Capital Gains Taxation in the Russian Federation
Definition of Capital Gains
In the Russian Federation, capital gains are defined as the profit derived from the sale or disposal of property or assets. This includes:
- Real estate
- Stocks and bonds
- Business assets
- Intellectual property
Calculation of Taxable Capital Gains
Taxable capital gains are calculated as the difference between the selling price of the asset and its acquisition cost. The formula is:
Capital Gain = Selling Price - Acquisition Cost - Expenses
Adjustments or deductions may be allowed in the calculation of the gain, such as expenses related to the sale (e.g., brokerage fees, legal fees) and improvements made to the property during ownership.
Tax Rates
Capital gains are taxed at a flat rate of 13%. However, there are certain exemptions and preferential tax treatments available, such as:
- Gains from the sale of residential property owned for more than five years are exempt from tax.
- Gains from the sale of shares in Russian companies held for more than two years are taxed at a reduced rate of 0%.
Legal Framework
The taxation of capital gains in the Russian Federation is governed by the following laws:
- Tax Code of the Russian Federation, Part Two, Chapter 23
- Federal Law No. 212-FZ "On Amendments to Part Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation"
Policy Objectives
The Russian government's capital gains tax system aims to:
- Generate revenue for the government
- Encourage investment and economic growth
- Promote the development of the Russian stock market
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