Cryptocurrency will be Taxed as Property but not as the Currency confirms Israel
The tax authority had published a draft of today’s circular on Jan. 12, which referred to virtual currencies as the units used for barter that can be used for investment purposes.
The Announcement described:
“These currencies will be considered as ‘assets,’ and will be sold as a ‘sale,’ and the proceeds from their sale will be classified as capital income.”
Israeli news outlet Haaretz announced:
“The cryptocurrency will be taxed by the capital gains tax, which in Israel will be 25 percent for private investors, with a 47 percent marginal rate for businesses.”
The US Internal Revenue Service (IRS) has been taxing cryptocurrencies as property since March 2014.
Israel’s general using value-added tax (VAT) will not be included for individual investors, as crypto is held an “intangible asset” used “for investment purposes only,” but businesses will have to pay VAT, the circular notes. The document also states that miners will be classified as “dealers” for VAT purposes.
Shahar Strauss, a lawyer at the Israeli law firm Ziv Sharon & Company, told:
“The [agency’s] stance ignore economic realities. investing in the esoteric currency of some Pacific island that can’t be used in Israel and many other countries meets the definition of currency and is therefore entitled to a tax exemption while investing in digital currency is not.”