How to Pay Taxes on P2P Trading: Key Questions and Answers

P2P cryptocurrency trading in Russia is gaining momentum, especially considering current sanctions. Many use it for transfers, settlements with counterparties, and even as a full-fledged business asset. However, the challenge is that there is still no clear taxation procedure for such operations — but this does not exempt traders from the obligation to pay taxes. Today, we’ll explore how to pay taxes on P2P trading, when tax obligations arise, how tax authorities can track operations, and what penalties you might face.

Question №1: When Do You Need to Pay Taxes?

Not all cryptocurrency transactions are taxable — it depends on the nature of your activities with the asset. Buying and holding crypto are not taxable operations. This is confirmed by the Russian Ministry of Finance’s letter No. 03-04-05/34900 dated May 6, 2021. In other words, if you simply purchase cryptocurrency or keep it in your wallet, you have no tax obligations.

Only Profits Are Taxed

Taxes are due only when your cryptocurrency activities generate income that exceeds your expenses. This includes:

• Selling cryptocurrency for fiat. For example, selling Bitcoin for rubles or dollars.
• Mining or staking profits. However, the taxable base is formed only when the asset is sold for fiat. Holding or transferring mined assets in digital format is not taxed.

Example: You bought Bitcoin for 100,000 rubles and later sold it for 150,000 rubles. Tax is calculated only on the 50,000 rubles profit. If you simply exchanged Bitcoin for another cryptocurrency, no tax is due until the funds are converted to fiat. This approach is based on the fact that only real money (fiat) is considered a taxable object. Digital assets do not form a taxable base until they are sold for fiat.

Question №2: Who Must Pay Taxes on P2P Transactions and How Much?

Taxes must be paid by anyone earning income from cryptocurrency operations. This includes individuals, sole proprietors (SP), and organizations. Tax rates and payment procedures depend on your status and tax system.

Taxes for Individuals

Individuals pay personal income tax (PIT) at the following rates:

• 13% if total annual income (including crypto income) does not exceed 5 million rubles.
• 15% on income exceeding 5 million rubles.

Individuals must calculate PIT independently, file a 3-PIT tax return, and submit it to the tax authorities by April 30 of the following year. Taxes must be paid by July 15 based on the return.

Taxes for Self-Employed Persons

If you pay professional income tax (PIT) as a self-employed person, the tax calculation depends on the type of operation:

• Selling previously purchased cryptocurrency for resale is subject to PIT, as self-employment tax does not cover resale and speculative transactions.
• Selling mined cryptocurrency can be taxed under self-employment tax.

Taxes for Sole Proprietors (SP)

SPs under the general tax system pay tax at a 13% rate (PIT). SPs under the simplified tax system are taxed based on the chosen taxable object:

• 6% on income.
• 15% on income minus expenses.

Taxes for Organizations

Organizations conducting cryptocurrency operations must pay a 20% profit tax. However, such cases are rare as 99% of crypto wallets are registered to individuals, and exchanges do not allow corporate accounts. For organizations under the simplified tax system, the same rates as SPs apply:

• 6% on income.
• 15% on income minus expenses.

Why Are Most P2P Transactions Done by Individuals?

In practice, the majority of wallets and exchange accounts are registered to individuals. This is because it's difficult for legal entities to open accounts, while working as an SP or self-employed person is simpler and more tax-efficient.

Question №3: Do You Need to Pay VAT?

The issue of VAT on cryptocurrency transactions is a matter of debate. According to Article 38 of the Russian Tax Code, cryptocurrency is not considered a commodity and is not subject to VAT. Moreover, Draft Law No. 1065710-7, currently under discussion, explicitly excludes cryptocurrency transactions from VAT. This means that VAT is not applicable to cryptocurrency transactions, as confirmed by legal and tax experts.

Question №4: How to Calculate Taxes?

Tax calculation for cryptocurrency operations is based on your profit — the difference between income and expenses. To determine your taxable base, subtract the original purchase cost of the cryptocurrency from the sale amount. Tax is then calculated on this difference.

