Currency revaluation for tax purposes

Currency revaluation for tax purposes is the rule under which income from a transaction in an asset bought and sold for foreign currency is calculated in roubles rather than in that currency. Each leg of the transaction is converted into roubles at its own exchange rate: the purchase cost at the rate on the purchase date and the proceeds at the rate on the sale date. The tax base is the difference between these two rouble amounts, not the result in dollars or yuan.

What makes up the rouble result

The rouble income on a foreign-currency security combines two components: the change in the security's own price in currency and the change in the exchange rate over the holding period. The tax does not separate them; the combined total in roubles is what is taxed. Each part of the transaction is converted at the official Bank of Russia rate on the date it was carried out or recognised. This is why the date of income recognition matters for coupons and dividends paid in currency: the payment is converted at the rate on the day it is received, not on the day the security was bought.

If the security is held with a Russian broker, the broker performs the conversion as a tax agent and withholds personal income tax itself. If the account is held abroad, the investor calculates the rouble base themselves and reports it in their tax return. A replacement bond is converted in the same way: it is settled in roubles, but its face value is set in currency, so its rouble value at purchase and at sale depends on the exchange rate.

Example: a profit in currency and a smaller base in roubles

An investor bought a foreign-currency bond and sold it a year later for more than they paid, so the result in currency is positive. Over the same year the rouble strengthened. Converted at the new, stronger rate, the proceeds came to less in roubles than the currency account shows: part of the currency profit was eaten up by the rouble's appreciation. Tax is charged only on this smaller rouble difference, at the rate of 13%. Had the rouble strengthened further, the rouble result could have turned negative and no tax would have been due at all, even though the transaction was profitable in currency.

What it is confused with

The first mix-up is to conflate the tax rule with currency revaluation in a company's financial statements. There, foreign-currency debts and assets on the balance sheet are revalued, and this changes the issuer's accounting profit. It has nothing to do with a private investor's tax. The related accounting concept of exchange differences likewise belongs to corporate accounting, not to the calculation of personal income tax.

The second mix-up is to assume that revaluation applies to any exporter's security. A share that is bought and sold for roubles on an exchange requires no conversion, even if the company's revenue is in foreign currency: the exchange rate affects its price, but not the way the tax is calculated. Revaluation arises only where the transaction itself is carried out in currency. Its effect is removed by the long-term holding exemption: if the conditions of the exemption are met, all of the income is exempt, including the exchange-rate component.