Central District Court of Israel ruled in favor of the tax authority of the country, recognizing Bitcoin being finance asset, but not currency. As a result, profit from its selling in Israeli has to tax on capital gains. Also, you can read about legit bitcoin doubler.
This is about the deal of blockchain startup DAV. Its founder Noam Copel bought bitcoins in 2011 and sold them in 2013 with the benefit equal about to 8,27 mln Shekels (about 2,29 mln Dollars). Copel doesn`t agree that his profit must tax on capital gains.
“Bitcoin must be classified as a foreign currency and its profit must be considered as rate difference, received by an individual, who doesn`t implement his activity, and, consequently it shouldn`t be taxed”, – he claimed.
Details of the Trial
However, Israel tax authority didn`t agree with this meaning, because Bitcoin isn`t the currency by central bank definition. Therefore, it cannot be the foreign currency, as the plaintiff offered it. Instead of this, the agency claims that cryptocurrency falls under the definition of an asset, so the profit from its selling tax on capital gains. Bitcoindoubler2x reminds that official Bitcoin status is still uncertain.
The court reminded the position of tax authority that “currency” definition must be the definition of country`s central bank. According to the current law, this definition doesn`t apply to cryptocurrencies. The agency confirmed that Bitcoin isn`t currency both in accounting and in economic aspects.
“Bitcoin is very volatile. And any investments bound with it are high-risk, its usage is strictly limited, generally, by illegal individuals. And it`s not used as the cost reference”, – Israel Tax Service thinks.
According to Copel, the fact. that BTC is used as payment means and for cost estimates, signifies that it should be considered the currency.
The judge Shmuel Bornstein listened to the parties` arguments and rejected Copel`s appeal, because “he couldn`t prove that Bitcoin corresponds to the currency definition or that is a real alternative to coins and ATMs in any country”. He ruled that since Bitcoin is an asset, not a currency, this operation is taxed. As a conclusion, the court`s decision obliges Copel to pay a tax of about 3 mln Shekels.
According to Itay Bracha, managing partner of t price he Israeli law firm Bracha&Co and the head of the tax department, the ruling can be considered the signal for those, who hasn`t still informed about the profit, connecting with cryptocurrencies.