Israeli Tax Authority Issues Virtual Currency Tax Rules
by Lorys Charalambous, Tax-News.com, Cyprus
01 March 2018
The Israeli Tax Authority has clarified the country's tax rules for cryptocurrencies such as Bitcoin, in a circular issued on February 19.
The ITA confirmed that Bitcoin is to be viewed as property for capital gains tax purposes, and that, as such, gains from cryptocurrency trading are liable to tax when the investment is divested. CGT on such gains will be imposed at a rate of 25 percent for individuals, and 47 percent for businesses.
The circular further clarified that those "mining" virtual currencies – the process through which they are first created, by solving algorithms – will be required to charge VAT on the first supply of that bitcoin, but trades thereafter will be outside the scope of VAT. VAT will be applicable in the normal way for goods and services purchased where the consideration provided for such is virtual currency.
Businesses engaged in virtual currency trading will be classified as financial institutions and subject to the tax regime applicable to the industry.
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