Russian bill on taxation of transactions with digital assets contains provisions on VAT, personal income tax and corporate income taxes.
Especially for Cryplogger, the CEO of Yunf Accompanying, Sergey Leoshko, and the managing partner of the Grad law firm, Maria Agranovskaya, analyzed the requirements imposed by the authorities on the owners of the CFA.
VAT
The services of organizations that will issue, control and keep records of CFA applications are exempt from VAT, by analogy with securities.
However, the sale of the DFA itself is subject to VAT. Until March 9, 2022, the same principle applied to the sale of precious metals by banks to individuals.
“These norms significantly reduced the investment attractiveness of precious metals in the eyes of investors. Apparently, the authors of the bill consider the digital asset market so attractive that even 20% VAT will not be able to cool this interest, ”suggests Sergey Leoshko.
All features of VAT calculation are retained when using digital assets in foreign trade transactions, with the participation of agents and other special cases in terms of this tax.
VAT payers will be all legal entities that carry out the primary issue or secondary transactions with the CFA.
income tax
Income from the sale or ownership of digital assets must be included in the income tax base.
Expenses related to maintenance, payment of income to the owner of the asset or its redemption may be taken into account when calculating corporate income tax.
Rules are established for the one-time and uniform (during the life of various CFAs) recognition of expenses for income tax purposes. There is a procedure for accounting in expenses for VAT paid on the acquisition of an asset, if the organization is the last holder of such.
Features of determining the tax base for operations with CFA will be prescribed separately. Such assets will not be revalued for corporate income tax purposes.
“The draft law provides for the features of the issue and turnover of CFAs, by analogy with the issue and turnover of securities, including similar restrictions. For example, proceeds from the issuance of digital financial assets for which the maturity is not defined or is more than 10 years are recognized on the expiration date of the ten-year period from the date of issue of these assets,” explains Maria Agranovskaya.
Profit or loss from CFA transactions can be determined in aggregate with transactions with non-tradable securities and non-tradable derivative financial instruments, separately from the overall tax base.
There is a possibility of hedging using DFA and other special cases of using such assets.
personal income tax
Income from transactions with DFA should be determined net of costs for their acquisition and implementation of the transaction. However, the bill also contains a requirement to document such expenses.
“What documents can confirm the expenses for the purchase of digital assets, the amendments are not deciphered. The right to a deduction in the absence of supporting documents (a conditional expense of 20% of the amount of income) is expressly prohibited by the bill. It remains to be hoped for official clarifications on how to document the costs of CFA purchased in 2021 and earlier, ”notes Sergey Leoshko.
It will be possible to include the commissions of exchangers, operators, fees for the services of registrars, banks and other future participants in the official circulation of the CFA in the Russian Federation into expenses.
At the same time, according to the bill, losses from digital transactions can only be set off against income from other similar transactions – it will not be possible to reduce other income taxable with personal income tax. It is also necessary to separately account for income associated with the ownership of assets, for example, coupon or interest income, dividend payments to holders, and others.
In general, the introduced procedure is similar to the personal income tax rules regarding income from trading and holding securities. The costs of DFA, which will be received at redemption of securities, can be deducted from the income from such securities, but this and other special cases are best analyzed in advance.
Income and expenses for transactions denominated in foreign currencies will have to be converted into rubles at the official exchange rate of the Central Bank of the Russian Federation, established on the date of actual receipt of income or expenses.
All individuals who are tax residents of the Russian Federation must declare and pay personal income tax on income from transactions with CFA, which follows from the already existing norms of the Tax Code. The draft law will establish for legal entities the obligations of tax agents in relation to income from the CFA paid by them to individuals.
“Of course, this will make life easier for individuals, since all the features of tax calculations, as well as the transfer of personal income tax itself, will be assigned to organizations officially working with the CFA. The main thing is that such organizations should appear,” the lawyers sum up.
Conclusion
The amendments being introduced are intended to provide clear rules for taxation of income from transactions or ownership of CFAs. Although the draft law enters into force one month from the date of publication, it provides for the application of new tax rules to legal relations that arose from January 1, 2022 – that is, retrospectively.
At the same time, experts advise studying the impact of the document on each specific transaction separately.
Cryplogger previously reported that the Digital Asset Tax Bill does not affect the cryptocurrency market in RF.
Taxation of transactions with cryptocurrencies will be prescribed separately and can be passed in parallel with the bill “About digital currency”.
Subscribe to Cryplogger news in Telegram: Cryplogger Feed – the entire news feed, Cryplogger — the most important news, infographics and opinions.
