Bitcoin is now viewed as an asset in Israel, according to the country’s central district court on Monday. This means that the bank court views the digital currency as a form of finance. That and users who participate in it will have to deal with a capital gains tax.
A newer form of finance
Shmuel Bornstein, the Judge of the court, made another ruling as well. This was a push for Bitcoin to be recognized as a currency to avoid it being taxed. This came from the founder of a blockchain startup, reports Bitcoin.com. His name is Noam Copel, creator of the DAV blockchain startup. The project looks to “revolutionize the transportation industry” with blockchain technology.
Bornstein backs his decision. His defense is that “it was hard to envisage a result whereby bitcoin would be considered a currency for tax purposes in particular”. He went on to say that this issue could head to the Supreme Court as well.
According to local publication Calcalist, Itay Bracha from a local law firm Bracha & Co says that “the ruling is a signal to all those who have yet to report cryptocurrency-related profits or based their actions on differing legal advice. The ruling is unequivocal, and since it is not new legalization but a judicial interpretation, it applies retroactively.”
Local publication Globes found that Copel went to buy Bitcoin in its early years and sold it later on for $2.29 million. He doesn’t want to pay capital gains tax on profits like this, hence his complaints.
Speaking to the court, Copel says:
“Bitcoin should be classified as a foreign currency, and that his profits should be seen as exchange rate differences received by an individual not in the course of a business, and therefore should not be taxed.”
The Israel Tax Authority doesn’t think this, however, and made this clear. Their defense is that the digital asset does not fall under the bank’s definition of a currency, hence it cannot classify as a foreign one, whether or not it’s used for trading online.