After couple of years of bitcoin gaining popularity among Israeli citizens, Israel’s government came to conclusion that bitcoin sales should be a subject to capital gains tax, categorizing digital currencies as a type of property.
According to a statement published on 11th January, the Israel Tax Authority (ITA) said that it would consider bitcoin and other digital currencies as a kind of intangible asset rather than a foreign currency.
Profits would then be taxed at the capital gains rate, which in Israel begins at 25%.
The agency said in a translated statement:
“…and therefore [bitcoins] will be considered in accordance with the Income Tax Ordinance as assets and their sale will be taxed as a sale of ‘property’ and income from their sale will be classified as capital.”
Individuals involved in the sale or mining of digital currencies would be subject to business tax rates. Further, any commercial sales of bitcoin or transactions involved with trading are subject to value-added tax (VAT), the agency said.
The release comes more than three years after word first emerged that Israel would seek some degree of taxation on bitcoin transactions. In late 2013, officials from the tax agency were quoted as saying that they wanted to pursue a means of taxing profits on bitcoin sales, but that they were uncertain on how to do so.
The move echoes the decision made by US tax authorities in 2014, when it moved to classify bitcoin as a type of taxable property and we could see many other countries considering such approach due to large move to transactions made in the cryptocurrency together with the popular blockchain system, weighed by the banks to make transactions easier from the former system.
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