Example 1: You made a profit.

You bought Ethereum (ETH) for 120,000 rubles and sold it later for 200,000 rubles. Your profit is: 200,000 - 120,000 = 80,000 rubles.
Tax due: 80,000 × 13% = 10,400 rubles.

Example 2: You incurred a loss.

You bought Bitcoin (BTC) for 150,000 rubles, but the price dropped, and you sold it for 100,000 rubles. Your loss is: 150,000 - 100,000 = 50,000 rubles.
Since there is no profit, no tax is due.

Example 3: You exchanged stablecoins.

You bought 100 USDT at 80 rubles per dollar (total cost — 8,000 rubles) and sold them a few months later at 90 rubles per dollar. Your profit is: 100 × (90 - 80) = 1,000 rubles.
Tax due: 1,000 × 13% = 130 rubles.

Key points to remember:

• Purchase costs must be documented (e.g., exchange or bank statements).
• Selling cryptocurrency at a loss does not create a taxable base, so no tax is due.
• Taxes are only applied to income received in fiat currency (rubles, dollars, etc.). Crypto-to-crypto exchanges are not taxed.

Question №5: How Do Tax Authorities Track Cryptocurrency Transactions?

While blockchain is considered anonymous and decentralized, tax authorities do have tools to monitor cryptocurrency operations. However, their capabilities are still limited. Main tracking methods:

• Bank requests. When you transfer funds to a crypto exchange or receive payouts from one, these transactions are visible to banks. Tax authorities can request this information to determine if transfers are related to crypto purchases or sales.
• Requests to foreign crypto exchanges. The Russian Federal Tax Service (FTS) can request information from foreign exchanges under international data exchange agreements. However, these requests must be justified, such as suspicions of tax evasion. Mass audits of all crypto users this way are not feasible.
• 3-PIT tax returns. If you file a tax return declaring crypto income, the tax authority may request additional documents, such as exchange statements, expense confirmations, or other proof of legal income.

Why is there no full control yet?

There is no automated data exchange between tax authorities and crypto exchanges, especially foreign ones. Additionally, tax authorities cannot directly identify individuals behind blockchain transactions. They can see only sender and receiver codes and transaction amounts, making it technically challenging to determine who is involved.

Question №6: What Are the Penalties for Not Paying Taxes on P2P Transactions?

Tax evasion penalties apply to cryptocurrency just like any other income. Violators may face:

• A fine of up to 200 rubles for each unsubmitted document (Article 126 of the Russian Tax Code).
• A fine of 5% of the tax amount for not submitting a tax return, but no more than 30% (Article 119 of the Russian Tax Code).
• A fine of up to 20% for unpaid taxes without intent, or up to 40% for deliberate evasion (Article 122 of the Russian Tax Code).

For large debts, criminal liability may apply:

• Debt exceeding 2.7 million rubles is considered large-scale.
• Debt exceeding 13.5 million rubles is considered especially large-scale.

Question №7: How to Pay Taxes and Sleep Soundly?

If you work with P2P trading, here are some tips:

• Keep accurate records of income and expenses. Save all documents related to your transactions: exchange statements, receipts, contracts, and bank transfers. These are your main defense if the tax authorities have questions.
• Remember tax return deadlines. Individuals must file a 3-PIT tax return by April 30 of the following year. Calculate your tax in advance to pay it on time and avoid unnecessary fines.
• Don’t ignore tax authority requests. If the tax service requests proof of your income or expenses, respond promptly. It’s better to provide all documents and confirm your compliance than to risk fines and audits.
• Be honest. It may seem that the chance of being audited is low, but it’s not worth the risk. Transparent tax payments guarantee your financial safety and freedom from state claims.

P2P cryptocurrency trading through our Telegram bot is a great way to earn, but staying within the law is essential. Taxes aren’t the end of the world — they’re just part of the game. Earn legally and sleep peacefully!