Thu. Aug 26th, 2021

    Israeli cryptocurrency investors cannot pay taxes on crypto assets, since banks do not accept income received from cryptocurrency trading as a deposit.

    The Israeli media Haaretz reports that local cryptocurrency investors cannot deposit income from their investments in BTC to bank accounts due to banks ‘ concerns about money laundering and terrorist financing. Bitcoin is not recognized as a currency in Israel, and income from trading it is subject to a capital gains tax of 25% for individuals and a corporate tax rate of 47% for companies.

    These two factors have reportedly led to the fact that the Israeli tax authority expects to receive taxes from cryptocurrency investors. But they are not able to pay them, because they cannot place the income received as a result of their investments in the national currency on accounts in local banks.

    The publication tells about the experience of a local BTC investor Ron Gros, who invested in bitcoin in 2011 and reported his income to the local tax authority. He reports that in 2017, the bank of Hapoel began to refuse him to place profits from BTC on the account. Gross also met with the bank’s employees and showed them 70 pages of deposit records of income from BTC, but the bank continued to refuse to accept funds. Gross told me:

    “I tried to work with almost all banks, but as soon as they hear the word “bitcoin”, they refuse.”

    Since he was unable to pay his contributions to the Israeli tax authority, his bank account, house and scooters were seized. He also stated that ” the tax authority is aware of the problem, but they say that it is not in their competence.”

    Haaretz also notes that the local tax authority is aware of unpaid taxes in the amount of 300 million shekels (more than $85.7 million) on profits from cryptocurrency income, but this figure is probably much higher.

    Recently, the cryptocurrency exchange Bits of Gold won
    a notable legal victory over an Israeli bank by gaining access to banking services. In addition, in the spring of this year, the court of the Central District
    of Israel ruled in favor of the country’s tax authority, recognizing bitcoin as a financial asset, not a currency