On 1 January 2025, the primary rules governing the taxation of digital currencies (cryptocurrencies) and income from mining, introduced into tax legislation by Federal Law No. 418-FZ dated 29 November 2024 (the “Law”), came into force.

It is worth mentioning that, under Federal Law No. 259-FZ of 31 July 2020 (the “Law No. 259-FZ”), digital currency or cryptocurrency is defined as a set of electronic data (digital codes or designations) that can be used as a means of payment. Mining, on the other hand, refers to the process of producing such currency.

Below is an overview of the changes that have taken effect.

Value added tax (VAT)

Transactions involving mining and sale of digital currencies are exempt from VAT.

Additionally, the services provided by organisations facilitating digital currency transactions within the framework of the experimental legal regime for digital innovation established by Law No. 259-FZ are also exempt from VAT.

Personal income tax

Income derived from the mining of digital currencies is recognised as income in kind and is taxable under the standard progressive tax scale, ranging from 13% to 22%.

This income is deemed to arise when the taxpayer gains the right to dispose of the digital currency (i.e., before its disposal) and is assessed based on the market quotation. The valuation mechanism for personal income tax mirrors that established for corporate income tax, as described below.

Disposal of digital currency, excluding gifts to close relatives, is also treated as a taxable event. Income from such sales is taxed at rates of 13% to 15%, applicable to a broad category of “passive” income of individuals.

Tax is also levied on material benefits arising from acquiring digital currency from related parties at below-market value. This taxable income is calculated as the difference between the market value of the digital currency and the actual acquisition cost, with rates of 13% to 15% applied.

Income from both mining and subsequent sales of digital currencies may be reduced by the taxpayer's documented and verifiable expenses.

However, the standard deduction of RUB 250,000 and the exemption from taxation for ownership periods exceeding three years do not apply to digital currencies.

Corporate income tax (CIT)

The receipt of digital currency through mining is subject to CIT. Such income is classified as non-operating income and is determined at the point when the taxpayer gains the right to dispose of the digital currency.

The Law introduces specific provisions for calculating the tax base related to digital currencies.

Income from mining is determined using market quotations, specifically the closing price provided by a foreign trade organiser. This quotation is calculated based on transactions executed through the organiser during the trading day.

A foreign organiser is defined as an entity with a daily transaction volume exceeding RUB 100bn and a track record of publishing transaction data on its official website for the preceding three years. Taxpayers may select a market quotation from any qualifying organiser, offering a degree of discretion in managing their tax obligations.

For digital currencies priced in foreign currencies or foreign digital rights, the value is converted into roubles at the Central Bank of the Russian Federation's exchange rate applicable on the income recognition date.

Taxable income from mining may be reduced by actual mining-related expenses, recognised as indirect expenses.

Taxable income also arises from the sale of digital currencies. Calculation of such income is based on the sale price, but not less than the market value, reduced by 20%.

The acquisition cost of digital currencies, which may be expensed, is determined by their purchase price, capped at 20% of the market quotation. If the currency was obtained through mining, its value equals the previously recognised income.

According to the explanations of the Ministry of Finance (Letter No. 03-03-06/1/113203 dated 15 November 2024), any documentation in the taxpayer’s possession can substantiate cryptocurrency acquisition costs, as no specific requirements are defined by law.

Taxpayers can choose to write off the cost of digital currency using either the FIFO method (first-in, first-out) or its current value. The chosen method should be documented in their accounting policy.

The tax base for digital currency transactions is calculated separately from the primary tax base.

Cryptocurrencies are recognised as depreciable property, although revaluation for taxation purposes is not required.

The Law permits losses from prior cryptocurrency transactions to reduce taxable income, subject to statutory limits (up to 50% of the current period’s tax base).

Withholding tax

Income earned by foreign organisations in Russia from mining digital currencies through participation in mining pools is subject to withholding tax. Such organisations may reduce their taxable base by verified expenses, following the principles outlined for non-residents (as described above).

Special tax regimes

The Law excludes income from mining digital currencies from favourable tax regimes. Cryptocurrency miners cannot apply the Unified Agricultural Tax, simplified taxation system (including automated one), the patent taxation system, or be considered professional income taxpayers.

Additional reporting

Mining infrastructure operators are required to report details of cryptocurrency mining activities conducted by individuals or entities using their services. Reports must be submitted electronically on a quarterly basis, in accordance with timelines set out in the Law.

The specific details of these reporting requirements are expected to be clarified in subordinate legislation.

Comments

The Law formally recognises digital currency as property and establishes clear taxation rules for relevant transactions, addressing previous legislative gaps concerning taxpayer obligations.

Historically, tax authorities have emphasised the need to determine taxable income from cryptocurrency transactions (e.g., Ministry of Finance Letters dated 6 May 2021, No. 03-04-05/34900, and 10 February 2022, No. 03-04-05/9243), advocating the use of general legal principles in the absence of specific regulation. This, however, led to numerous uncertainties for taxpayers.

While the Law clarifies the taxation process, it also imposes additional compliance burdens on those involved in cryptocurrency transactions.

Given that these rules are now in effect, taxpayers are advised to evaluate their applicability and the resulting tax and administrative implications. This includes considering the specific mechanisms for calculating income and expenses outlined above.

SEAMLESS Legal’s tax team is available to assist taxpayers in assessing and fulfilling their tax obligations.

Publication is also available in Russian.

Authors:

Maria Kabanova, Counsel

Co-authored by Viktoria Tikhonova, Paralegal in Tax.