How to calculate taxes on cryptocurrency income?

Question

The obligation to pay taxes is enshrined in Article 57 of the Constitution of the Russian Federation. However, there are no special legislative acts in Russia regulating legal relations in the crypto industry, including mining, buying, selling, or exchanging digital assets. Despite this, Russian citizens are not exempt from taxation on income related to cryptocurrency transactions. In this article, we will detail the process of paying taxes on profits from cryptocurrency operations.

Regulatory Legal Framework for Taxation

In recent years, against the backdrop of instability in traditional financial markets, cryptocurrencies have become more attractive to Russian investors seeking new ways to preserve and grow their capital.

It is important to note that the processes of mining, acquiring, storing, or staking cryptocurrencies are not taxed in and of themselves. Only the profit obtained from cryptocurrency transactions when converting them into rubles is subject to taxation, if the final amount exceeds the initial costs.

The declaration in the form 3-NDFL must be submitted by April 30 of the year following the year of income received from cryptocurrency operations. Individuals are required to pay tax by July 15 at a rate of 13% of the received income, or 15% if the total annual income exceeded 5 million rubles.

Legal Status of Cryptocurrencies in Russia

In Russian legislation, cryptocurrency is considered as property. This means that you can conduct buying and selling transactions or gift cryptocurrencies, but you do not have the right to receive a salary or accept payment for goods and services in cryptocurrency.

The main rule when working with digital assets is the timely payment of taxes and the retention of all information about completed transactions. This will help avoid problems with banks and confirm the legality of your income and expenses.

Tax Payment Procedure

Important dates:

April 30 is the deadline for submitting the tax return.

July 15 is the deadline for tax payment.

Action algorithm:

Collect monthly statements from all used cryptocurrency exchanges, exchangers, and P2P platforms.
Calculate the annual income using the formula: Revenues minus Expenses equals Taxable base.
Fill out the 3-NDFL declaration.

When declaring the sale of cryptocurrency, use the wording "income from transactions with digital financial assets (CFA)".

Question of documentary confirmation

There are cases on the internet where tax authorities have required citizens to provide documents confirming expenses for the purchase of cryptocurrency. This can cause certain difficulties, as many acquire cryptocurrency through P2P services.

Typically, the process looks like this: an individual transfers rubles to the card of another individual, who then sends the corresponding amount of cryptocurrency to the buyer's exchange account. It remains unclear whether tax authorities will accept bank statements of ruble transfers between individuals as proof of cryptocurrency purchases.

Prospects of Regulation

As in other high-tech areas, the development of public relations in the cryptocurrency sphere significantly outpaces the pace of the development and adoption of relevant regulatory legal acts. The state makes significant efforts to create adequate solutions capable of ensuring the safety of all participants in the cryptocurrency market, while not forgetting about replenishing the federal budget.

Several bills are currently under consideration in the State Duma, including the draft federal law "On Amending Parts One and Two of the Tax Code of the Russian Federation," developed by the Government of the Russian Federation. Work on this bill has been ongoing for about three years.

It is clear that this bill affects the interests of many market participants and has drawn significant criticism, requiring substantial revision. It can be assumed that with the adoption of amendments to the legislation and the establishment of appropriate tax regulation in the field of cryptocurrencies, the tax payment conditions will become clearer and more transparent for taxpayers.