From July 1, 2021, residents of the Russian Federation will be required to report to the Federal Tax Service on transactions of funds via foreign electronic wallets if the amount of transactions exceeds RUB 600K or the equivalent in foreign currency for a year.
This obligation was legislatively formalized in December 2020, and even in the process of reading it began to grow overgrown with rumors and speculation, which were replicated by the media. And after the amendments to Art. 86 of the Tax Code of the Russian Federation, according to which the FTS received the authority to request from banks an extended list of documents from June 1, 2021 (only in the case of suspicious transactions with accounts in precious metals) – the volume of speculation on the Internet has increased dramatically.
From about mid-May, the media began to spread the news especially actively that from July 1, 2021, the Federal Tax Service will allegedly receive access to information on all movements of funds of residents of the country using bank cards. The most common version of the news reprinted from each other: now the Tax Service will monitor all transactions on citizens’ cards in order to reveal hidden income, and if they are discovered, request the payment of 13% personal income tax and fine 20% of the amount of unpaid tax and interest.
We have carefully studied this information and collected for you in this article an analysis of the situation with the changes from July 1, an overview of upcoming innovations and advice on preparing for filing a 3-NDFL tax return (FTS).
More control over bank cards – a myth
In Russia, banks have been obliged to report suspicious transactions of clients to the Federal Tax Service since 2001, when No. 115-FZ “On Counteracting Legalization (Laundering) of Criminally Obtained Incomes and Financing of Terrorism” came into force. According to this law – taking into account the latest amendments of July 31, 2020 – a transaction with monetary funds or other property is subject to mandatory control if its amount exceeds RUB 600K or its equivalent in foreign currency. The law takes into account the following types of transactions for individuals:
- With cash in cash;
- Buying or selling foreign currency in cash;
- Purchase of securities for cash;
- Receipt of funds on a bearer check issued by a non-resident;
- Contribution of cash funds to the authorized (pooled) capital of the organization;
- Cash transactions, obtaining or providing a loan (loan), as well as transactions with securities with an individual or legal entity registered, living or located in the territory of a state that does not comply with the recommendations of the Financial Action Task Force on Money Laundering (FATF). This also applies to any forms of transactions using a bank account registered in a similar territory;
- Operations on bank accounts (deposits);
- Other transactions with movable property – precious metals and stones, jewelry and other valuables, as well as insurance claims, commercial, residential and other property;
- Receiving funds that serve as a condition for participating in a gambling game;
- Payment, transfer or provision of winnings from participation in the lottery;
- Obtaining an interest-free loan from a legal entity that is not a credit institution;
- Transactions with digital financial assets.
From this list, only paragraphs 1, 8, 9, 10 and 12 were legislatively added in 2020 – the rest were either under control since the introduction of the law, like operations on bank accounts, or were added to it in the period from 2004 to 2010. Moreover, information about the bank accounts of an individual has been displayed in the personal account of the taxpayer since 2014. To find them, you need to log in to the FTS website, click on your full names in the upper part of the window and find in the “Profile” section the “Information on bank accounts” tab. At the same time, the FTS does not display any details, except for the name of the bank, number, type and state of the account, as well as the dates of opening and closing.
The only new product in 2021, indirectly related to bank cards, was the service “My Checks Online” – a special portal from the Federal Tax Service, where you can get access to all your checks. Checks are displayed in your account after logging in by phone number and confirmation email. We checked how it works – only payments appeared in the account, in which the phone number and mail selected during registration appear as payment data.
When you click on the receipts, you can see and download the full cash counterpart, but the service is not very stable yet and sometimes requires 5-10 page updates to download detailed information on the receipt. At the same time, there are no checks older than 2018 in the account.
It is noteworthy that the “My Checks” section is also available in the taxpayer’s personal account – it can be found in the “Taxes” tab by clicking on the “Cashier’s Checks” button. However, there is no information on your payments there – you need to enter the details of each check manually yourself, only then the FTS will be able to find it in the system.
Summarizing the information in this section, we can say that the FTS does not need to expand its powers to control the operations of people in banks – they already have ample opportunities to monitor your actions.
At the same time, the Tax Service can still check the banking operations of a citizen only if there are physical and legal grounds. By law, these include the commission of large one-time transactions – from ₽600K, but in fact the FTS also monitors suspicious actions on accounts, for example, regular approximately the same transfers in favor of a person. Most often, such transfers from ₽100K attract the attention of the authorities.
What are the important changes for poker players coming into effect in 2021?
On July 1, the only significant change for poker players and people associated with the industry in the coming two weeks will be the need to inform the Federal Tax Service about transactions in foreign wallets. Residents of the Russian Federation will be obliged to do this if the volume of their transactions per year exceeds ₽600K or the equivalent in foreign currency (~ $ 8K at the exchange rate as of 06/19/2021).
