This judgment is important as it means that the profits made by trading the ‘cryptocurrency‘ will currently be liable to capital gains tax, Globes added.
Noam Copel, the founder of blockchain startup DAV, bought Bitcoins [BTC] earlier in 2011 and sold them two years later – thereby making a net profit of $2.9 Mln at today’s rates.
Within the court case, he had argued that Bitcoin should be considered an foreign currency, as variations in exchange rates don’t seem to be taxed.
But the ITA [Israel Tax Authority] argued otherwise, with the organization expressing the idea that currencies should have some physical manifestation underneath the country’s laws.
The judge named ‘Shmuel Bornstein’ ruled that Copel failed to prove that bitcoin met this demand, or that it might be used as a viable alternate to fiat after he had sold the cryptocurrency six years ago. However, he indicated that the court’s decision might change – describing his ruling as “for now.”
However for now, the entrepreneur is liable to pay tax on $830,000 USD of the profits he made; but, Copel does have the choice of appealing to Israel’s Supreme Court further.
Also earlier this month, the U.S. Internal Revenue Service aforesaid that it was ‘prioritizing‘ issuing guidance on ‘cryptocurrencies‘ after politicians in Congress warned that there’s still alot more ambiguity regarding how the asset should be taxed.