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Russian bill on taxation of transactions with digital assets contains provisions on VAT, personal income tax and corporate income taxes.
Especially for Cryplogger, the CEO of Yunf Accompanying, Sergey Leoshko, and the managing partner of the Grad law firm, Maria Agranovskaya, analyzed the requirements imposed by the authorities on the owners of the CFA.
VAT
The services of organizations that will issue, control and keep records of CFA applications are exempt from VAT, by analogy with securities.
However, the sale of the DFA itself is subject to VAT. Until March 9, 2022, the same principle applied to the sale of precious metals by banks to individuals.
“These norms significantly reduced the investment attractiveness of precious metals in the eyes of investors. Apparently, the authors of the bill consider the digital asset market so attractive that even 20% VAT will not be able to cool this interest, ”suggests Sergey Leoshko.
All features of VAT calculation are retained when using digital assets in foreign trade transactions, with the participation of agents and other special cases in terms of this tax.
VAT payers will be all legal entities that carry out the primary issue or secondary transactions with the CFA.
income tax
Income from the sale or ownership of digital assets must be included in the income tax base.
Expenses related to maintenance, payment of income to the owner of the asset or its redemption may be taken into account when calculating corporate income tax.
Rules are established for the one-time and uniform (during the life of various CFAs) recognition of expenses for income tax purposes. There is a procedure for accounting in expenses for VAT paid on the acquisition of an asset, if the organization is the last holder of such.
Features of determining the tax base for operations with CFA will be prescribed separately. Such assets will not be revalued for corporate income tax purposes.
“The draft law provides for the features of the issue and turnover of CFAs, by analogy with the issue and turnover of securities, including similar restrictions. For example, proceeds from the issuance of digital financial assets for which the maturity is not defined or is more than 10 years are recognized on the expiration date of the ten-year period from the date of issue of these assets,” explains Maria Agranovskaya.
Profit or loss from CFA transactions can be determined in aggregate with transactions with non-tradable securities and non-tradable derivative financial instruments, separately from the overall tax base.
There is a possibility of hedging using DFA and other special cases of using such assets.
personal income tax
Income from transactions with DFA should be determined net of costs for their acquisition and implementation of the transaction. However, the bill also contains a requirement to document such expenses.
“What documents can confirm the expenses for the purchase of digital assets, the amendments are not deciphered. The right to a deduction in the absence of supporting documents (a conditional expense of 20% of the amount of income) is expressly prohibited by the bill. It remains to be hoped for official clarifications on how to document the costs of CFA purchased in 2021 and earlier, ”notes Sergey Leoshko.
It will be possible to include the commissions of exchangers, operators, fees for the services of registrars, banks and other future participants in the official circulation of the CFA in the Russian Federation into expenses.
At the same time, according to the bill, losses from digital transactions can only be set off against income from other similar transactions – it will not be possible to reduce other income taxable with personal income tax. It is also necessary to separately account for income associated with the ownership of assets, for example, coupon or interest income, dividend payments to holders, and others.
In general, the introduced procedure is similar to the personal income tax rules regarding income from trading and holding securities. The costs of DFA, which will be received at redemption of securities, can be deducted from the income from such securities, but this and other special cases are best analyzed in advance.
Income and expenses for transactions denominated in foreign currencies will have to be converted into rubles at the official exchange rate of the Central Bank of the Russian Federation, established on the date of actual receipt of income or expenses.
All individuals who are tax residents of the Russian Federation must declare and pay personal income tax on income from transactions with CFA, which follows from the already existing norms of the Tax Code. The draft law will establish for legal entities the obligations of tax agents in relation to income from the CFA paid by them to individuals.
“Of course, this will make life easier for individuals, since all the features of tax calculations, as well as the transfer of personal income tax itself, will be assigned to organizations officially working with the CFA. The main thing is that such organizations should appear,” the lawyers sum up.
Conclusion
The amendments being introduced are intended to provide clear rules for taxation of income from transactions or ownership of CFAs. Although the draft law enters into force one month from the date of publication, it provides for the application of new tax rules to legal relations that arose from January 1, 2022 – that is, retrospectively.
At the same time, experts advise studying the impact of the document on each specific transaction separately.
Cryplogger previously reported that the Digital Asset Tax Bill does not affect the cryptocurrency market in RF.
Taxation of transactions with cryptocurrencies will be prescribed separately and can be passed in parallel with the bill “About digital currency”.
Subscribe to Cryplogger news in Telegram: Cryplogger Feed – the entire news feed, Cryplogger — the most important news, infographics and opinions.
Found a mistake in the text? Select it and press CTRL+ENTER
