Nov 27, 2019
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Russian Tax Authority Registers Crypto as Part of a Company’s Capital

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Russian Tax Authority Registers Crypto as Part of a Company’s Capital

A company has blazed a trail in Russia, successfully convincing the country’s tax agency to accept that its equity capital now includes cryptocurrency. The change in the ownership distribution has been registered after the firm filed a set of notarized documents confirming a new investment was made in digital coins, not fiat rubles.

Also read: Belarusian Bank Gets the Go-Ahead to Service Crypto Investors

Investor Buys 5% of Artel’s Equity Using Bitcoin

At present, cryptocurrencies don’t have any legal status and are not regulated in Russia. Yet a company called Artel has managed to officially add bitcoin to its authorized equity capital. Not without giving the entity a hard time, the country’s Federal Tax Service eventually agreed to register the change in its status. According to experts consulted by the Russian business daily Kommersant, the case will not have an immediate effect on the treatment of cryptocurrencies by the state, but it will expand their legal use.

Russian Tax Authority Registers Crypto as Part of a Company's Capital

Artel CEO Mikhail Uspensky told the newspaper the company was joined by an investor who added virtual currency to its equity capital. He bought 5% of the company with 0.1 BTC worth around 60,000 rubles (approx. $940) at the time of the deal. From that amount, 750 rubles in crypto covered the purchase of the investor’s share in the firm’s authorized capital and the rest of the money was transferred to Artel’s operating balance.

Initially, the Russian tax agents rejected the company’s request but Uspensky and his team didn’t give up. They acquired an independent evaluation of the wallet holding the cryptocurrency from a third party specializing in the evaluation of different assets, a company called Veta, and prepared a full set of notarized documents including a protocol establishing the transfer of the wallet’s login details. This time the tax administration had nowhere to go but to accept the documents and register the change of ownership.

Russian Tax Authority Registers Crypto as Part of a Company's Capital

“The procedure for company registrations in Russia is declarative,” explained Sarkis Darbinyan, lead legal expert at Roskomsvoboda. The NGO is fighting internet censorship and helping companies from the digital space, including crypto businesses, to overcome various legal challenges. “The law says that share capital can be paid with money, property or property rights. However, state bodies are afraid to deal with bitcoin and make any legally significant actions with it before the legislature adopts a clear position on cryptocurrencies,” Darbinyan told news.Bitcoin.com.

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