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 of industry publication Blockchain News, partner at ICO services collective CryptoAsset Design Group (helped raise over $200m+), director of education company Blockchain Partners (Oracle Partner) and ICO event organiser at leading industry event  CryptoFinancing (first ICO event in Europe) - Richard Kastelein is an award-winning publisher, innovation executive and entrepreneur. He sits on the advisory boards of half a dozen Blockchain startups and has written over 1200 articles on Blockchain technology and startups at Blockchain News and has also published pioneering articles on ICOs in Harvard Business Review and Venturebeat.
 
Kastelein has spoken (keynotes & panels) on Blockchain technology in Amsterdam, Antwerp, Barcelona, Beijing, Brussels, Bucharest, Dubai, Eindhoven, Gdansk, Groningen, the Hague, Helsinki, London, Manchester, Minsk, Nairobi, Nanchang, San Mateo, Shanghai,Tel Aviv and Venice. His network is global and extensive.
 
He is a Canadian (Dutch/Irish/English/Métis) whose writing career has ranged from the Canadian Native Press (Arctic) to the Caribbean & Europe. He's written occasionally for Harvard Business Review, Wired, Venturebeat, The Guardian and Virgin.com and his work and ideas have been translated into Dutch, Greek, Polish, German and French.
 
A journalist by trade, an entrepreneur and adventurer at heart, Kastelein's professional career has ranged from political publishing to TV technology, boatbuilding to judging startups, skippering yachts to marketing and more as he's travelled for nearly 30 years as a Canadian expatriate living around the world.
 
In his 20s, he sailed around the world on small yachts and wrote a series of travel articles called, "The Hitchhiker's Guide to the Seas' travelling by hitching rides on yachts (1989) in major travel and yachting publications. He currently lives in Groningen, Netherlands where he's raising three teenage daughters with his wife and sailing partner, Wieke Beenen.

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