Russia's Crypto Assets Policy Transformation: An Exploration of Experimental Legislation

Russia plans to impose value-added tax on companies that rent out mining equipment or data centers to overseas enterprises and Mining Pools.

Written by: TaxDAO

1. News Overview

Russia plans to impose value-added tax on companies renting out mining equipment or data centers to overseas enterprises and Mining Pools.

Starting from September 1, 2024, Russia officially allows the use of cryptocurrencies in cross-border trade and digital asset exchanges, covering mainstream currencies such as Ethereum (ETH) and stablecoin USDT, marking the country as one of the few in the world to incorporate cryptocurrencies into legal payment tools. In November of the same year, the Russian cryptocurrency Mining industry gained legal status, ending years of gray area operations. Moving to January of this year, Russian law requiring all industrial-scale miners and Mining Infrastructure Operators (MIO) to register in the national registry officially came into effect. As of April 1, 2025, 116 MIOs and 606 industrial miners (промышленные майнеры) have completed registration, but the Federal Tax Service of Russia (FTS) believes that there are still many enterprises that are non-compliant. The registry is managed by the FTS, which is currently formulating tax regulations for the annual profits of industrial-scale miners (промышленные майнеры) and MIOs.

On May 1, 2025, the Russian Ministry of Finance plans to impose value-added tax (VAT) on companies renting mining equipment or data centers to overseas enterprises and Mining Pools. Energy companies providing power to foreign mining enterprises will also fall under this new regulation. The Ministry stated that this move aims to clarify the taxation process for renting mining equipment and to establish tax rules for companies providing "Mining Power" to non-Russian clients. Due to the lack of "clear explanations" in current regulations, companies face difficulties when declaring, and VAT may apply to real-time, monthly, or annual rental invoices.

2. Details of the New VAT Regulations in Russia

2.1 Legislative Process

On May 1, 2025, the Russian Ministry of Finance officially proposed a bill to impose value-added tax on cross-border Mining services, marking a key step in the country's tax regulation of the cryptocurrency Mining industry. The bill is currently in the public consultation period, allowing industry associations, businesses, and the public to provide feedback on its provisions. After the consultation period ends, it will enter the parliamentary review process. If the bill passes smoothly, it is expected to be officially implemented on January 1, 2026, along with amendments to Article 149 of the Tax Code of the Russian Federation to clarify the value-added tax rules for transactions involving digital currencies. To ensure a smooth transition, the bill sets an adjustment period for registered miners and infrastructure operators, while also requiring electricity suppliers to report separately on the electricity consumption for cross-border Mining to enable tax authorities to accurately distinguish taxable entities and avoid excessive disruption to energy basic services.

The current focus of controversy is on the scope of taxation: The Energy Industry Association opposes including electricity sales in the value-added tax system, arguing that it is a basic energy service and the cost is already reflected in the electricity pricing mechanism, while the Ministry of Finance asserts that electricity is a core cost component of Mining activities and should be included in the value-added tax to comprehensively cover economic value. This divergence may affect the final tax rate setting and the compliance costs of related industries.

2.2 Legal Definitions and Registration Requirements of Industrial Miners and MIO

On August 8, 2024, Russia clarified the legal definitions of industrial miners (промышленные майнеры) and mining infrastructure operators (MIO). According to a report by the Russian national news agency TASS, on August 8 at Moscow time (UTC+3), Russian President Vladimir Putin signed a law. This law introduces new concepts such as digital currency mining, mining pools, mining infrastructure operators, address identifiers, and individuals organizing mining pool activities, and specifically defines the criteria for identifying industrial miners and "mining infrastructure operators (MIO)", as well as the registration subjects and the materials and documents required for registration.

Industrial miners (промышленные майнеры) refer to legal entities or individual entrepreneurs engaged in large-scale cryptocurrency Mining activities, which typically involve high energy consumption and large equipment scale. Industrial miners must meet specific criteria:

(1) In terms of registration entities, it must be a legal entity or individual entrepreneur in Russia, and must be included in the "Individual Register of Cryptocurrency Mining" managed by the Federal Tax Service (FTS);

(2) In terms of energy consumption, individual miners who use household electricity to engage in Mining activities must ensure that their power consumption does not exceed the limits set by the government (the specific value is dynamically adjusted by the Ministry of Energy);

(3) In terms of compliance obligations, miners are required to regularly report their mining income to the tax authorities and pay taxes based on their income levels. Investors with an annual income below a certain threshold (2.4 million rubles) will be subject to a tax rate of 13%, while the portion above that threshold will be subject to a tax rate of 15%.

