been a source of confusion and uncertainty for several years. While the Central Bank supports a complete ban on crypto-related activities, other government ministries, including finance, trade, and energy, have expressed a desire to legalize and regulate cryptocurrency. This conflicting approach has created a deadlock between these bodies, leaving citizens and businesses unsure of how to navigate the cryptocurrency landscape.
The legal status of cryptocurrencies in Russia remains uncertain, further complicated by the sanctions imposed on the country by the United States and its allies. This has led some Russian firms to turn to cryptocurrencies for buying and selling goods as a way to de-dollarize and facilitate trade. The finance ministry recently suggested a compromise that would restrict everyone in Russia except miners from handling crypto. However, the Federal Tax Service (FTS) has added another layer of complexity by stating that cryptocurrency can be recognized as a form of property and declared on tax returns accordingly.
The FTS has provided two methods for individuals to declare their cryptocurrency earnings for tax purposes. Firstly, individuals can declare their profits on crypto personal income tax declarations. Alternatively, they can use the simplified taxation system (STS). The FTS has advised crypto traders to submit their declarations using existing documents by April 30, 2024. To calculate the income from the sale of cryptocurrency, traders must consider the documented costs of its purchase, and the tax calculations must be made in fiat rubles. Under the STS, crypto traders can determine their earnings by calculating the difference between their sales income and the purchase price of the cryptocurrency.
Although the legal framework for cryptocurrencies in Russia is unclear, the FTS’s position is not unprecedented. Russian courts have previously ruled that crypto can be protected as a form of intangible property, falling under existing property rights. While the FTS acknowledges that the status of cryptocurrencies is not currently defined by law, it maintains that until this issue is resolved, the sale of cryptocurrencies can be considered as the sale of property.
The FTS’s assertion that citizens can pay taxes on their cryptocurrency earnings brings both complexity and confusion to the government’s approach to cryptocurrencies. Different ministries have conflicting views on the subject, further clouding the legal landscape. As the deadline for tax declarations approaches, crypto traders in Russia are encouraged to carefully consider their options and comply with the existing regulations.
The complex nature of cryptocurrency taxation in Russia highlights the need for a clear and comprehensive legal framework. The conflicting views within the government have created a state of uncertainty, making it difficult for individuals and businesses to operate within the cryptocurrency market. It is crucial for the Russian government to resolve these issues and provide clarity for its citizens. Only with a well-defined regulatory framework can the potential of cryptocurrencies be fully realized in Russia.