Non-fungible tokens remain outside the Russian legal field, which creates uncertainty in terms of legislation and tax payments
To pay or not to pay tax on NFTs
At the moment, the concept of NFT does not exist in Russian legislation. At the same time, tokens are actively issued by representatives of show business, athletes, even the State Hermitage sold tokens for their paintings last year.
Experts told what difficulties users who want to issue their NFTs may face, and whether it is necessary to pay taxes on transactions with non-fungible tokens.
In fact, NFTs are outside the Russian legal framework, said Andrey Tugarin, Managing Partner at GMT Legal. This is observed in many countries, since the legal regulation of non-fungible tokens in the world is still being formed.
However, this also means that the circulation of NFTs in Russia is not prohibited. Individuals can legally create, acquire and alienate NFTs, the expert emphasized. He added that such actions should not violate the law (for example, NFT fraud would be a crime and prosecuted under the criminal code).
The purchase of NFT can be considered as an investment, added Elena Buydalina, Product Manager at Erachain. She noted that difficulties with investments in non-fungible tokens may arise at the stage of entering the world of cryptocurrencies.
“You need to create an account, connect your wallet to the NFT marketplace, you will need to buy cryptocurrency, because for the issuance of NFT, as in principle for any operation in the blockchain, you need to pay a commission. Since now there are restrictions on the use of Russian cards, you will have to contrive to buy the right cryptocurrency, ”Buydalina warned.
At the same time, persons issuing NFTs may face various difficulties, including tax ones, Tugarin emphasized. According to him, a person must pay taxes on income from NFT transactions. Despite the fact that NFTs have not yet received legal regulation in Russia, as a general rule, any income is taxed.
According to the tax legislation of the Russian Federation, economic benefits in cash or in kind are recognized as income. Economic benefit refers to the excess of income over expenses. Accordingly, if a tax resident of Russia received income from the issuance, creation, sale and other operations with NFTs, he must pay tax on such income, Tugarin emphasized.