Mining Infrastructure Operators (MIO): Refers to operators that specialize in providing infrastructure and services related to cryptocurrency mining, including but not limited to the management of mining equipment, operation of data centers, etc. The recognition criteria for Mining Infrastructure Operators (MIO) are relatively strict, and their entry threshold is reflected in multiple aspects:

(1) In terms of the licensing system, it is necessary to obtain the "Mining Infrastructure Operator License" issued by the federal government, and this license is approved by a specialized committee under the Digital Economy Department;

(2) In terms of service scope, it can provide services such as Mining farm hosting, data center leasing, and computing power sales, but it is explicitly prohibited to combine with core businesses of the electricity industry, such as power transmission and scheduling;

(3) Regarding registration requirements, it is necessary to submit materials such as the articles of incorporation, technical plans, and electricity purchase contracts to the Federal Tax Bureau;

(4) Annual compliance audits must be accepted.

According to the registration requirements of the Federal Tax Service of the Russian Federation (FTS), industrial-grade miners and Mining Infrastructure Operators (MIO) must submit a series of documents to complete compliance registration:

(1) The legal person of the enterprise must provide a notarized copy of the company's articles of association, clearly including the terms related to industrial assembly or cryptocurrency Mining business scope, along with the tax registration certificate and the main country registration number of the legal person.

(2) If the applicant is an individual entrepreneur, they must submit personal identification documents (such as notarized passport) and the main country registration number of the individual entrepreneur.

Both individuals and enterprises need to provide a list of Mining equipment, qualified electronic signatures for the equipment, technical parameters and explanations of energy consumption, as well as the digital wallet address used to receive Mining earnings. In addition, documents specified in Article 1 "a" of Resolution No. 719 of the Government of the Russian Federation dated July 17, 2015 must be supplemented, along with relevant documents on the technical requirements for industrial products, including technical conditions, corporate standards, process regulations, or national standards, etc. This process aims to ensure that applicants meet technical access, tax compliance, and anti-money laundering regulatory requirements. Unregistered enterprises will face penalties and legal risks.

2.3 Taxation Elements of the New VAT Regulations

According to the draft proposal, the scope of VAT collection will explicitly cover cross-border Mining services, including the rental of Mining equipment to overseas clients, the provision of real-time computing power services, and electricity supply (if the Russian Ministry of Finance's plan is ultimately approved). In terms of tax rate standards, the draft bill sets a general tax rate of 20%, applicable to equipment rental income; at the same time, if the service recipient is an enterprise from a member state of the Eurasian Economic Union (EAEU), they can apply for VAT exemptions and enjoy a zero tax rate benefit. Service providers applying for the zero tax rate must submit the "EAEU Client Tax Registration Certificate" and the "Service Purpose Statement." Other tax rate references can refer to Article 164, Clause 1 of the Tax Code of the Russian Federation, which lists "zero tax rate for cross-border services." Regarding tax obligations, the draft bill stipulates that the taxpayer is the equipment/computing power service provider registered in Russia (including foreign companies' permanent establishments). If the equipment rental party fails to fulfill the reporting obligations, the actual controller of the equipment (such as the data center operator) must bear joint liability, paying the VAT and related late fees.

The reporting period is divided into monthly and annual items, which are declared by the Russian service provider, and relevant materials such as cross-border service contracts and foreign exchange income certificates must be submitted to fulfill tax obligations.

(1) Monthly declaration: Generally, it is necessary to submit the value-added tax declaration form and simultaneously provide the notarized Russian-English bilingual cross-border service contract, foreign exchange income bank vouchers (Rubles / foreign currency receipt proof). If applying for a zero tax rate preferential treatment for clients from the Eurasian Economic Union (EAEU) member countries, a valid tax registration certificate must be attached.

(2) Annual Declaration: Completing the annual filing generally requires submitting detailed records of the duration of foreign customers' equipment usage or computing power output data (unit: TH/s·day) in the equipment usage log.

