The Israeli tax authorities issued notice early on Monday confirming their classification of cryptocurrencies as properties and thus attracting property gain tax.
The notice requires investors in cryptocurrenies to report their holdings with a month and start prepayment of tax. Profit from crytocurrency will be subjected to ordinary 25% capital gains tax for private investors and 47% marginal rate for businesses.
Property tax regulations in Israel have two components in the event of transaction on the property. The first part is the acquisition tax which may apply to purchaser. The second part is what is normally referred to as capital gain tax (CGT) which levied on the seller in case of profit accrued from the sell. CGT normally imposed on the seller where the property has appreciated in other words where there is difference between the original purchase and the sale price. There are other tax issues that may apply depending on the individual circumstance of the transactions.
Key questions experts are asking includes the rationale of classifying cryptocurrencies as assets rather than currency and what will be the tax liability on early investors if the rules are applied retrospectively.
Read the Notice here