How is a company’s profit from the sale of cryptocurrency taxed?
Territorial jurisdiction:
Russia
Short answer:
The sale of cryptocurrency may be subject to taxation depending on the applicable taxation system: • Simplified Taxation System (STS) at 6% — the tax is calculated based on the total amount of income received from the sale. • STS at 15% or the General Taxation System (GTS) — the tax is calculated on the difference between income and expenses; in other words, the sale amount is reduced by the acquisition cost of the cryptocurrency.
Denis Polyakov
Head of Digital Economy practice at GMT Legal
The profit received by a legal entity from cryptocurrency sale transactions is subject to taxation in accordance with the applicable tax regime. According to clarifications issued by the Federal Tax Service of the Russian Federation (FNS of Russia) and published on the official website of the tax authority, where digital currency is recognized as property, income from its disposal is treated as ordinary income of the organization. If the company applies the Simplified Taxation System (STS) at the rate of 6%, the tax is calculated based on the entire amount of income from the sale of cryptocurrency, without taking into account any related expenses. If the company uses the STS at 15% or the General Taxation System (GTS), the tax is calculated on the difference between income and documented expenses, i.e., on net profit. In this case, the acquisition cost of the cryptocurrency may be deducted from the taxable base, provided it is duly documented. It is essential to maintain proper documentation to substantiate both income and expenses associated with cryptocurrency transactions.