Putin signs law exempting crypto sales and crypto mining from VAT in Russia

2024-11-29 16:45

Russian President Vladimir Putin has signed a significant law that officially recognizes digital currency as a form of property, reshaping the legal landscape for crypto operations in the country and allowing use in foreign trade settlements.

This new legislation, aimed at regulating the circulation and taxation of digital assets, brings clarity to the evolving field of cryptocurrency while introducing specific tax frameworks for mining and trading activities.

Crypto mining and sales of digital currencies exempt from VAT

Under the new law, which went into effect upon official publication, digital currencies are classified as property, including those used for foreign trade settlements within the framework of Russia’s experimental legal regime (ELR) for digital innovations.

This classification solidifies the legal status of digital assets in Russia and is seen as a major step forward in the government’s efforts to create a structured environment for the cryptocurrency sector.

One of the key provisions of the law is the exemption of crypto mining and the sale of digital currencies from value-added tax (VAT).

This will benefit mining operators, as it reduces the financial burden on their activities.

However, operators of crypto mining businesses in Russia are now required to report their clients to tax authorities, with failure to do so leading to a fine of up to 40,000 rubles.

This provision aims to enhance transparency and ensure that mining operations are monitored more effectively.

Crypto mining and sales income treated as “income in kind”

Income from crypto mining will be treated as “income in kind” and taxed based on market value.

Taxes will be calculated using a progressive scale, with deductions allowed for mining expenses.

Individuals earning from the acquisition, sale, or circulation of digital currencies will be taxed according to a two-tier personal income tax system—13% for earnings up to 2.4 million rubles, and 15% for any income exceeding that threshold.

This structure brings digital currency income into line with other forms of income, such as transactions with securities or bank deposits.

The law also includes provisions for corporate income tax.

Starting in 2025, profits generated from digital currency mining will be subject to the standard corporate tax rate of 25%.

This move aligns the treatment of crypto mining with traditional industries, ensuring that mining enterprises contribute to the national tax base.

However, the law places several restrictions on tax regimes available to crypto miners and traders.

Those involved in mining or trading digital currencies will be excluded from preferential tax systems, such as the simplified taxation system, agricultural tax benefits, and the self-employed status.

These restrictions prevent crypto-related entities from benefiting from tax advantages typically available to other sectors of the economy.

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