According to the official notice from the Israel tax Authority, Israel will tax cryptocurrencies as property. The reason for this ruling is that a cryptocurrency is a possession belonging to the individual holding it. Thus, a digital currency’s sale is a taxable event, which is subject to capital gains tax.
20 February, AtoZForex – Israeli officials have confirmed that they decided to treat Bitcoin along with other cryptocurrencies as a type of property when it comes to the taxation matters.
Israel Will Tax Cryptocurrencies as Property
The official notice from the Israel Tax Authority indicates that the country will regard cryptocurrencies as “a property, not a currency”. This makes cryptocurrencies taxable as property.
The reason for this ruling is that a cryptocurrency is a possession belonging to the individual holding it. Thus, a digital currency’s sale is a taxable event, which is subject to capital gains tax. The position of Tax Authority has been further explained in a draft circular that has been issued earlier this January.
The ITA’s circular outlined a draft of new legislation that clarifies the status of cryptocurrency tokens as assets. In addition, the circular detailed the taxation obligations of companies that raise money via ICOs. The head of the Israeli Tax Authority, Moshe Asher, has commented on the draft matter:
“The Tax Authority is monitoring the technological developments and is working to provide an answer regarding the tax implications of virtual currency activity and the issue of digital tokens, thereby increasing the certainty and tax transparency of those operating in the field.”
Israel Government still works on crypto legislation
The circular from ITA also states that profits from cryptocurrencies will be subject to a capital gains tax at rates ranging between 20-25%. Individuals that are involved in mining or trading cryptocurrencies must pay a 17% value-added tax (VAT) in addition to the capital gains tax.
Firms that buy and sell cryptocurrency should be obliged to report profits and losses, just like with any other asset.
Today’s announcement from Israeli government was anticipated. However, the officials note that they are still working on some of the ideas that could further impact the industry.
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