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DO THE OWNERS OF CRYPTOCURRENCIES MUST PAY TAXES?

Nowadays, the question of cryptocurrency taxation is more relevant than ever. Living in the era of information technology, it is important for each of us to understand what is meant by virtual assets and whether they are taxed. Unfortunately, it is impossible to answer this question exactly, since in each country there is a different vision of taxes on cryptocurrency. Moreover, the very concept of cryptocurrency and its essence varies in different countries.In this article we will consider the current practices of cryptocurrency taxation and look more detail on a few practical examples of cryptocurrency taxation.

Legal status and taxes on cryptocurrency in Russia

Unfortunately, the legal status of cryptocurrency in the legislation of the Russian Federation has not yet been determined, and there is also no uniform procedure for the taxation of personal income when performing cryptocurrency transactions.

Today, when making operations with cryptocurrencies, individuals must independently, at their own risk, calculate the tax on operations with cryptocurrencies and submit a declaration to the tax authority.

In September the Federal Tax Service announced that payment for goods by cryptocurrency is considered as a transfer of property for the purchased item, and, therefore, the owner of such property must pay certain taxes on cryptocurrency.

Taxes on cryptocurrency in the USA – a role model?

Since at this point we cannot find an answer to the question on cryptocurrency taxation using the example of the Russian Federation, we can consider the example of the United States. Here we clearly see which operations with cryptocurrencies are not taxed – this is the simple storage of cryptocurrencies in wallets or the transfer of cryptocurrencies from address to address (by one owner). You need to enter data only on the sale of cryptocurrency or trade in the tax return.

Also, one well-known auditing company “Ernst & Young” released a tool called EY Crypto-Asset Accounting and Tax, which allows to count taxes on cryptocurrency transactions for almost all major exchanges, systematize data and generate reports for tax returns to the US Internal Revenue Service (IRS).

What is the situation with the taxation of cryptocurrency in Ukraine?

This year the law “On Amendments to the Tax Code of Ukraine on Taxation of Transactions with Virtual Assets” can enter into force in Ukraine. Based on this document, it is proposed to legitimize the basic terms, such as: token, mining, cryptocurrency, virtual assets and so on.

According to the proposed draft law, a virtual asset is any form of digital recording that can be used as a medium of exchange, a unit of account, or as a means of preserving value.

In the field of taxation, a new type of taxable profit is foreseen – profit from operations with virtual assets, which is defined as the difference between the income from the sale of virtual assets and the cost of their acquisition.

During the legal regulation of the market of virtual assets until December 31, 2024, it is proposed to set the amount of taxes on cryptocurrency at a rate of 5%, and starting from January 1, 2024 – 18%.

You should note that only income from operations with cryptocurrency will be taxed, that is, if no operations are carried out, then the storage of cryptocurrency will not be taxed.

Risks of tax evasion from cryptocurrency transactions

Despite the fact that draft laws in Russia and Ukraine have not yet been approved, there is already a responsibility for non-payment of taxes on operations with cryptocurrency (as with any tax evasion). Sooner or later, the issue of cryptocurrency taxation will be settled at the legislative level, and the situation will become clearer.

It is worth noting that the US Internal Revenue Service (IRS) already uses special tools for tracking users of cryptocurrency, as well as non-payers of taxes on cryptocurrency.

Thus, we see that the topic of taxation of virtual assets is now at the peak of its popularity, and every day there are more and more new tendencies related to its regulation.

SBSB experts are carefully monitoring this topic and will be happy to provide you with qualified advice on cryptocurrency taxation.