Cryptocurrency taxes in Russia: how much and how to pay in 2021?

On January 1, 2021, the law "On Digital Financial Assets" came into force, and earlier the Civil Code includedChanges related to cryptocurrency have been made. Now it is recognized as property, it is prohibited to use it as a means of payment, but you can make transactions with it, writes RBC Crypto.

We talk about the main changes in the current year and what can await Russians if the new rules are not followed.

How do I file my tax return?

This year, individuals declare onlyincome from the sale of cryptocurrency. To do this, by April 30, you must submit the tax return for 2020 to the tax authority at the place of registration (in person or by mail) or through the taxpayer's personal account on the FTS website. It must reflect the income from the sale of cryptocurrency, subtract from this amount the costs of purchasing this cryptocurrency (even if it was purchased more than a year ago) and multiply the difference by the personal income tax rate of 13%. The tax must be paid by July 15, said Dmitry Kirillov, senior lawyer at tax practice at Bryan Cave Leighton Paisner (Russia) LLP.

Responsibility for Failure to Submit Tax Return

Responsibility for failure to submit taxthe declaration entails the recovery of a fine in the amount of 5% of the amount of tax unpaid within the time period established by the legislation on taxes and fees, for each full or incomplete month from the date set for its submission, but not more than 30% of the specified amount and not less than 1000 rubles, Irina Muraschenkova explained , expert at Moscow Digital School.

What tax applies to transactions with cryptocurrency?

According to the currentAccording to the legislation, cryptocurrency is equated to property, therefore, income from its sale is subject to personal income tax. In this case, a tax rate of 13% is applied, and from January 1, 2021, a 15% rate is applied to income exceeding 5 million rubles, Murashchenkova explained.

That the tax base for taxationoperations with cryptocurrency is defined as the difference between the income from its sale and the cost of its acquisition, the Ministry of Finance expressed itself in its letters back in 2018. Liability has also been established for non-payment of tax, the amount of which, according to Art. 122 of the Tax Code of the Russian Federation can be 20% of the amount of unpaid tax, in case of an unintentional act, and 40% of the amount of unpaid tax, if intent is established in the actions of the taxpayer.

In addition to collecting the amount of the fine as a sanction for the tax offense committed, the taxpayer must pay both the amount of tax and the amount of penalties.

Criminal liability for tax evasion

If the unpaid amount of personal income tax for three financialyear exceeds 2.7 million rubles, an individual may be held criminally liable for tax evasion (liability under Part 1 of Article 198 of the Criminal Code of the Russian Federation - up to imprisonment for up to 1 year). If the unpaid amount exceeds 13 million rubles over three financial years, this will result in a three-year imprisonment, Dmitry Kirillov warned.

Ministry of Finance proposals to amend tax legislation

In the fall of 2020, the Ministry of Finance proposed amendments tothe Law "On Digital Financial Assets", which propose to oblige the owners of cryptocurrency to provide the tax authorities with information about the receipt of cryptocurrency, transactions with it, balances on digital wallets, if the amount of transactions for a calendar year exceeds the equivalent of 600 thousand rubles.

Miners and crypto exchangers will be required tosubmit information on transactions with cryptocurrencies to Rosfinmonitoring. For failure to provide information to the tax authority, the project provides for a fine of 50 thousand rubles, and for providing false information - a fine of 10% of the amount received or the amount of cryptocurrency written off, while the greater of these two amounts will be applied to calculate the fine. For failure by a taxpayer to submit the above information to the tax authority more than 2 times within 3 years, the draft provides for criminal liability in the form of imprisonment for up to 3 years, Murashchenkova said.

Kirillov added thatthe law does not yet oblige to declare cryptocurrencybill establishing this dutyNo. 1065710-7 has just begun to be considered by the State Duma. The law on digital financial assets that came into force this year only speaks of judicial protection for cryptocurrency disputes under the condition of their declaration (informing the tax authorities) in a procedure not yet established.