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Taxation of cryptocurrencies in Russia

On January 1, 2021, the law "On Digital Financial Assets" came into force. Now it is recognized as property. You can't pay with it, but you can make deals with it.

Tax calculation formula

This year, individuals declare only income from the sale of cryptocurrencies.
Income from the sale of cryptocurrencies, minus the cost of buying this cryptocurrency (even if it was purchased more than a year ago) and the difference is multiplied by the personal income tax rate of 13%.

How to file a tax return?

By April 30, it is necessary to submit a tax return for 2020 to the tax authority at the place of registration (in person or by mail) or through the taxpayer's personal account on the FTS website. The tax must be paid by July 15.

What happens if you don't pay?

You will get a fine in the amount of 5% of the amount of tax unpaid within the time period established by the legislation on taxes and fees, for each full or incomplete month from the date set for its submission, but not more than 30% of the specified amount and not less than 1000 rubles.
If the unpaid amount of personal income tax for three financial years exceeds 2.7 million rubles, an individual may be criminally liable for tax evasion (liability under Part 1 of Article 198 of the Criminal Code of the Russian Federation – up to imprisonment for up to 1 year). If the unpaid amount for three financial years exceeds 13 million rubles, it threatens three years in prison.

Jurisdictions for crypto projects

Estonia

Taxation conditions:

Taxation of transactions with cryptocurrency is carried out on the principle of capital gains tax of 25%. There is also a social tax of 33%. Also, VAT is paid from cryptocurrency transactions.

Registration and license:

Registration fee: € 2550
A real presence, a local director, and an AML officer are required to obtain a license. The authorized capital of the company is not less than € 12,000. You will also need a business plan, compliance policy, and additional documents.
A license can be obtained for a period of 2 months or more. The cost of the license starts from € 4900.

Advantages:

Simplified procedure for registering a crypto business and low cost of a license.
There are no bureaucratic delays and illegal pressure on business from government agencies.
Zero taxation (before the distribution of dividends)
Mandatory rules for compliance with AML procedures. The principle of electronic tax residency. Simplified scheme of opening a digital business. LHV Bank opens accounts for companies working with transactions in cryptocurrency.

Singapore

Tax conditions:

0% on profits earned outside Singapore;
17% on profits made in Singapore.

Registration and license:

Registration fee: € 5250
The license can be obtained within 6 months. The cost of a full license is from $30,000
There are requirements for mandatory authorized capital for companies that issue and exchange cryptocurrencies for cryptocurrencies or for fiat funds – about 166,000 euros. The Directorate, at least the 2nd, must also be residents of Singapore, as well as have at least 2 years of experience in the financial sector. You will need to provide a business plan, and compliance policy.

Advantages:

Direct legislative regulation of crypto exchange trading.
Strict requirements for compliance with the rules of identification according to UML standards.

The USA

Tax conditions:

The company is completely exempt from taxes if it has no income in the United States, there are no permanent residents or citizens of the United States in the structure of the company.
Capital gains tax — no
Sales tax - 6%.
VAT: no

Registration and license:

Registration fee:
California - € 2175
Oregon - € 2475
Florida - € 2625
Nevada - € 2400
The time limit for obtaining a license is ± 2 weeks. The cost of a crypto license starts from $ 25,000, plus mandatory requirements for the authorized capital of approximately $ 100,000.

Advantages:

The ability to have subsidiaries.
Pass-through taxes.
Absence of filing a corporate tax return.
LLC is considered to be the easiest company to manage. No corporate decisions or resolutions are required.ё
Lack of requirements for the president.
The founders of the company should not be residents of the USA.

Malta

Tax conditions:

The standard rate is 35%. However, the legislation of the country allows you to return 6/7 (5/7, or 2/3) of the tax paid. The tax rate is equal to 5%. VAT – 18%.

Registration and license:

Registration fee: € 5325
The cost of the license is about € 40,000.

Advantages:

Developed legislation in the field of securities market regulation, which also applies to crypto projects.
Lack of reputational risk, which can be a good help in opening an account with a bank working with crypto projects, for example, in Switzerland, since local banks are reluctant to work with companies that carry out operations with cryptocurrency.

