Clever Geek Handbook

Buying and selling cryptocurrencies in Russia: methods, legalization, risks





Crypto transactions are not yet legally regulated, and therefore do not violate anything. However, from January 1, 2020, important changes will enter into the Russian legislation on currency regulation , and in the fall of 2019, a law on the regulation of cryptocurrency turnover may be adopted. In order not to violate currency, tax or even criminal legislation, an overview of the legal methods of buying and selling crypts is offered.



The goal is not so much to make a physical exchange as to be able to freely dispose of honestly earned money. The information below may be useful only if you are not going to keep the crypt forever, but plan to withdraw the part to fiat and have legal income. Under the cut you will know:





Buying cryptocurrency is easy!



If the task of legalizing crypto and income is not worth it, then you can purchase a crypto within ₽6M by any means and without serious consequences.



A purchase within $ 75K ... $ 180K can be paid by credit card in popular mobile applications freely available in the AppStore and GooglePlay. Closing a deal for any amount and on favorable conditions is possible through exchangers and p2p sites, but you will need to follow safety measures and not rely on supporting documents.



It is possible to conduct transactions average in volume through payment systems, for example, AdvCash and Payeer, which are conveniently replenished through Qiwi and Yandex.Money, but require identification, and commissions and rates are not encouraging there.



Perhaps the best way to acquire cryptocurrency is directly on exchanges (exmo, cex, kraken, bitfinex, bitstamp, possibly currency.com, etc.), they work with Russian residents, close transactions at market rates and offer reasonable fees for depositing and withdrawing fiat funds.



Comparison of cryptocurrency purchase methods:







Deposit replenishment on exchanges is carried out by bank transfer. Unfortunately, Russian banks are disloyal to outgoing currency payments in general, and especially for the acquisition of crypto. The fact is that the Central Bank of the Russian Federation and Rosfinmonitoring in their letters regard transactions with cryptocurrencies as doubtful, and for banks such letters are de facto law. The actions of banks can be expressed in the demand to provide supporting documents, restriction of account operations, and possibly in the denial of further services.



It is preferable to have an account with a foreign bank in order to use it as a transit one - i.e. first withdraw funds to it from your account with a Russian bank, and only then transfer funds from it to the exchange. Ideally, in a European bank to use both Swift international transfers and Sepa intra-European transfers. Of course, this account must be declared in the tax, submit annual reports and use in full compliance with Russian currency legislation.



Probably, there will come a time when he wants to sell the crypt in order to declare and legalize the income or part of it. To legalize the income from the sale of crypto, an individual will need to submit a 3-NDFL declaration, to which documents confirming both the purchase and the sale must be attached. If there are documents for the purchase of the crypt, the tax must be paid on the difference between the sale and purchase prices. Otherwise, if there are no supporting documents, then you will have to pay tax on the entire sale amount.



Supporting documents are the contract and payment documents. For example, an offer from the site and screenshots from your personal account can replace the contract. An account or card statement from a Russian bank or payment system is definitely a payment document. But screenshots from localbitcoins and checks from obscure terminals are unlikely to be considered supporting documents, if only because the localbitcoins resource in Russia is blocked, and non-fiscal checks are just paper. The question is of course debatable, but they will have to prove their case in court.



Selling cryptocurrencies is harder than buying



And it is not so much a matter of technology and economics, but rather of compliance with currency and tax laws. For the legal sale of crypts, you need to take care of supporting documents and pay taxes.



The Ministry of Finance and the Federal Tax Service in their letters adhere to the position that crypto is property, and therefore, when selling cryptocurrency, an individual needs to pay income tax. This means that according to the results of the year, an individual independently submits a declaration and pays tax . Everything can be done remotely through the personal account of the taxpayer at nalog.ru.



There is an opinion that less documents are required for documents confirming the sale, because this is the amount voluntarily declared by the taxpayer. However, it is recommended to treat them as seriously as with documents for the purchase of crypto, as both amounts are involved in determining the tax base, and therefore can be double-checked by the tax authority. The statute of limitations for tax offenses is 3 years in theory and up to 5 years in practice ( proof ).



Legal withdrawal of medium and large amounts is possible only to a bank account. Until the end of 2019, it is impossible to withdraw funds from the sale of crypto to your foreign account , at least if you are a Russian resident. This operation is not included in the list of permitted operations in accordance with 173- “On currency regulation and currency control”. In case of violation, a penalty is 75% .. 100% of the transaction amount. However, from January 1, 2020, amendments to the 173- will come into effect, and the rules of the game will change.



The good news is that from 2020 it will be possible to fully use accounts in foreign banks and withdraw funds from crypto sales to them without any penalties, but only if this bank account is opened with a bank in the territory of a FATF or OECD member country, and the country exchanges tax information with the Russian Federation ( financial information or country reports ).



