According to the Federal Tax Service, regardless of their status, sale or purchase of cryptocurrencies are deemed currency transactions under the Russian law and should be reported to tax authorities.

All such transactions are already covered by the Russian law 173-FZ dated 10 December 2003, says an official letter from the main tax authority of Russia published by CoinDesk. The law (article I, part I, paragraph 9, sub-paragraph B) says that

“The acts of acquisition by a resident from a non-resident and alienation by a resident to a non-resident of currency valuables, currency of the Russian Federation and domestic securities on lawful terms, and the use of currency valuables, currency of the Russian Federation and domestic securities as a means of payment are deemed currency transactions.”

The conclusion follows:

“Consequently, the transactions of purchase and sale of cryptocurrency (virtual currency) between residents and non-residents, with the utilization of currency valuables and (or) currency of the Russian Federation, are, in fact, currency transactions.”

Therefore, for bitcoin sale or purchase it does not really matter if bitcoin is currency, commodity, “surrogate money” or something else. If Russian tax residents exchange bitcoins against currency or securities, it is a currency transaction. And if such transaction is accomplished with the help of a foreign bank account, it should be reported to the Russian tax authorities.

The letter does not say anything concerning any other operations with bitcoins besides their sale or purchase. Nor does it throw the light on bitcoin purchase or sale inside the Russian Federation. But these topics did not apparently concern the inquiry. Moreover, the authors of the letter emphasise that the letter “is intended for informational purposes” only and is not intended to add anything new to existing laws.

In July interview, the Russian Deputy Minister of Finance Alexey Moiseev noted that, while forbidding the issuance of cryptocurrency in the country because it contradicts the Constitution, the Ministry would allow its purchase to be used for purchases abroad. Technically, it meant bringing the legal status of cryptocurrency close to foreign currencies.

Alexey Tereshchenko