The Israeli court has declared all the digital currencies, including Bitcoin should be considered as a taxable asset rather than currencies as per the report surfaced on 21st May in a local news website.
The judgment was delivered to the case in which an Israeli startup founder argued with the Tax authority of the country to make the profit from the sale of cryptocurrencies to be tax-free. The court has delivered its judgment in favor of Tax authorities of the country, thereby endorsing the definition of the central banks for the currencies.
Noam Copel, the founder, as mentioned earlier of the startup, DAV. The network had earned a massive amount from the sale of Bitcoin which he had purchased in 2011. He claimed that Bitcoin must be considered as foreign currency and must not be imposed with tax. In response to this, the Tax department said Bitcoin is not a currency but an asset which makes it liable to taxes. And as per the definition of the chief bank of the country, it can never be considered as a foreign currency.
Judge Shmuel Bornstein, the presiding judge of central district court instantaneously rejected Copel’s appeal. He said the position of digital currencies is indeterminate in the country. He further said that it is not a permanent asset, but with this characteristic, it cannot be considered as currency and can be made tax free.
Ultimately because of this judgment, Copel has to pay 3 million NIS as tax. He will have to pay an additional amount of 30,000 NIS as per the reports of the court session. After the judgment, Copel can move to Supreme Court to reverse the decision, but there is no news whether he will do so or not.
The Tax Authority of Israel has continuously measured virtual currencies as an asset and are exposed to capital gain tax. The authorities were chasing the unreported crypto incomes from last year and have sent a notice to those whose actions have elevated doubts.
The court has clearly stood with Israeli government while delivering the judgement saying cryptos will be considered as properties while filling the taxes. The individuals involved in the mining and trading of these assets will have to pay 17% tax as an add-on to CGT.