By CCN: An Israeli court has ruled that Bitcoin is not a currency but rather an asset. This was in a case brought forth by Noam Copel, a blockchain entrepreneur, according to business publication Globes. The ruling means that Copel will pay taxes of New…
By CCN: An Israeli court has ruled that Bitcoin is not a currency but rather an asset. This was in a case brought forth by Noam Copel, a blockchain entrepreneur, according to business publication Globes. The ruling means that Copel will pay taxes of New Israeli Shekel (NIS) 3 million ($830,115). This is after making profits of over NIS 8 million ($2.2 million) trading bitcoin six years ago.
In the course of presenting arguments, Copel had made the case that bitcoin should be classified as a foreign currency. The country’s tax collection agency, Israel Tax Authority, had made the opposing argument that bitcoin should be categorized as property.
The ruling could still be appealed at a higher court by Copel.
Per Globes, in 2013 Copel sold bitcoins he had acquired in 2011. He made a profit of over NIS 8 million. One of his arguments was that bitcoin should be viewed as a foreign currency such as the dollar.
Further, Copel urged the court to view the profits made as differences in exchange rates and therefore not taxable. Besides paying the tax on capital gains of his bitcoin holdings, Copel will also meet legal costs totaling NIS 30,000 ($8,300).
In his ruling, Judge Shmuel Bornstein said Bitcoin could not be classified as a currency since its staying power is not guaranteed. The tax agency’s position was that Bitcoin did not meet the qualities of a currency. Therefore, the argument went, it could not be a foreign currency.
In this regard, the court went by the definition of currency as held by Israel’s central bank. Per the Bank of Israel, a currency must possess some physical manifestation. The tax authority had argued the same early last year.
Israel’s position on taxing cryptocurrencies mirrors that of other OECD countries. This includes the United States where the Internal Revenue Service treats Bitcoin and other cryptocurrencies as property. They are therefore subject to tax on capital gains.
In the United Kingdom, a capital gains tax is also applied when cryptocurrencies are disposed of. This is an indication that they equally viewed as property.
The situation is not different in Australia where cryptocurrencies are also viewed as an asset. On its website, the Australian Taxation Office says that ‘if you make a capital gain on the disposal of cryptocurrency, some or all of the gain may be taxed’.
This article was edited by Samburaj Das.