Israeli Tax Authorities Might Go After Bitcoin

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The Israeli government’s tax department has turned up the heat with an official draft announcement (Hebrew) clarifying the tax guidelines that could apply to bitcoin adopters if it’s passed.

And it’s not pretty.  Israeli cryptocurrency users may have to pay a 25 per cent capital gains tax and bitcoin exchanges and miners will have to charge 17 per cent VAT.

“… bitcoin will be considered in accordance with the Income Tax Ordinance as “assets” and their sale will be taxed as a sale of “property.” Income from their sale will be classified as capital income and capital gains will be taxed according to fixed tax rates.” 

 from Finance Magnates writes:

[The] Tax Authority begins by explaining that, according to their interpretation of the relevant laws, cryptocurrency is not currency but rather an asset. It adds that it is also not a financial security (like a stock). This determination has a number of legal repercussions in terms of using cryptocurrency in Israel.

First, if a company is paid in bitcoin its accountants can’t write down the transaction as receiving payment. Instead, this needs to be classified as a barter and dealt with accordingly. Needless to say this can cause a lot of extra paperwork for companies that are open to accepting cryptocurrencies as a payment method.

If this draft paper gets passed, everytime someone sells bitcoin they will have to pay a 25 percent capital gains tax and exchanges as well as businesses that use bitcoin will have to charge 17 per cent VAT for every buy/sell transaction. 

 

 

About Richard Kastelein

Founder, Publisher and Editor in Chief of industry leading online publication, Blockchain News and co-founder and director at Blockchain Partners in London/Amsterdam/NYC. Kastelein is also an advisor with a number Blockchain startups doing ICOs including Humaniq.co where hs is interim CMO, DECENT.ch, Inchain, Chronobank, eGaas and others. He is regarded as one of the top journalists by the Blockchain and fintech communities – as is evident by his entry in the Top 150 Fintech journalists online and in the top 10 of the Blockchain Top 100 List.

As a prominent keynote presenter, he has spoken on Blockchain at events in Gdansk, Amsterdam, Minsk, Dubai, Antwerp, Eindhoven, Bucharest, Nairobi, Tel Aviv, Manchester, Brussels, Barcelona etc, where he helped spread the cause for Blockchain technology and cryptocurrency and, consequently, has built a notable network in the scene.

He’s also a director of a Dutch foundation called The Hackitarians and has run innovation events in London, San Francisco, Berlin, Amsterdam and other cities around the world on topics such Blockchain, Health, Energy, Internet of Things, AI etc.

In 2013, the European Commission appointed him as an expert for overseeing financing for emerging startups as a part of the European Commission’s 90 billion euro Horizon 2020 project, created in Brussels to promote innovation as a driving force of job creation and business ventures across Europe. He has also worked as an external expert for Innovate UK since 2012, judging startups for the UK government.

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