Russians ‘Can Pay Taxes on Their Crypto Earnings’ – Despite Crypto’s Lack of Legal Status

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Tim Alper

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Tim Alper

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Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

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July 12, 2023 00:04 EDT

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The Russian tax body says that citizens “can pay” taxes on their crypto earnings, despite the fact that tokens have no legal status in the country.

In another sign that the government appears to be sending mixed messages about its stance on crypto, the Federal Tax Service (FTS) stated that crypto earners could pay taxes using two different methodologies.

V2B reported that the FTS said those making profits from crypto could declare their earnings on crypto personal income tax declarations or use the simplified taxation system (STS).

Crypto has no legal status in Russia.

And the Central Bank favors a China-style ban on all forms of crypto-related activity.

Government ministries, such as the ministries of finance, trade, and energy, have all expressed a desire to “legalize” and regulate crypto.

This has led to a years-long impasse between the bodies.

And the picture has been muddied further by the sanctions regime imposed on Russia by the US and its allies.

In a bid to de-dollarize and facilitate trade, some Russian firms are buying and selling goods for crypto.

In its apparent desperation, the finance ministry last week reportedly proposed a compromise that would effectively bar everyone in Russia except for miners from handling crypto.

But the FTS appears to have thrown another curveball.

It stated that crypto can be recognized as a form of property – and declared on tax returns accordingly.
 

How Does Russian Tax Body Think Crypto Income Can Be Taxed?

The FTS’ position is not novel.

Russian courts have previously ruled that crypto can be protected as a form of “intangible property,” and thus covered by existing property rights.

The body conceded that “the status of cryptocurrencies is not fixed by law,” but said that “until this issue is resolved,” the “sale of cryptocurrencies” could be “considered as the sale of property.”

The FTS noted that “income from the sale of cryptocurrency” can be calculated by using “the documented costs of its purchase.”

It insisted that tax calculations must be made in fiat rubles.

The body advised crypto traders to “submit a declaration” using existing documents by April 30, 2024.

Alternatively, using the STS, crypto traders can reportedly calculate their earnings by calculating the difference between their incomes for sales and the price they paid when “purchasing cryptocurrency.”