Taxation of card accounts and deposits

On March 26, 2022, the law came into force, introducing changes to the taxation procedure for interest income on bank deposits and accounts of individuals.

Now you will not have to pay Personal Income Tax (PIT) on interest income received in 2021 and 2022. Also, the tax on interest income received starting from 2023 onward will be calculated differently.

What is subject to tax?

Income received in the form of interest during the year in aggregate on deposits and accounts in all banks in Russia is subject to taxation, provided that this income exceeds the tax-free minimum amount. Accounts should be understood to include savings and card accounts on which interest is expected to accrue on the balance.

• Interest income on cards and current / savings accounts is included in the calculation if the rate on them exceeds 1% per annum.
• The taxable amount is the amount of income received by the client in the form of % minus the tax-free minimum.
•  The tax rate is 13% for both income of residents of Russia and income of non-residents of Russia*.

How was it before?

In 2022, clients were to pay tax for the first time on income received on deposits and accounts in 2021 if this income exceeded the amount of the tax-free minimum. 

The tax-free minimum amount was calculated as follows:
RUB 1 million was multiplied by the key rate of the Bank of Russia effective as of January 1 of the year in which the income was received.
At the beginning of 2021, the Bank of Russia key rate was 4.25%. Accordingly, the minimum not subject to tax was RUB 42,500. Personal Income Tax (PIT) at a rate of 13% had to be paid in 2022 on interest income exceeding this amount. As of January 1, 2022, the Bank of Russia key rate was 8.5%, therefore in 2023 the tax-free minimum would have amounted to RUB 85,000.

What has changed?

Now you do not need to pay Personal Income Tax (PIT) on interest income received in 2021 and 2022, even if this income exceeds RUB 42,500 and RUB 85,000 respectively.

Tax will have to be paid on interest income from deposits and accounts received in 2023, but the taxable base will be calculated differently. Instead of the Bank of Russia key rate set on the first day of the year, the maximum key rate among those effective on the first day of each month in the tax period will be taken into account.

Example

Suppose the Bank of Russia key rate remains at 10% throughout 2023 and only as of December 1, 2023 amounts to 11%. In this case, 13% Personal Income Tax (PIT) will have to be paid on the amount of interest income exceeding RUB 110,000 (RUB 1 million × 11% = RUB 110,000).

This calculation method is more advantageous, since in the event of a sharp increase in the key rate and rates on deposits, the income not subject to Personal Income Tax (PIT) will also increase.

What is not subject to tax

• If the interest income received in the form of % during the year is less than the tax-free minimum.
• If the rate on deposits and accounts during the year did not exceed 1% per annum.
  
• If income is received in the form of % on escrow accounts.
  

Income from foreign currency deposits and accounts is added to income from ruble-denominated ones. Income in the form of interest in foreign currency is converted into rubles at the official exchange rate of the Bank of Russia effective on the date of payment.

For all categories of individuals, tax accrual in relation to this income is carried out according to a uniform scheme; no benefits are provided.

*if an individual's income for the tax period (calendar year) exceeds RUB 5 million, then the tax rate on the excess amount will be 15%.