An Israeli court passes a new rule that classifies bitcoin as an asset and not a currency, thus subjecting it to capital gains tax (CGT), as reported by Globes on Tuesday.
The Central District Court passed a ruling in a case that involved a blockchain startup founder and the Israel Tax Authority, the latter ultimately won the decision. Reportedly, Noam Copel, the founder of DAV.Network, bought bitcoins in 2011 and sold them in 2013, earning a profit of 8.27 million Israeli new shekels ($2.29 million).
Copel contented in the court that bitcoin should be treated as a foreign currency and not be taxed, while the Tax Authority, argued over the matter. The regulatory asserts that the foremost token is not a currency but an asset and the profits earned through them are liable to CGT.
Shmuel Bornstein, the presiding judge noting in his arguments that Bitcoin can cease to exist as a currency, replaced by another digital currency. Which is why it cannot be considered a currency, specifically for tax purposes.
As per the ruling, Copel will now have to pay a tax of around 3 million NIS ($830,600) along with costs of 30,000 NIS ($8,306). The report further notes that Copel can still appeal to the Supreme Court for a reversal of the decision.
However, with this ruling, the court has sided with the Israeli government in considering bitcoin and other cryptocurrencies as property for tax purposes. In February 2018, the Tax Authority issued a notice that announced that the profits from cryptocurrencies will be subject to CGT at rates from 20–25 percent. As for individuals mining or trading cryptocurrencies in connection with businesses will be liable to a 17 percent value-added tax in addition to capital gains tax.