The Israeli government has decided to impose cryptocurrency taxes. In terms of the law, bitcoin, ether, and others are not currency, but property, digital property that is taxed.
The Israeli authorities did not agree that cryptocurrency is money or legal means of payment. For this reason, there was a choice of one of two things: consider them security or a commodity/property. Under the definition of securities, they also do not fall due to the fact that there is no single issuer that will provide the issue and redemption.
Therefore, only a category of goods remained from a small list.
In practice, this means taxing Bitcoin and other cryptocurrencies at very harsh tax rates: you have to pay capital gains tax, which is 20-25%. In addition, if there were no documents on hand to prove the costs when buying cryptocurrencies, you will have to pay with the entire amount of the sale!
Israel’s tax amnesty in comparison with the Russian program
Plus, in some cases, you must also pay a VAT of 17%. It will be paid by those who are engaged in cryptocurrency, as a business (traders and miners), plus those who acquire cryptocurrency through intermediaries. On top of that, bitcoins will be accepted not as currency, but as “barter”, which means additional paperwork for the business.
The tax authorities of Israel understand that such an approach will cause difficulties for cryptocurrency users, but they talk about the need to adhere to the letter of the law. The law has been passed, but various specialists continue to work on it. It is unlikely that it will become softer, but it is possible that some kind of relief will appear or the convenience of interaction with law enforcement agencies will increase.
The example of Israel shows what difficulties arise if the authorities do not follow the path of simplification, but the ways of creating artificial barriers. Or in an attempt to earn more on taxes, without even fully understanding how the system works.
The pressure may have another reason: the desire of Israel to release its own “digital shekel”, which will become a legal cryptocurrency in the country. This, according to the authorities, will stop the development of the shadow market.
There is, however, a question: what will force citizens to switch to a currency that is fully controlled by the authorities and which can be written off, destroyed or lost at any moment without demand? Modern cryptocurrencies are initially popular due to the fact that they are almost impossible to control and difficult to track. Only then did the price increase due to the attention.
What can the authorities offer? Only that with ordinary fiatnnymi currencies: control, price retention, taxes.
Will Israeli residents have to give up cryptocurrency?
Do Israelis have to pay draconian taxes or refuse to cryptocurrency? If they decide to remain completely inside the Israeli financial system, then yes.
However, in the modern world, there are no borders, including economic ones. It is always possible to find an alternative legal way to protect and increase the fortune. Especially in such a freedom-loving and uncertain area as digital assets.
Of course, there will be nuances and the need to declare income, no matter where you receive it. However, it does not interfere in any way with active activities. Especially all over the world there are enough countries that so far or already allow obtaining digital coins, selling and storing them without special restrictions.
Canada and Israel offer an opportunity to get a startup visa to foreigners
If you wish, you can even open your own cryptocurrency project in Belarus or Australia.
By the way, Israel proposes to tax and ICO. Such a proposal was announced at the end of January in the draft law regulating this area. ICOs plan to require two types of VAT to be paid: a maintenance transaction and a sales transaction. The sale of services and goods to foreign residents is not taxed.
If ICO collects more than 15 million new shekels, then the company must comply with the requirements of financial statements in accordance with current legislation.
Of course, this is not a final decision and the authorities are waiting for public discussion. However, judging by the proposed rules on cryptocurrencies, restrictions for crypto-business will only increase. Lightness can only dream.
In general, this market is in its infancy, but it is gaining momentum rapidly. It concerns the whole world. The number of those who earn on it and the number of those who lose millions grow. Therefore, mindlessly buying everything in a row is unwise. Especially if you still want to take taxes.
How to choose those assets that will bring predictable profits? You can independently explore the market and all those several hundred coins and tokens that are already on the stock exchanges. You can take a chance and buy startups and ICO tokens. And you can use the help of professionals and save time and nerves.
We suggest that you visit the cryptocurrency investment advisory. On it, you will learn which cryptocurrencies should be invested in and why, how to do it as safely as possible. You can ask questions to a specialist and get an answer to them.
Do not forget to diversify your assets. You should not invest all the money in one class of assets and even more so – to keep them on the same exchange or wallet. In general, it is highly recommended to use different types of assets for greater safety.
It is not only about different cryptocurrencies, but also about more familiar assets: real estate, stocks, and bonds, gold and bank accounts. They should also be located in different places: store gold in Switzerland or Singapore; open an account in Germany and Belize; transfer the yacht under the flag of Georgia; and transfer your company’s share of the business to St. Kitts and Nevis.