Crypto News: Bitcoin Is Not a Currency Says Israel

Crypto News: Bitcoin Is Not a Currency Says Israel
  • The Israeli court rules that “for now” Bitcoin is not a currency
  • The Israeli Tax authority wants it to be treated as a physical asset and hence subject it to taxation
  • Noam Copel, founder of DAV, must pay taxes on profits he made selling Bitcoin which he bought in 2011

The governments from various countries all across the globe aren’t sure how to properly regulate and tax cryptocurrencies because they fail to completely understand it. Another addition to the hall of ignorance is the Israeli Tax Authority.

As reported by The Globes on May 21, 2019, an Israeli judge Shmuel Bornstein has ruled that bitcoin is an asset and not a currency. The Central district court of Lod has accepted that bitcoin shall be taxed just like any other asset. The case in question here was of one Noam Copel, founder of blockchain startup DAV.

The Court vs Noam Copel

The accused bought bitcoin in 2011 and sold them for profits of $2.9 million compared to today’s rates. He argued that bitcoin should be considered as a foreign currency and all he merely received was a difference in exchange rates and that the fluctuations in exchange rates mustn’t be taxed.

The Tax authority, on the other hand, pointed out that bitcoin was not a currency when the accused bought Bitcoin or sold it and thus it cannot be considered foreign currency. They, however, stated that bitcoin can be categorized under the definition of an asset, as held by Israel’s central bank and therefore profits on its sales are deemed to be taxed.

The Court was strenuous about the Israeli Bank Laws, which stated that a “currency” must have some physical-concrete manifestation or must represent a real alternative to coins and notes in any country which Noel failed to demonstrate.

As of now, the entrepreneur must pay a tax on his $830,000 of the profits he made but he could appeal to the Supreme Court. Gidi Bar Zakay CPA, former deputy head of Israel Tax Authority and a specialist in cryptocurrency taxation commented on the hearing:

 “In my view, what will ultimately determine whether Bitcoin is a currency is the reality test. As soon as its use becomes widespread, the legislature will have to rewrite the law in such a way as to accommodate this, and we shall all benefit from these technological and monetary developments and from the ability of Bitcoin and other cryptocurrencies to serve as efficient, trustworthy, and widely accepted means of payment. In fact, the way to that lies through the regulator. If the enforcement agencies feel comfortable with the coin, and use blockchain analysis tools that make it possible to meet standards of money laundering prevention and tax avoidance prevention in a more reliable and efficient way than is the norm today, the road to it becoming a widespread means of payment will be open.”

Israel Had Always Looked upon Bitcoin as an Asset

The Israeli Tax Authority (ITA) first showed their interest in taxing cryptocurrencies as an asset class back in February of 2018. The draft stated that cryptocurrencies will be “Considered as ‘assets’ and will be sold as a ‘sale’ and the proceeds from their sale will be classified as capital income”. However early tax guidelines issued for cryptocurrency adopters was first released in a draft back in 2017.

However, Israel isn’t the only country that looks at cryptocurrencies as assets. The united states treat Bitcoin and other cryptocurrencies as property and hence they are taxed. The same goes with the United Kingdom and Australia where cryptocurrencies are equally treated as assets as well and are subject to taxation.

Source: blockchainreporter

Leave a reply

Your email address will not be published.