- Cryptocurrencies are possessions to any individual holding it.
- Just like any other property, Cryptocurrency would be taxed too
Israel: The Israel Tax Authority (ITA) has released an official notice stating than cryptocurrencies are assets when it comes to taxation matters. The notice confirmed that Israeli officials would henceforth tax cryptocurrencies as property. The reason behind ITA’s ruling is that cryptocurrencies are possessions belonging to any individual holding it. Therefore, the sale of a cryptocurrency is a taxable event, which is subject to capital gains tax.
Hence, Israel through the ITA’s official notice considers cryptocurrencies as “a property, not a currency”. And therefore taxable as property.
The stance of Israel Tax Authority had been earlier explained in a draft circular issued by the body in January. The circular outlined a draft of new legislation that makes clear the consideration of cryptocurrency as assets. More so, the circular specified the taxation obligations of firms that raise money through Initial Coin Offerings. Moshe Asher, the head of the Israel Tax Authority, commented on the draft:
“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.”
The circular went further to explain that profits from trading in cryptocurrencies will be subject to a capital gains tax at rates ranging between 20 to 25 percent. And individuals that are involved in crypto mining or crypto trading must pay in addition to the capital gains tax a 17 percent value-added tax (VAT).
Companies that trade in cryptocurrency are obliged to report profits and losses, just like with any other asset. Though this announcement from ITA to tax cryptocurrencies was anticipated. However, the officials note that they are still working on some of the ideas that could further impact the crypto industry.
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