Russia Officially Recognizes Cryptocurrency as Property with New Tax Law

Russian President Vladimir Putin has signed a new federal bill into law that introduces taxes on cryptocurrency transactions and officially recognizes digital currencies as property. The law, published on November 29, 2024, brings a more defined regulatory framework to Russia’s cryptocurrency landscape.

Under the new legislation, individuals will be subject to a personal income tax rate ranging from 13% to 15% on cryptocurrency sales. Notably, mining operations are exempt from value-added tax (VAT). However, mining infrastructure operators will be required to report detailed information about their operations to local authorities, with non-compliance carrying fines of 40,000 rubles (approximately $383).

Legal Recognition of Cryptocurrencies

The law officially classifies digital currencies as property, including those used in foreign trade agreements under Russia’s experimental crypto regime. This marks a significant step in the country’s approach to cryptocurrencies, granting them legal status.

Cryptocurrency acquired through mining will be treated as income in kind, with its value determined according to market rates. The income derived from mining will be taxed on a progressive scale: 13% for earnings up to 2.4 million rubles and 15% for earnings exceeding that threshold. Additionally, mining-related expenses will qualify for tax deductions.

Corporate and Entrepreneurial Taxation

Corporations engaged in cryptocurrency mining will be subject to the standard corporate tax rate, which is set to increase to 25% in 2025. Moreover, the law restricts certain tax regimes for businesses and individual entrepreneurs involved in mining or cryptocurrency sales. These entities will not be allowed to switch to simplified or specialized taxation systems, including the single agricultural tax, patent system, self-employed taxation framework, or automated simplified taxation.

Cryptocurrency Mining Legalization

On August 8, 2024, President Putin signed a separate law that legalized cryptocurrency mining in Russia. This law, effective from November 1, 2024, allows only registered Russian legal entities and individual entrepreneurs to participate in mining activities. Those holding entrepreneur status will be allowed to mine Bitcoin, subject to a monthly consumption limit of 6,000 kWh. However, certain regions may experience temporary restrictions due to energy consumption concerns.

Growing Crypto Demand in Russia

The new regulatory clarity is driving an increase in cryptocurrency demand across the country. According to crypto.news, traffic to major crypto exchanges in Russia surged by over 8% in November, reflecting growing interest in digital assets following the introduction of clearer rules.

With this move, Russia takes a significant step in establishing a regulated environment for cryptocurrency, balancing taxation with legal recognition and paving the way for further growth in the sector.