For clarity and convenience, a list of countries has been prepared in which you can open an account and withdraw funds from the sale of crypto to it without any fines - 42 countries as of September 2019:







The bad news is that you will need to declare accounts not only in banks, but also accounts in any organizations of the financial market . The interpretation of this term by the Federal Tax Service, the Ministry of Finance and the Central Bank is given in the document , but with the proviso that the list is not exhaustive. If you follow the letter of the law, then you need to declare any accounts and accounts, including:





It makes sense to declare the accounts and accounts of foreign payment systems and exchanges, and do this until February 2020. At the very least, it’s worthwhile to declare accounts whose turnovers or balances for which exceeded ₽600K (for any calendar year, from January 01 to December 31). Not declaring invoices is not recommended. The Federal Tax Service automatically receives information on the availability of foreign accounts, turnover and balances in the framework of the automatic exchange of tax information (CRS). Any regulated financial institution (payment system, exchanger, exchange) sends information about foreign beneficiaries to the tax service of its country, and then from the tax authority of its country, information is sent to the Federal Tax Service of Russia once a year or more often upon request.



Here, for example, are just some of the well-known payment systems, they are all with licenses, and therefore are regulated and push information to the tax authorities:





For incoming foreign currency payments to the Russian account, the bank will request substantiating documents, as According to the letters of the Central Bank of the Russian Federation and Rosfinmonitoring , operations with cryptocurrencies are doubtful in the sense of 115-FZ "On counteracting the legalization (laundering) of income." The time for consideration of documents, and accordingly the time of holding the payment, will depend on the amount, bank and region, the availability of premium or private banking and the quality of preparation of documents . Similarly, a bank can request supporting documents for incoming transactions to a card account, it just might not be right away, but when AML / CFT triggers fire.



It should be borne in mind that the Federal Tax Service has a working mechanism for obtaining information about dubious transactions along the chain Bank (payment system) → Central Bank → Rosfinmonitoring → Federal Tax Service. According to the interagency agreement , such information is pushed as it is automatically detected.



You can certainly sell the cryptocurrency in the exchanger or on the p2p site, but then there will be no legal protection, and supporting documents in the form of screenshots may be rejected, for example, due to a blocking of an Internet resource in the Russian Federation, or because of the inability to identify the other side of the transaction.



Courts in their decisions are inclined to believe that such operations are anonymous and are performed by the parties at their own risk. Law enforcement agencies consider any cryptocurrency transactions as potentially illegal. And if the amount of the exchange exceeds ₽6M and there are no documents confirming the legality of the origin of the funds, then if the circumstances are unsuccessful, there is a risk of falling under Art. 174 of the Criminal Code .



Comparison of cryptocurrency selling methods:







Summary



  1. If you plan to just buy a crypt and store forever -

    those. if you don’t pay it and put it in fiat, then you don’t need to do anything. At the moment, in 2019, all methods of acquiring cryptocurrency from the point of view of the law are legal. But if a law regulating the circulation of cryptocurrencies is adopted, then some restrictions will probably appear.
  2. If you plan to sell the crypt, and legalize part of the income -

    then you need to take care of supporting documents every time you buy and sell crypto, this is useful for the bank and tax.

  3. If you plan to work with serious volumes - it is useful to switch to premium banking

    Upon receipt of funds in a Russian bank, if the operation seems suspicious, and the bank does not arrange the documents you provided, it will merge the information along the chain: Bank → Rosfinmonitoring → Federal Tax Service. There may not be anything further, but this is not accurate. If you plan to work with large volumes, it will be useful to switch to premium banking, get a personal manager and talk to him about your intentions to buy and sell a crypt using a Russian account.

  4. If you need to work with large volumes at the lowest fees and risks

    It makes sense to build a scheme with a foreign company in one of the crypto-friendly jurisdictions (Estonia, Malta, Switzerland, Gibraltar, etc.).

  5. Good time to open a foreign account

    It is not recommended to receive funds to a foreign bank in 2019, as penalty for violation of currency legislation - 75% .. 100% of the amount. Starting from 2020, for accounts from the list of allowed countries, these sanctions are canceled and can be used freely. Good time to pick up a European bank, go and open an account.

  6. Before February 1, you need to declare accounts in any foreign payment systems and exchanges

    Starting in 2020, you need to declare accounts in any foreign payment systems and exchanges. If you do not declare - a fine of ₽5K, if you do not submit reports - a fine of ₽20K annually, and if you withdraw funds to such accounts - a fine of 75% .. 100% of the amount. There is only one conclusion: you can actively use accounts and accounts only in those financial institutions that are registered in one of the permitted countries , and before February 1, 2020, you must submit a notification.

  7. Until April 30, you need to file a 3-personal income tax return and pay tax

    When crypto is sold, income arises, and therefore, by April 30 of the next year, you need to submit a 3-NDFL declaration to nalog.ru and pay 13% tax by July 15. If you do not pay taxes, then a penalty will be charged on the amount of non-payment (7.25% / 300 per day) + 20% penalty .. 40% of the amount. Penalties are accrued for all time and have no limit on top. And contrary to popular belief about the statute of limitations for tax violations of 3 years, technically it can be up to 5 years.



The original article is posted on my website: lite.legal/how-to-legalize-cryptocurrency-income



Questions and opinions are welcome!


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