The Russian government has enacted legislation to regulate the taxation of cryptocurrency transactions, marking a significant shift in the country’s fiscal policy.
The new legislation, approved by the Ministry of Finance, designates cryptocurrencies as property, thereby requiring companies to pay income tax on crypto transactions, while individuals will be liable for personal income tax.
Starting next year, the tax rate for Russian citizens will range from 13% to 22%, based on their income levels. Notably, cryptocurrency transactions will be exempt from value-added tax. Individuals and businesses must report crypto transactions to the Federal Tax Service if their annual receipts and write-offs exceed 600,000 rubles (approximately $6,000).
Operators of crypto mining infrastructure are mandated to submit data regarding their services to the tax authorities. Failure to comply could result in fines of up to 40,000 rubles (around $400). Although the bill was initially drafted in December 2020, its progress was stalled until the recent legalization of crypto mining in Russia on November 1, 2024.
Taxation Process for Mining Profits
Under the new tax framework, miners will undergo a two-step taxation process. Initially, miners will make an advance payment upon receiving cryptocurrency in their wallets. An additional tax will apply when these digital assets are sold. Should the value of the mined coins appreciate after the initial payment, miners will face higher tax liabilities; conversely, if the value declines, potential overpayments may be recorded as losses.
The Ministry of Finance has proposed that the tax rate for cryptocurrency sales will set at 13% starting in 2025, increasing to 15% for incomes exceeding 2.4 million rubles (about $24,000) annually. Digital currency will be classified as property for taxation purposes under the Russian Tax Code.
This principle was incorporated during the initial readings of the bill over three years ago. Income from digital currency transactions will be unified with revenue from shares, bonds, and other financial instruments, coming into effect in 2025.
For individuals earning below 2.4 million rubles annually, the personal income tax will remain at 13%. Those whose income exceeds this threshold will incur a 15% tax on the excess along with a fixed charge of 312,000 rubles (approximately $3,100) corresponding to the tax on 2.4 million rubles. The tax base will be calculated based on the market price of the digital currency at the time of income reception.
International trading entities will determine market prices based on daily transaction metrics. If multiple foreign exchanges have traded the same cryptocurrency, taxpayers may select the market price independently, ensuring a minimum calculation based on 80% of the market price.
Russia Aligns with North American Tax Strategies
Analysts indicate that Russia’s taxation structure for cryptocurrencies mirrors approaches found in North America.
As detailed by industry experts, miners will initially incur a profit tax when cryptocurrency is received, subtracting documented and reasonable expenses. Taxpayers may recover part of the paid tax if their expenses are substantiated as necessary.
While the Russian system establishes a clear framework, it contrasts with U.S. taxation, where rates differ according to holding durations, with short-term gains taxed between 10% and 37%, and long-term holdings benefiting from lower rates of 0%, 15%, or 20%.
