Israeli Court Rules Bitcoin Is an Asset in Feud Over Tax Payment

An Israeli court has ruled against an investor in declaring bitcoin is an asset and not a currency, and thus subject to capital gains tax.

May 22, 2019 at 12:15 p.m. UTC
Updated Sep 13, 2021 at 9:13 a.m. UTC

An Israeli court has ruled that bitcoin is an asset and not a currency, and thus subject to capital gains tax (CGT).

The Central District Court made the ruling in a case involving a blockchain startup founder and the Israel Tax Authority, which ultimately won the decision, Globes reported Tuesday.

The founder, Noam Copel of DAV.Network, reportedly bought bitcoins in 2011 and sold them in 2013 at a profit of 8.27 million Israeli new shekels ($2.29 million). He contended in court that bitcoin should be treated as a foreign currency and not be taxed.

The Tax Authority, on the other hand, argued that bitcoin is not a currency but an asset, and therefore profits should be liable to CGT.

The presiding judge, Shmuel Bornstein, made the point in his arguments that bitcoin as a cryptocurrency could cease to exist and be replaced by another digital currency. Hence, it cannot be considered a currency, especially for tax purposes.

As a result of the ruling, Copel is now liable for tax of around 3 million NIS ($830,600) as well as costs of 30,000 NIS ($8,306), according to the report. However, Copel can yet appeal to the Supreme Court for a reversal of the decision.

With its ruling, the court has sided with the Israeli government’s position that bitcoin and other cryptocurrencies are considered property for tax purposes. In February 2018, the Tax Authority issued a notice, saying that profits from cryptocurrencies will be subject to CGT at rates from 20–25 percent.

On the other hand, individuals mining or trading cryptocurrencies in connection with businesses, are liable to a 17 percent value-added tax in addition to capital gains tax.

Israeli shekels and bitcoin image via Shutterstock

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
Sequoia's Guide to Surviving the 2022 Bear Market

Venture capitalists have gotten increasingly frantic over the last few months.

Venture capitalists have gotten increasingly frantic over the last few months.

CoinDesk - Unknown
2
CoinDesk - Unknown
NFT Art Museums Are a Good Idea

The metaverse turns galleries global, and helps fund the arts. This article is part of “Metaverse Week."

The metaverse turns galleries global, and helps fund the arts. This article is part of “Metaverse Week."

CoinDesk - Unknown
3
CoinDesk - Unknown
How the US Can Establish Itself as a Crypto Leader

Regulators have an opportunity to map out thoughtful, strategic policy on stablecoins and beyond.

Regulators have an opportunity to map out thoughtful, strategic policy on stablecoins and beyond.

CoinDesk - Unknown
4
CoinDesk - Unknown
No, the UK Is Not Going to Make USDC and USDT Legal Tender

For “legalize” read “regulate.”

For “legalize” read “regulate.”

CoinDesk - Unknown