Bitcoin (BTC)’s acceptance as real currencies confront stern challenges on daily basis. A court in Israel has ruled in favour of the country’s Tax Authority, taking Bitcoin as an asset, but not a currency.
Lod’s Central District Court ruled yesterday in support of Israel Tax Authority in its quest to make Bitcoin (BTC) and related digital assets’ trading taxable in the country.
During the court session, Judge Shmuel Bornstein stressed that the reliability and existence of Bitcoin is still gloomy, it could be eventually replaced by another virtual currency. The Judge said this scenario will make accepting Bitcoin as a currency a bit difficult, especially for tax purposes.
The Israel Tax Authority in its argument clamoured that Bitcoin (BTC) emerged as an asset and was never a currency. So cannot be termed as a foreign currency, making all profits made through its sales taxable.
Noam Copel, founder of blockchain startup DAV was the appellant in the case. Copel reportedly went into Bitcoin (BTC) trading about 8 years ago, which he later sold with a relative profit of NIS 8.27 million.
In Copel’s argument before the Judge, he claimed that Bitcoin should be treated as a foreign currency, and gains from trading it should be classified as exchanges between individuals, not as a business transaction. He reiterated that buying and selling of Bitcoin should not be taxed.
However, Copel’s stance was rejected by Judge Bornstein, and was ordered to pay a sum of NIS 30,000. This ruling makes the appellant due to remit tax of about NIS 3 million.
The appellant lost the test case due to his inability to prove that Bitcoin (BTC) has physical and sure manifestation except being virtual currency that cannot represent physical notes in any country’s economic system.
Nevertheless, the court action might not stop there as the appellant is liable to proceed to Supreme Court for final verdict.
When Bitcoin came to being in 2009, it was more like a valueless asset, but it grew up to $100 between 2011 and 2013. At press time Bicoin (BTC) is trading at $7,871.85, this implies that whoever that accumulated the digital asset 7 years ago without selling would be known as a multi-millionaire today.