Russia Classifies Crypto as Property with Putin's Approval

BY
Sean Millare
/
Nov 30, 2024

On November 29, Russian President Vladimir Putin signed a law designating digital currencies as property, setting the stage for taxation and regulatory measures. The law allows for the use of cryptocurrencies in foreign trade under an experimental framework, reflecting a major shift in Russia’s approach to managing digital assets.

Taxation Framework for Digital Currency Mining and Transactions

The legislation exempts digital currency mining and sales from VAT and removes transaction taxes for organizations operating under the experimental framework. Mining operators are mandated to report users of their infrastructure to tax authorities, with violations leading to fines of 40,000 rubles. Revenue generated from mining is treated as non-cash income and taxed accordingly, with mining costs deducted to calculate taxable income.

Digital currency transactions will be subject to a progressive personal income tax, with rates set at 13% for income up to 2.4 million rubles and 15% for amounts above that threshold. Beginning in 2025, corporate profits from mining will be taxed at 25%.

Key Provisions and Impact

The Russian State Duma passed the digital currency taxation law in its second and third readings on November 26, followed by approval from the Federation Council on November 27. The legislation was then submitted to President Vladimir Putin, who signed it into law.

The new legislation limits tax options for entities involved in mining or cryptocurrency sales, prohibiting them from using simplified, automated, agricultural, or self-employment tax systems. Additionally, cryptocurrency-related activities are excluded from the patent tax system. The law seeks to enhance transparency and accountability within the cryptocurrency sector. While it takes effect immediately upon publication, transitional measures are included to facilitate its implementation.

Sean Millare

Sean, a skilled writer, gamer, trader, and investor, with a passion for all things web3. With a practical touch, he sheds light on the evolving crypto scene, helping readers grasp blockchain intricacies and make savvy decisions in decentralized finance.

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