Earlier this week, Judge Shmuel Bornstein of the Israeli Central District court ruled against Noam Copel, a blockchain entrepreneur who was seeking legal protection in a lawsuit with the Israel Tax Authority (ITA).
Globesreports that Noam Copel’s lawsuit against the ITA hinged on whether Bitcoin is a cryptocurrency or an asset with the warring parties taking up one side of the argument respectively.
Noam Copel had bought Bitcoin sometime in 2011 and then sold it two years later, making a profit of 8.27 million Israeli new shekels ($2.29 million) from the trade. He then claimed that the ITA should not tax the profit since Bitcoin is a currency just like any other foreign currency and not subject to taxation.
The ITA, on the one hand, argued in line with a new stance by the Israeli government to regard Bitcoin as an asset, and thus liable to a deduction of capital gains tax when a person makes a profit from trading it.
Well, as anyone would expect, the court sided with the government, ruling the Noam Copel should pay taxes for the profits he made from the trade since Bitcoin is an asset and not a currency.
In his ruling, Judge Bornstein reportedly claimed that Bitcoin could cease to exist or be replaced by another digital currency. Such a position according to the Judge, means Bitcoin is not ideal as a currency, especially when it comes to taxes.
As a result of the ruling, the court ordered that the ITA collects a 3 million NIS ($830,600) tax from Noam Copel and a further 30,000 NIS ($8,306) for legal costs, although Mr. Copel still has a chance to appeal the decision.
Moving away from the crypto tax situation in Israel, Stmarket.co reported yesterday that the United States Internal Revenue Service (IRS) would soon release guidance for crypto taxpayers.