It is an exciting time for cryptocurrency enthusiasts in the Middle East as a court in Israel just ruled that bitcoin is an asset. This judgment is in line with the same perspective maintained by the country’s central bank. The case is an interesting one for those trading cryptocurrencies as it linked the Israeli tax authority with the founder of a blockchain venture who maintains that the profits that accrue from the sale of cryptocurrency should not be subjected to taxes. With this ruling, the court has sided with the tax authority, thus cementing the definition of what a currency is, according to the central bank.
Interesting Pronouncement from Judges
Recently, an Israeli central district gave a ruling that further consolidated the position of the nation’s tax authority, triggering the attention of those who want to buy Bitcoin. The judges proclaimed that bitcoin is a financial asset and not a currency. What this implies is that the profits made on the sale of bitcoin in Israel are subject to the taxation laws of the country, specifically legislation regarding capital gains tax.
An appeal launched by the founder of blockchain startup was thrown out by Judge Shmuel Bornstein. The startup founder was arguing that bitcoin should be regarded as a currency so that the profits that accumulate from the sales should not be taxed. While stressing that the status of bitcoin remains undefined in Israel, the judge declared in his ruling that it was not easy to project a conclusion where Bitcoin was going to be regarded a currency for tax purposes specifically. Interestingly, there is the possibility that the case could still be presented before the supreme court, the highest court in the land.
Itay Bracha is the managing partner at the Israeli law venture Bracha and Co. where he also doubles as the head of the venture’s tax department. He shared his opinion on the matter during an interview with local media outlets. He said that the judgment is a signal to the people who have not declared the profits that they have made from cryptocurrency deals or those who reached their conclusions based on varying legal advice. Bracha stressed that the ruling is quite clear and that considering the fact that it is not a new law but an interpretation of existing laws, the application is going to be in a retroactive manner.
The Landmark Case
The reports showed that the primary personality in the case is none other than Noam Copel, founder of blockchain startup venture DAV. According to the information available on the venture’s website, their purpose is to have a decentralized platform that will serve as the engine of revolution in the blockchain technology sector. It was also reported that Copel purchased BTC in 2011 and a couple of years later, he sold them and made a profit in excess of two million dollars. While in court, he told the judges that his profits should not be subject to capital gains tax. But unfortunately for him, the judges had a very different interpretation of the whole thing. For the court, bitcoin is a currency and he has no choice but to pay his fair share of the taxes.