A court in Israel has ruled that Bitcoin is an asset. This latest rule has confirmed the earlier stance by the central bank of Israel. The case was between the tax authority of the country and the founder of a particular blockchain startup. The startup founder had earlier argued that the profits from the sale of the virtual coins should not be taxed. The court ruling is in favor of the tax authority, and it has also endorsed the definition of currency by the central bank.
The Ruling On Bitcoin’s Nature
A court in the central Israeli district has reportedly ruled in favor of the tax authority of the country on Monday, 20th May 2019. The court has recognized BTC as a financial asset and not currency as it was earlier defined. Therefore, all the profits on its sale in the whole country are subject to the capital gains tax. The presiding judge, Shmule Bornstein rejected an appeal that was presented by the founder of one of the leading blockchain startups. He had earlier argued that the coin should be regarded as a currency and so the proceeds from its sale shouldn’t be subject to any form of taxation. The Central District Court seating in Lod accepted the interpretation of the tax authority. He then held that BTC is an asset and not a currency.
The Undefined Status Of BTC
The judge emphasized that the status of the currency is still not defined in the entire country. In his ruling, he stated that it was not easy to envisage an outcome where BTC would be regarded as a legal currency for purposes of remitting taxes. According to a popular news outlet, the case could even reach the country’s supreme court. According to Bracha & Co. managing director, Itay Bracha, the ruling has signaled good tidings to those who haven’t benefited from the coin’s proceeds. He also stated that the court ruling is unequivocal. Speaking further on the matter, the managing partner of the Israeli firm stated that the ruling will apply in a retroactive manner.
About The Case
Based on the available reports, the case was between the founder of DAV, a blockchain startup, Noam Copel. Globes, a leading publication in the country, reported that the blockchain investor purchased Bitcoin back in 2011. He later sold them in 2013 for a profit that was estimated to be in the region of NIS 8.27 million. This amount translates to about $2.29 million. He told the court that the profits he got from this sale should not be subject to any capital gains tax.
The Tax Authority’s Stance
The Israel Tax Authority, however, disagreed with the submission of Noam Copel. The authority stated that Bitcoin is not a currency under the definition provided by the central bank. Therefore, it can’t be a foreign currency as had earlier been suggested by the blockchain startup founder. The agency, instead, claimed that the crypto falls right under the definition of asset. The profit on its sale are, therefore, subject to capital gains tax.