The Israeli government has today confirmed today that bitcoin will be classified as property when in comes to tax. The Israeli government has been deliberating on the idea of taxing crypto currency as early as 2013.
There has been some speculation leading up to the announcement that Israel’s Tax Authority would in fact regard cryptocurrencies as “property” rather then a currency, making it open to similar property taxes.
The tax authorities first propositioned the idea in a circular issued in January this year.
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.
The circular further elaborates that profits from cryptocurrencies such as Bitcoin will be subject to capital gains tax between twenty percent and twenty-five percent. However, people mining and trading cryptocurrencies in connection with a business must pay an additional seventeen percent value-added tax (VAT).
Although today’s announcement was no surprise given the previous draft release, the Tax Authority still continues to work on initiatives to change the evolving market.
Furthermore, ICO’s could also be taxed with a similar draft circular published in late January this year. Potential changes could include setting a minimum token revenue threshold in which tax would be triggered.
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