An Israeli court has recently issued a ruling that Bitcoin is an asset, as opposed to a currency, and thus making it subject to capital gains tax (CGT).
According to Coindesk, Israel’s Central District Court ruled Bitcoin (BTC) as an asset in the case of blockchain startup founder Noam Copel of DAV.Network appealing against the Israel Tax Authority.
Copel had purchased BTC in 2011 and sold for a profit of over US$2.29 million in 2013. In court, the startup founder argued that Bitcoin is considered a foreign currency and should not be subject to tax.
However, the Tax Authority sided with the Israel Tax Authority, finding that Bitcoin is not a currency but an asset. Therefore, profits from selling Bitcoin should be liable to CGT.
In court, presiding judge Shmuel Bornstein stated that there may be a point when Bitcoin as a cryptocurrency could cease to exist and be replaced by another digital currency. Thus, it cannot be ruled as a currency, especially for tax purposes.
Due to the judge’s ruling, Copel was reportedly found to be liable for US$830,600 in taxes and another US$8,306 in additional legal fees. Still, it is possible for Copel to submit an appeal to the Supreme Court for further consideration.
The ruling indicates that the Israeli courts have adopted a similar stance to that of the Israeli government, whereby Bitcoin and other cryptocurrencies are considered property for tax purposes. In 2018, the Tax Authority announced that profits from cryptocurrencies are subject to 20 – 25% CGT.
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