A court in Israel is of the opinion that bitcoins should attract taxes since it is an asset and not a currency.
This was said during a case between a blockchain company and the Israel Tax Authority. The Tax authority wants Noam Copel, owner of DAV Network, to pay taxes from the gains he made in 2013, which was two years after he bought some bitcoins. His profit was 8.27 million Israeli shekels (that is $2.29 million). However, Noam Copel disagreed to treating his bitcoins as an asset.
But the Tax Authority still insists that bitcoin is not a currency. If this decision is upheld at the end of the day, Noam Copel will be answerable to the Capital Gains Tax.
The judge, Shmuel Bornstein, insisted on this, pointing to the fact that bitcoin can be replaced by some other cryptocurrencies in the future.
This means that Copel must pay a tax of around $830,600 plus another $8,306 as costs. The only way Copel can avoid this is to appeal to the Supreme Court.
This ruling is in agreement with what the Israeli government had earlier proposed. This will not just affect the bitcoin but all other cryptoccurencies as well. The Tax Authority had earlier sent a message three months ago that taxes will be paid on cryptocurrencies at rates between 20 and 25 percent. In addition to this rate, traders and miners will pay an extra 17% VAT.