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Ready for a 25% tax on Bitcoin?

The plan of the Tax Authority is revealed

Israelis who hold digital currencies recently received a request from the tax authority asking them to disclose the scope of their assets.

Whoever uses the coins in profit will have to pay tax.

CPA who specializes in the field: "In the professional bronze it is called 'money on the floor' that just needs to be collected"

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• Eran Yaakov

These are Levi-Weinrib

Tuesday, 22 December 2020, 06:08

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Dozens of Israelis who hold digital currencies, especially Bitcoin, have recently received a "greeting" from a new-old author: the tax authority headed by Eran Yaakov - which requires them to disclose their assets in full and tax accordingly.

Globes has learned that tax officials across the country have begun to put pressure on the digital currency market and look for the tax hidden in the field.

Among other things, digital wallet holders are sent letters of demand to report all their assets and income, many of which have no assets other than the same digital wallet, and inquiries have been made to cryptocurrency exchanges in Israel and around the world to obtain information about Israelis trading in these currencies.

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At the same time, the Tax Authority receives information following the entry into force of the CRS regulations, in the framework of which Israel receives information on the funds and accounts of Israelis throughout Europe.

More information comes from the FATCA agreement, under which IRS information is passed.

According to the Authority's position, published in 2018, investors in digital currencies are subject to a 25% capital gains tax, as long as their activities do not turn into a business. activity costs to businesses, dealers will be taxed as a two-stage or marginal tax under individual tax brackets.

now, in light of market revival digital currencies, especially the start of Bitcoin, while the urgency to fill the state coffers, there was a resurgence in this arena.

A huge market that rolls in about $ 640 billion

According to CoinMarketCap, the digital currency market, with a total value of about $ 640 billion, currently rolls in an estimated $ 181 billion a day trading, using thousands of trading venues worldwide.

The leading currency in the market since 2009 until today is Bitcoin, which traded in the last day at an average price of $ 22,900 (after a decrease of 3%).

Trading is conducted through thousands of crypto exchanges around the world.

Some of these foreign stock exchanges, as well as the Israeli ones, have recently received a visit or phone call from the tax authority and have begun to pass on information to it.

In some tax offices, a new initiative is now being formulated to send letters in the style of letters sent by the US IRS to players in crypto arenas, informing them that they know their activities and receiving information from trading venues, and they better report before the authority reaches them, "We have information about your activities , Which does not match your reports. "

The message from this letter goes well with most of the players who rush to the representatives - the lawyers and the accountants - and examine how they should report.

According to Adv. Lior Neumann, co-director of the tax group at the law firm S. Horowitz & Co., "There has been a recent revival of the tax authority in this arena, which stems from two places - one is lack of money and desire to fill the public coffers, and it is a resource that can help;

And the second main argument is that Bitcoin has made a rally.

The tax authority's working assumption is that since Bitcoin rallied for $ 20,000, there have been quite a few customer realizations, and the authority assumes it can get its hands on quite a bit of money. "

According to Neumann, in the spirit of this position, some of his customers have recently received inquiries from the tax authority. The Tax Authority recently approached our customers who are significant Bitcoin players.

One of them has no income tax file at all and another has.

The questions they are asked are general, asking them to declare assets, when it is clear that they are referring to Bitcoin assets because these are their main assets.

"These are initial fishing questions. 'Let's tell us what you have', General Intelligence questions, but it's clearly born of these currencies, as these are not people who have traveled abroad a lot or made large purchases of luxury goods, so there are no signs." "Others are suspected of them."

Ask them to declare assets, when it is clear that the reference is to Bitcoin assets.

Tax Authority (Photo: Olivier Fitoussi, Flash 90)

"Clear trend of increased enforcement"

Attorney and CPA Ron Tzarfati, VP of Finance and Regulation at Bit2C - a trading platform that enables the buying and selling of cryptocurrencies against the shekel, managing digital currencies and realizing transactions, recognizes the emergence in the tax arena. He says, "There is a clear trend of increased enforcement. On the part of the Tax Authority towards users of cryptocurrencies who have not yet reported or have reported a lack of activity in the field.

Especially in light of the significant rise in the price of bitcoin and many other currencies and the Authority's motivation to collect taxes in light of the deepening deficit in the economy.

The tax authority does not freeze on the yeast.

She is studying the field of cryptocurrencies in depth and is taking active steps. "

According to French, unreported currency holders may have trouble coming to pay the tax." a day.

Government offices and the Knesset must settle the issue urgently, through completion of legislation for the Prohibition of Money Laundering financial bodies and the regulation of the Bank of Israel and other regulators. "

According to French," recently made inquiries to various institutions of Directors wallets digital field enforcement agencies, the Tax Authority and the authorities Ahrot- Investigative and police requirements for information and inquiries.

Taxpayers and private individuals who have not yet reported, and also represent, say they encounter inquiries and aggressive steps to make inquiries.

The mood was clear.

Bitcoin is now raging and there is room to charge from it and the tax authority recognizes it.

"Other currencies are also rising, and people are doing a lot of conversions between currencies, and not everyone understands that it is taxable according to the position of the tax authority."

"Lateral audit actions very soon"

According to CPA Gidi Bar-Zakkai, founder and CEO of Bittax, a platform for calculating tax on cryptocurrency activity, and former senior vice president of professional affairs at the Tax Authority, “The writing was on the wall.

The tax authorities have a different pace and in recent years much information has been absorbed including reports from taxpayers.

The situation today is that tax authorities around the world have partial reports that lack information and the authorities are quickly learning how to locate it.

"In our work with tax authorities in Europe and America, we have witnessed the process of examining tax returns, cross-referencing data with other data that authorities receive from trading venues, and enforcement actions, such as letters recently sent by the IRS to taxpayers about the difference in cross-referencing data with trading venues. "In light of the dramatic rise in the Bitcoin rate and the processes that are taking place in the authorities around the world, it is not surprising that we also see in the Israeli Tax Authority actions to deepen the collection."

Bar-Zakkai adds that "the tax authority understands that a deeper examination of the reports that have already been submitted to them along with cross-referencing, can bring the state treasury a significant available and fast revenue, and I anticipate that we will see horizontal audit and enforcement actions very soon."

Bar-Zakai also says that "information from the authorities from the trading arenas usually includes the end of the required thread because these are the addresses of Bitcoin wallets that made deposits or withdrawals. With the right technology, it is possible to trace the entire wallet through such addresses and even report incorrectly reported wallets. , Which leads to a significant increase in collection from taxpayers who have already reported and even the addition of those who did not report.

"In Israel, in the professional bronze it is called 'money on the floor' that just needs to be collected." Until recently we saw it in real estate transactions where the tax authority collected Material from the computer and acted in front of taxpayers, now it's the turn of Bitcoin. "

Assisted in the preparation of the article: Roi Katziri

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