It is important to note that all the above declaration documents must be submitted with an electronic signature certified by the Federal Tax Service (FTS), and the computing power service must be strictly measured by daily output and match the pricing terms of the contract.

3. FinTax Viewpoint

The new value-added tax regulations have sparked intense debate within Russia, with some supporters of the new proposed regulations arguing that there are two main benefits to these new rules. From the perspective of policy interconnectivity, the regulations enacted at the beginning of the year require all cryptocurrency Mining operations in Russia to be registered, allowing tax authorities to comprehensively grasp the equipment inventory data across the entire industry. This initiative is significant as it not only provides regulatory agencies with a clear understanding of the industry scale but also offers precise targeting for the administration of value-added tax. Through the registration information, tax authorities can clearly identify taxable entities and understand the number of equipment, scale, and operational status of businesses, thereby effectively implementing the new value-added tax regulations and ensuring that all taxes due are collected.

From the perspective of government revenue, the implementation of the new VAT regulations will bring considerable fiscal income to the Russian government. The Ministry of Finance estimates that VAT can increase revenue by 45-60 billion rubles annually. This funding is of significant strategic importance to the Russian government and will mainly be used to subsidize the upgrading of domestic electricity infrastructure. The cryptocurrency Mining industry is a high-energy-consuming sector that requires high stability and quality of electricity supply. By upgrading the electricity infrastructure, the efficiency and reliability of electricity supply can be improved, reducing electricity costs for enterprises, thus providing better support for the development of the cryptocurrency Mining industry. Furthermore, from a macroeconomic perspective, this fiscal revenue can also be used in other livelihood areas, such as education, healthcare, and social security, to improve people's living standards and promote sustainable economic development. Additionally, through the implementation of the new VAT regulations, the Russian government can guide the cryptocurrency Mining industry towards a more standardized and legal direction, promoting healthy and stable development in the sector, contributing to the transformation and upgrading of the national economy.

At the same time, the new regulatory draft is facing a lot of opposition. Opponents argue that the implementation of the new value-added tax regulations in the short term will lead to an increase in tax burdens, which may cause some small and medium-sized industrial miners and MIO to exit cross-border operations due to the inability to bear the increased costs. These small and medium-sized companies are usually smaller in scale and have weaker financial strength, and when faced with higher tax rates, they may find it difficult to maintain normal operations and profitability. Their exit will accelerate industry consolidation, and market share will further concentrate among large industrial miners and MIO. Although this concentration of market share is somewhat beneficial for improving the overall efficiency and competitiveness of the industry, it is not entirely a good thing for the ecological balance of the entire mining market.

In the long term, the industry's trend may be even more severe. Leading industrial miners and MIO, in search of lower costs and higher profits, may migrate data centers to low-tax countries such as Kazakhstan. These countries may offer more favorable tax policies and electricity prices, attracting relevant personnel. Once leading industrial miners and MIO migrate on a large scale, Russia's hash power share may decline, and hash power is the core competitiveness of cryptocurrency Mining. A decrease in hash power share means that Russia's voice and influence in the global mining market will be weakened, which may affect its technological development and innovation in this field.

We believe that the following aspects should also be noted regarding the new regulation draft. First, there is a dispute over the classification of tax items, with the Russian Ministry of Finance and the tax authorities stating that Mining services should be calculated at a tax rate of 20% according to "equipment leasing". This is still in the draft stage and has not reached a consensus. Secondly, the issue of missing cross-border transaction certificates is severe, as over 60% of mining enterprises are unable to provide tax payment certificates with overseas customer seals, which leads tax authorities to refuse to deduct input tax. In addition, the problem of energy cost sharing also needs urgent resolution, as the electricity expenses of mining sites account for a large portion of operational costs, but current regulations do not specify the VAT deduction ratio for electricity procurement invoices.

Despite the controversies, overall, this remains a beneficial attempt for Russia to promote the transformation of its cryptocurrency policy and the healthy development of the cryptocurrency market. If the relevant reforms are ultimately implemented and achieve good results, Russia may expand the reforms to more subfields, continuously guiding the development of its domestic cryptocurrency industry while safeguarding national interests.