Australia

Tax conditions:

Taxation is carried out according to the direction. Mining as a business is taxed differently than mining as a hobby. The rules of taxation of trading, DeFi projects and staking, stock trading, etc. have been developed.

VAT — No
The basic profit rate for legal entities is 30%
Capital gains tax — No
Currency control — No

Registration and license:

Registration fee: € 11250
The cost of the license depends on many factors and can vary from $10 to $50 000. In addition, there are requirements for the minimum authorized capital and the level of qualification of the management staff.
The company registration process can take up to 2 months

Advantages:

It is suitable for organizing crypto projects of any level and direction. The country has developed regulations;

there is no currency control;
there are no reporting requirements;
there is no open access to reporting;
there is no mandatory audit;
there are no requirements and open access to Annual Return;
there are no reporting requirements.

Switzerland

Tax conditions:

7.83% at the federal level and 6-12% in the cantons
VAT – 7.6%.

Registration and license:

Registration fee: € 11,850
The requirements for registering a cryptocurrency company include the amount of authorized capital from 20 to 100 thousand CHF, a direct presence in the country, one Swiss resident director, a risk-oriented business plan, and requirements for authorized capital: minimum – 20 thousand CHF, and for a public company - 100,000 CHF.
If you want to join the SRO, you need to provide a business plan for the company's development for the next 3 years with a strategy for entering the European market. The cost of membership in the first year will be about 7,000 CHF.

Advantages:

As advantages, we note more than 10 banks working with cryptocurrency; favorable business climate; low taxation.

The agreement signed by Switzerland with 32 countries on the avoidance of double taxation
At least one director and shareholder
Directors and shareholders may be individuals or legal entities
Lack of currency control
The absence of the country in the FATF and OECD blacklists.

The Principality of Liechtenstein is also a favorable jurisdiction for cryptocurrency projects. The regulation is similar to the Swiss one, it is also a part of the European Economic Area.
However, there are an independent blockchain Law, a lower tax rate, and less time for registration procedures.

Liechtenstein

Tax conditions:

Income tax rate - 12.5%;
Interest tax - 0% (exception - securities)

Registration and license:

Registration fee: € 10050

Advantages:

2 agreements on avoidance of double taxation have been signed
Lack of currency control
The good business reputation of the company registered in Liechtenstein
Tax benefits for companies registered in this jurisdiction
It is a part of the European economic zone.

Irish

Tax conditions:

Corporate tax – 12.5%
Tax on incoming dividends – 0%
Capital gains tax – 20%
Value added tax (VAT) – 23%.

Registration and license:

Registration fee: € 1875

Advantages:

Double taxation treaties signed by Ireland
Economic and political stability
Good reputation
Lack of currency control
Low tax rate

Gibraltar

Tax conditions:

10%

Registration and license:

Registration fee: € 3195
If you want to obtain a license, it is necessary to show compliance with the requirements in the field of digital technologies, compliance policy, to show technical equipment, and the development of security protocols.
The cost of the license is an entrance fee of 2,000 pounds (non-refundable), and a registration fee is from 10 to 30 thousand pounds.

Advantages:

This jurisdiction is attractive by the fact that the standard corporate tax rate is 10%. However, there are still no special explanations regarding the activities in the field of blockchain projects.

The Bermuda Islands

Tax conditions:

You can profitably optimize the introduction of taxes. The income tax, withholding tax, and real estate tax are 0%. If there are no resident employees in the company, the payroll fee is not paid. The country has concluded an agreement on the avoidance of double taxation with a number of countries.

Registration and license:

Registration fee: €
There are 2 types of licenses in Bermuda:
A limited-term M-class license and a full F-class license.

Advantages:

No direct taxation.
There is no need for the company's physical presence on the territory of the state.
Cryptocurrency is recognized as legal tender.
Cryptocurrency circulation activities are regulated by the Law on Business in the Field of Digital Assets.
There is a requirement for mandatory disclosure of information according to AML/KYC standards.
An independent ICO regulation regime has been introduced, there is a policy of relaxed conditions for permission to conduct activities in the field of FinTech.