Operation crypt still not regulated legislatively, and therefore did not break. However, from 1 January 2020 come important changes in Russian legislation on currency regulation, and in the fall of 2019 may be a law on the regulation of cryptocurrencies. In order not to violate the currency, tax, or even criminal law, an overview of the legal ways of buying and selling the crypt.

The goal is not so much to make the physical exchange, how to receive the opportunity to dispose of hard-earned money. The information below may be useful only if you are going to store the crypt forever, and you plan to withdraw part of Fiat and have a legal income. Under the cut you will learn:

  • why no supporting documents will have to pay taxes in full;
  • which countries in 2020 can fully benefit from Bank accounts without fear of fines wild;
  • why is the account in AdvCash, Payeer, Transferwise, Bitfinex, Bitstamp, Exmo… and any other financial institutions, including bills and exchange, will need to declare in 2020;
  • as the tax authorities, there is information about our revenues in Russia and abroad, and why the real Statute of limitations on offenses is not 3, and almost 5 years.

To buy cryptocurrency – easy!

If the task of legalization of the crypts and income is not worth to buy a crypt within ₽6M can be by any means and without serious consequences.

Purchase within ₽75К..₽180K you can pay by credit card in popular mobile applications that are freely available in the AppStore and GooglePlay. To close the transaction for any amount and best terms possible through the exchange and p2p platforms, but will need to take precautions and not rely on supporting documents.

Spending average transaction volume through the payment system AdvCash and Payeer for example, which conveniently replenished through Qiwi and Yandex.Money, but require identification and commissions and courses out there are not encouraging.

Perhaps the best way to purchase the crypt directly on exchanges (exmo, cex, kraken, bitfinex, bitstamp, maybe currency.com etc.), they work with the Russian resident, close trades at market rates and offer a reasonable fee for depositing and withdrawing Fiat money.

Comparison of methods of purchasing cryptocurrency:

Depositing on exchanges is made via Bank transfer. Unfortunately, Russian banks are disloyal to outgoing foreign currency payments in General, and for the purchase of crypts in particular. The fact that the CBR and the Federal financial monitoring service in his letters regarded cryptocurrency transactions as questionable, and for banks such letters are de facto law. Actions of banks can be expressed in the requirement to provide supporting documents, limit operations of the account, and possibly in denial of further service.

It is preferable to have a foreign Bank accountto use it as a transit – i.e., to first withdraw funds from his account in a Russian Bank, and then to transfer to the stock exchange. Ideally, in a European Bank to use international Swift transfers, and intra-Sepa. Of course, this account must be declared in the tax, annually file reports and used in full accordance with Russian currency legislation.

Probably there will come a time when the crypt will want to sell in order to declare and legalize the income or part of it. For legalization of the income from the sale of crypts, individuals will be required to submit a Declaration 3-NDFL, which must be attached the documents confirming purchase and sale. If the documents for the purchase of crypts, there is a tax you have to pay the difference between the sale price and the purchase. Otherwise, if no supporting documents, then to pay the tax will have on the whole amount of the sale.

Supporting documents – a contract and payment documents. For example, the offer from the website and screenshots from your personal account can change the contract. The account statement or card from a Russian Bank or payment system definitely is a payment document. But the screenshots with localbitcoins and checks of unknown terminals is unlikely to be considered supporting documents, not least because the resource localbitcoins in Russia blocked, and non-fiscal receipts are just paper. The question of course debatable, but to prove their case will have in court.

To sell the cryptocurrency more difficult than to buy.

And it’s not so much the technique and the economy of the question, and how much in respect for currency and tax legislation. For legal sale of crypts is required to take care of the supporting documents and to pay taxes.

The Ministry of Finance and FNS in their letters take the position that the crypt is the property and consequently, the sale of crypto-currencies, individuals have to pay tax on the income. This means that at the end of the year natural persons themselves shall submit the Declaration and pay the tax. Everything can be done remotely through a personal account of the taxpayer for nalog.ru.

There is an opinion that the documents confirming the sale, the requirements be made less because it is the sum voluntarily declared by the taxpayer. However, it is recommended to treat them as seriously as the documents for the purchase of crypts, because both amounts are involved in determining the tax base, and therefore can be cross-checked by the tax authority. The Statute of limitations for tax offences is 3 years in theory and up to 5 years in practice (proof).

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

The good news is that in 2020 it will be possible to fully use the accounts in foreign banks and withdraw their money from the sale of crypts without any penalties, but only if this Bank account opened in the Bank in the territory of a member country of the FATF or the OECD, and the country communicates with the RF tax information (financial information or country reports).

For clarity and convenience, prepared a list of countrieswhere you can open an account and withdraw the funds from the sale of crypts without any penalties 42 countries in September 2019:

The bad news is that you will need to declare the account not only in banks but also accounts at any financial institutions. Decryption of the term of the FTS, the Ministry of Finance and the Central Bank result in the document, but with the caveat that the list is not exhaustive. If you follow the letter of the law – need to declare any accounts and accounts, including:

  • in credit institutions, including payment systems;
  • professional participants of the securities market, including brokers and trust managers;
  • in investment funds and any other entities that receive from customers as cash and financial assets storage, management, investments or any deals.

