Taxation and Declaration of Income Under the Personal Income Tax Act for an Individual Who Trades in Cryptocurrencies, Shares, Stakes, etc.

Article 13 of the Personal Income Tax Act lists the types of income exempt from taxation. Income from trading in cryptocurrencies is not exempt. In summary, according to their characteristics and the intended purpose of cryptocurrencies, they may be treated as equivalent to financial assets.

Pursuant to Article 33, Paragraph 3 of the Personal Income Tax Act: The taxable income from the sale or exchange of shares, stakes, compensatory instruments, investment vouchers and other financial assets, as well as from trading in foreign currency, is the sum of the gains realized during the year - for example, based on the sale price of cryptocurrencies, determined for each individual transaction - reduced by the sum of the losses realized during the year, determined for each individual transaction.

In this case, the income is declared in Annex No. 5 to the Annual Tax Return under Article 50 of the Personal Income Tax Act, and the tax rate is 10%.

The result of each transaction is determined by reducing the sale price of cryptocurrencies, shares, stakes and others by the acquisition cost. The acquisition cost is determined on the basis of a documentarily proven price. When the cryptocurrencies or financial assets have different acquisition costs and it is difficult to determine exactly which of these assets is being sold, the acquisition cost is determined as a weighted average value using a formula.

The information above, however, does not apply to income from the economic activity of an individual, even if they are not registered as a trader under the Commerce Act; and the classification of an individual as a trader is not connected solely with the existence of registration under the Commerce Act. If the activity carried out is the individual's main source of income, then it will be taxed as income from commercial activity, and accordingly the income from the purchase and sale of financial assets and cryptocurrencies is declared in Annex No. 2 of the Annual Tax Return under Article 50 of the Personal Income Tax Act.