Starting January 1, 2021, income from bank deposits exceeding 1 million rubles will be taxed at a rate of 13 percent1.
Taxation of interest income
The Draft Law provides that interest income on bank deposits will be taxed at a rate of 13 percent2. At the same time, the deposit amount itself will still not be taxed.
Since the changes will enter into force on January 1, 2021, the tax will be calculated from interest income received from January 1, 2021. One will have to pay it for the first time in the next tax period, that is, not earlier than 2022.
- Does one need to split deposits?
It is important that the total amount of all deposits in all banks will be subject to taxation, if their overall size exceeds 1 million rubles, and therefore splitting deposits seems inappropriate. - Tax deduction mechanism
It is important to note that the Draft Law provides for a tax deduction mechanism, according to which the tax base is defined as the excess of the amount of interest income over the amount of interest calculated as the product of 1 (one) million rubles and the key rate of the Bank of Russia3.
So, if these changes took effect today, the deduction would have amounted to 60 thousand rubles4, and only income exceeding this amount would be taxed.
What happens to foreign currency deposits?
For deposits in foreign currency, the income will be converted into rubles at the exchange rate of the Bank of Russia at the date of receipt of income5. In this case, the ruble revaluation of foreign currency deposits will not be additionally taxed.
Exceptions
Income, the interest rate on which does not exceed 1 percent per annum, is not subject to taxation, as well as income from escrow accounts6.
1 Draft Law No. 862653-7 “On Amendments to Parts One and Two of the Tax Code of the Russian Federation and Certain Legislative Acts of the Russian Federation” (the “Draft Law”).
2 Part 4 of Article 2, ibid.
3 Ibid.
4 The key rate of the Bank of Russia as of April 1, 2020 is 6 (six) percent. Accordingly, 1 (one) million rubles × 6 (six) percent = 60 (sixty) thousand rubles.
5 Part 2 of Article 2 of the Draft Law.
6 Ibid.
