Key Points:
- Russia wants to exempt crypto trading from VAT
- The benefit will also affect cryptocurrency storage services
- The new law will be a rare relief amid strict regulation
Russian authorities are preparing legislative changes that will exempt crypto trading and cryptocurrency storage services from VAT. This is part of a broader attempt to bring order to the handling of digital assets within the country.
The necessary bill has already been prepared. It also outlines how companies working with crypto and the income of private traders will be taxed.
Russia May Cancel VAT on Crypto Trading and Storage
The Ministry of Finance has proposed amendments to the Tax Code. It concerns how crypto transactions will be taxed. This applies to both companies and ordinary users.
One of the key points is VAT. Authorities want to remove it for crypto exchanges and storage services. Local media report this.
Additional services may also fall under the exemption. For example, everything related to the issuance and trading of cryptocurrency. This was reported by a source familiar with the document.
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There is another point. VAT will not be applied to “digital rights confirming exclusively monetary claims.” This was reported to Interfax by an official, who did not disclose his name.
At the same time, the list of such reliefs is not final. The Ministry of Finance continues to refine the bill. This is reported by Bits.media.
But there is a nuance. There will be no relief for profits. Crypto exchanges and storage services will pay taxes as usual.
The rules are planned to be made similar to those that apply to securities market participants.
Commissions, storage fees, intermediary services, and other income will be taken into account.
Overall, the approach is simple. No special conditions for crypto. Just standard taxes, taking into account the specifics of the market.
The Law Regulates Taxation of Individuals’ Crypto Income
The bill includes a separate article on crypto taxes for individuals. It concerns sales and any other transactions, including exchange for fiat.
The tax can be reduced. Expenses will be allowed to include the purchase of cryptocurrency and commissions. This applies to exchanges, storage services, brokers, and banks. Taxes already paid will also be credited.
The document separately specifies an important point:
“For income from transactions with digital currency, expenses for its purchase are accounted for using the FIFO method.”
There is also a nuance with profits and losses. They can be accounted for within a single tax period. Carrying losses forward will not be allowed.
If money passes through intermediaries, everything falls on them. Brokers or trustees must withhold the tax and send it to the budget.
Strict Regulation Will Limit Crypto Trading in Russia
The crypto market in Russia rarely receives tax relief, but restrictions appear regularly. This is reported by the portal VC.ru, commenting on the new government initiatives.
The government is indeed preparing to legalize cryptocurrency operations, including trading and investment. But they plan to do this with strict rules and restrictions.
This week, a package of bills was submitted to the State Duma, including the main document “On Digital Currency and Digital Rights.” It is expected to be adopted by July 1.
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Access to crypto seems to be expanding. But with caveats.
Unqualified investors will be given a limit. Ordinary users will be able to buy cryptocurrency for a maximum of $3,700 per year.
And the choice will also be limited. Only the largest coins will be allowed. This refers to Bitcoin, Ethereum and a few other assets from the Central Bank’s list.
All transactions will have to be conducted through services licensed in Russia.
It is more complicated with foreign exchanges. Direct work will be almost impossible. The option remains to go through Russian intermediaries or through accounts abroad.
There is another initiative. Authorities want to require Russians to report to the tax authorities about wallets on foreign crypto platforms.
