We often encounter situations where foreign investors mine cryptocurrency on the territory of the Russian Federation: the equipment operates locally, but the crypto assets legally belong to foreign entities with no presence or registration in Russia.
Currently, in such cases, if the contract with the foreign company is properly structured, VAT may not be applicable. It all depends on the wording.
According to Article 148 of the Russian Tax Code, the place of supply for services related to data transfer and computational processes is considered to be the location of the customer.
Therefore, if the customer is located outside Russia, such services are not subject to VAT, provided the contract accurately describes the nature of the services.
However, the Ministry of Finance and the Federal Tax Service are clearly not satisfied with this setup, and changes are coming.
A draft bill has already been submitted to the State Duma, proposing to introduce VAT on:
- the leasing of mining equipment to foreign companies;
- the real-time sale of hashrate (computing power).
Notably, foreign counterparties will not be entitled to recover the VAT paid, which makes these services less attractive for them—but ensures tax revenue for the Russian budget.
Link to the bill: https://regulation.gov.ru/Regulation/Npa/PublicView?npaID=154001
By the way, invoice forms and accounting books will now be regulated by the Federal Tax Service rather than the Government—another step toward centralized control.
If you work with foreign clients in the mining sector, we recommend auditing your contracts and business models in advance to prepare for the upcoming changes.