It makes sense to declare accounts and accounts payment systems and foreign exchanges, and to do so until February 2020. At the extreme is to declare accounts, turnover or balances of which exceeded ₽600K. Not to declare the account is not recommended. FNS receives automatic information about the availability of foreign accounts, the turnover and balances in the framework of automatic exchange of tax information (CRS). Any regulated financial institution (payment system, exchanger, exchange) directs to tax Department in your country for information about foreign beneficiaries and has more from the tax authority of their country information once a year goes to the Federal or more frequently on request.

Here’s an example of just some of the well-known payment systems, they all have licenses and therefore are governed by and will push information to the tax authorities:

  • e-Payments (license FCA, UK)
  • Advcash (license IFSC, Belize),
  • Payeer (license FSC, Vanatau),
  • Transferwise (licensed by BaFin, Germany and the FCA, UK)
  • Payoneer (license FinCEN, US and FSC Gibraltar).

On incoming foreign currency payments on the Russian account, the Bank will request documentation, since according to the letters of the Central Bank of Russia and Rosfinmonitoringa, cryptocurrency transactions are questionable in the sense 115-FZ “On counteraction to legalization (laundering) of proceeds”. Time of consideration of the documents and, accordingly, the hold time of payment will depend on the amount of the Bank and the region, the availability of premium or private banking and quality of documents. Similarly, the Bank may request supporting documents from inbound transactions to the card account, it’s just maybe not immediately, and triggered the AML/CFT triggers.

You should bear in mind that at FNS there is a working mechanism of obtaining information on suspicious transaction chain, the Bank (payment system) → CB → Rosfinmonitoring → FTS. According to the interagency agreement, such information pouchitsa as revealing a gun.

To sell the crypt you can of course in the exchanger or on the p2p platform, but then redress will be available, and supporting documents in the form of screenshots can be rejected, e.g. because blocking Internet resource on the territory of the Russian Federation, or by failing to identify the other side of the transaction.

The courts in their decisions are inclined to believe that such operations are anonymous and are made by the parties at their own risk. Law enforcement authorities are investigating any transactions with cryptocurrencies as potentially illegal. And if the exchange amount exceeds ₽6M and there are no documents confirming the legality of origin of funds in case of an unsuccessful coincidence of circumstances there is a risk to fall under article 174 of the criminal code.

Comparison of methods of sale of cryptocurrencies:

The results:

  1. If you plan only to buy the crypt and keep forever –
    ie if you do not pay it and not withdraw in Fiat to do then nothing is required. At the moment in 2019 all the ways to purchase cryptocurrencies from the point of view of the law legal. But if the law is passed regulating the turnover of cryptocurrencies, you probably will have some limitations.
  2. If you plan to sell the crypt, and part of the income be legalized
    you need to strive on supporting documents every time you purchase and the sale of the crypt, it is useful for the Bank and tax.
  3. If you plan to play with the big volumes, it is useful to switch to premium banking
    Upon receipt of the funds in a Russian Bank, if the transaction look suspicious, and the documents you provided the Bank is not satisfied, it will merge information of the chain: Bank → Rosfinmonitoring → FTS. Then maybe nothing to follow, but this is not accurate. If you plan to work with large volumes, it is helpful to switch to premium banking, to get your personal Manager and discuss with him their intention to buy-sell the crypt, using a Russian account.
  4. If you want to work with large volumes of low 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. A good time to open a foreign account
    To receive funds in a foreign Bank in 2019 is not recommended because the penalty for violation of currency legislation at 75%..100% of the amount. Starting in 2020, for accounts from the list of allowed countries these sanctions are lifted, and they can be used freely. A good time to pick up the European Bank, go and open an account.
  6. Until February 1, you need to declare the accounts in any foreign payment systems and exchanges
    Starting in 2020, it is necessary to declare the accounts in any foreign payment systems and exchanges. If you do not declare the penalty ₽5K, if you do not apply the reporting penalty ₽20K annually and if you withdraw on such account, the penalty is 75%..100% of the amount. One conclusion: active use of accounts and accounts only in those financial institutions that are registered in one of the allowed countries, and before February 1, 2020 submit the notification.
  7. Until 30 April you need to submit a Declaration 3-personal income tax and pay the tax
    The sale of crypts the income arises, and therefore until 30 April of the following year must file a Declaration of 3-NDFL on nalog.ru and until July 15 to pay 13% tax. If you do not pay taxes, then the amount of the unpaid fine will be charged (with 7.25%/300 a day) + the penalty is 20%..40% of the amount. Fines are charged for all the time and have no limit on top. And contrary to popular opinion about the Statute of limitations for tax violations in 3 years, technically he could be up to 5 years.

The original article can be found on my website: lite.legal/how-to-legalize-cryptocurrency-income

Questions and opinions are welcome!