Less than a month before taxes. How to be a cryptocurrency owner
Demand for digital assets has increased during the crisis. Ernst & Young, an accounting and consulting firm, said this was why the company released the EY CryptoPrep app in mid-June to calculate taxes on cryptocurrency transactions. It is a fully automated step-by-step mechanism for completing a tax return filed by US citizens.
But not only US traders should pay tax from cryptocurrency. In Russia, it is also necessary to report income from operations with digital assets. Now, for example, it can be done for transactions conducted in 2019. Due to the coronavirus pandemic, the deadline for submitting documents was extended to July 30, but funds must be transferred by July 15. The tax amount for individuals will be 13%.
Various cryptocurrency transactions are taxable, says Dmitry Kirillov, a senior tax practice lawyer at Bryan Cave Leighton Paisner (Russia) LLP, a teacher at Moscow Digital School. He made it clear that mining, stacking and trading as such applies to them.
“Mining such as computational services or leasing of computer power, stacking as data storage services, crypto trading as financial investments – all these operations, if they are registered in the organization's account and generate revenue, are taxable. At the same time, the Russian Treasury traditionally takes a cautious position and confines itself to saying that such income taxation is carried out in a general way ”
The tax is not paid on the entire cryptocurrency owned by the investor, said Mikhail Uspensky, vice president of the Legal Support Commission for the Digital Economy of the Moscow branch of the Russian Bar Association, the taxology partner. When transferring digital assets to cash, the user deducts the amount received from the sale, say BTC, the amount spent on the purchase of BTC. The resulting difference is a tax base, it is necessary to pay taxes.
“In Russia, there is no legal obligation to evaluate cryptocurrencies annually and pay taxes for the increase in its market value. The tax will arise when the cryptocurrency leaves the bundle. To do this, you must subtract the coin purchase price from the sale price. The resulting difference will be the "tax base" with which you have to pay the tax, "explained Ouspensky.
He added that the revenue from the sale of the token and the cost of the purchase should be converted into rubles and documented. In some cases, the Federal Tax Service of Russia allows such confirmations in the form of screenshots rather than paper documents.
EXMO Development Director Maria Stankevich said special services, like Koinly, help users pay taxes. Traders connect to these with the API and choose a tax system. The service generates a report on transactions, income and transactions. This document can then be filed with the tax office for appropriate purposes. CoinTracking, Blockpit.io platforms work similarly. Their use is convenient, especially since it allows reporting to investors trading on multiple trading floors at the same time.
Kirillov continued that in the case of companies that pay taxes, the procedure for recording income and expenses and determining the tax for income tax depends on the form of the business organization and the tax regime. For example, it may be a legal entity or an individual entrepreneur, the tax system may be general or simplified, in the latter case the tax amount will amount to 6% of income or 15% of income less costs.
“In any case, tax reporting and willingness to survive tax control are required – the tax authorities under tax and field audits will ask a lot of questions to calculate which cryptocurrency businesses have earned revenue, what expenses are incurred and how they are related to each other ”- warned Kirillov.
He noted that when starting a crypto business, it is necessary to set up accounting and tax records, carefully document all business operations and not be shy to attract specialists to answer complex questions from the tax authorities. It is also important to keep track of legislative changes regarding digital financial assets. It is very unstable and ranges from the introduction of crypto assets in the Russian judicial area to their complete prohibition under penalty of criminal liability.
At the end of May, the State Duma proposed a number of bills related to the circulation and issuance of cryptocurrency. For violations in its use, administrative and criminal law prescribes responsibility. However, several departments criticized the documents at one time: the Ministry of Justice, the Ministry of Finance and the Ministry of Communications. Later, the chairman of the State Duma Committee on the Financial Market Anatoly Aksakov said that the law "On CFA" is clear, and when it comes to digital currency, the bill requires "serious discussion". Its further consideration is likely to be postponed until the fall.
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