People will be punished for not providing information only from October 1, 2021, when the law on penalties for hiding funds in electronic wallets comes into force. According to him, citizens, entrepreneurs without legal entity formation and legal entities will:
- Receive a warning or an administrative fine for violating the deadlines for submitting reports on transactions on wallets – the degree of punishment depends on the number of days of delay;
- Pay a fine from 20% to 40% of the amount of funds credited to the wallet for the reporting period, in case of concealment;
- Pay a fine in the form of an amount of funds transferred using a foreign electronic payment without opening a bank account, in case of concealment.
Also, from October 1, new requirements of the Central Bank will come into force, which will expand the list of signs of suspicious transactions. At the moment, according to No. 115-FZ, they are considered as such:
Systematic and / or significant volumes of transactions by the client that have signs of unusual transactions. The list of signs is quite large, but the main ones are:
- The confusing or unusual nature of a transaction with no obvious economic sense or legitimate purpose;
- Refusal of the client to provide the bank with the requested transaction documents;
- Excessive concern of the client with confidentiality issues in relation to the operation being carried out, including the transfer of information about it to government agencies;
- Unreasonable haste in the operation, which the client insists on.
Transactions that are repeated after the bank has repeatedly applied to the client measures to prevent them due to suspicions of illegality. Suspicions may arise if the recipient of the transfer is doubtful, the client does not provide documents confirming the legality of the source of funds, or the documents presented do not allow an unambiguous conclusion about the economic meaning and legitimate purpose of the transactions.
An obstacle for a bank to update customer information. This includes the actions and inaction of the client in the event that the bank needs to update the data obtained as a result of the identification of the client, his representative, beneficiary and beneficial owner.
Also, each credit institution has the right to independently determine additional criteria for suspicious transactions.
From October 1, 2021, two will be added to the general criteria:
- Buying digital currency using a debit card.
- Transfer from the current account of a legal entity to personal plastic, transfers from one computer or phone between people who are related.
Remember: according to article 54 of the Constitution of the Russian Federation, a law establishing or aggravating liability has no retroactive effect. No one can be held responsible for an act that at the time of its commission was not recognized as an offense. If, after committing an offense, liability for it is eliminated or mitigated, the new law shall apply. So, formally, the Federal Tax Service will not be able to punish people for hiding money in electronic wallets, which took place before October 1, 2021.
How to confirm the legality of income for the Federal Tax Service
The deadline for filing a tax return this year has already expired – those who have not forgotten to fill out and send 3-NDFL for 2020 by April 30, must pay 13% by July 15, 2021. The rest can begin to prepare for the submission of the tax return for 2021.
To pass 3-NDFL without serious hassle, do the things described in the points below in advance.
# 1 Request transaction history from each room
The official transaction history from the service provider will be a good confirmation of the legality of your income for the tax authorities. In addition, with its help you can more accurately calculate the income, taking into account the deposits made.
# 2 Download statements from cryptoexchange and cryptocurrency wallet
There are two options here: if you use P2P to convert cryptocurrency into national currency, then you will need to download information on each order for the year. If you make money selling cryptocurrency through the exchange, you will need to download the history of transactions.
# 3 Issue a statement of bank accounts and payment
You can select a general statement to summarize receipts and expenses for a specific period, or collect only receipts related to income.
# 4 scan civil contracts
If you provide any services for which you receive money, be sure to conclude contracts for the provision of services. Payment for work on them will also go to the tax return, and the document will become a confirmation of legality.
# 5 Collect confirmation of relationship with family members who made transfers to you
According to Art. 208 of the Tax Code of the Russian Federation, transfers between family members and close relatives are not considered income and are not subject to personal income tax, as well as income received from individuals as a gift. Although you are not required to report such receipts in your tax return, when reconciling with the bank, the FTS may ask you to confirm that some of the receipts included in the documents were gifts or transfers from family members.
To confirm the relationship with parents and children, your birth certificate and scans of the passports of the participants in the operation will be enough – be sure to scan the spread on which there is a stamp about children.
For spouses, a marriage certificate will be sufficient, and for former spouses – about a divorce.
For other relatives, larger amounts of paperwork will be required to prove your legal family connection.
To complete the picture, you can take receipts from the relatives and friends who transferred money to you confirming the purpose of the transfer (domestic relations, financial assistance or a gift).
# 6 Issue receipts with debtors
When lending money and other property, people often ignore the need for documentary confirmation of agreements, but in the case of the Federal Tax Service, its absence may become a reason to count the return of debt as income. Therefore, be sure to take, including from people who paid off the debt, handwritten readable receipts indicating passport data, which will indicate when they borrowed from you, what the amount was and when a full or partial refund occurred.
If you lend a large amount, it is better to issue a receipt at a notary.