The bitcoin traders in Israel are facing issues when paying their taxes following banks declining to accept payments that are earned through virtual currency investments.
On 6th August, the local news outlet of Israel Haaretz mentioned that the Israeli banks are worried that the income earned from Bitcoin Investment might have terrorist funding or related to money laundering activities. However, crypto traders, after failing to deposit crypto profits are now searching for answers from regulators and bank officials.
The bitcoin traders are willing to pay their taxes and settle them, but due to banks significant approach, they are not allowed to make deposits gained from crypto investments.
Haaretz mentions that around $86 million worth of unpaid taxes on digital currency trade incomes have been piled up as Israeli banks decline to accept deposits. Tax payments have been stopped until a solution is reached.
However, it should be noted that Israel does not recognize Bitcoin as a currency. Israel has imposed fines on the profits earned through crypto trading; the crypto trader’s needs to pay around 25 percent of capital gains, and the organizations are liable to pay 47 percent of the tax rate.
The media outlet Haaretz outlined the story of a Bitcoin investor, Ron Gross, who is regularly inventing in bitcoin since 2011. He has earned huge income from his Bitcoin holdings and carefully gave the bitcoin profit details to the Israel Tax Authority. While in 2017, Hapoalim -the bank, he holds an account in started refusing BTC deposits into his account. The bank suggested the reason for the decline as his bitcoin profits were trapped in Swiss Bank.
Gross further said that he spoke with bank authorities and presented them deposit records of 70 pages relating to Bitcoin profits, but the Israeli bank did not accept the money. The bank officials failed to change their decision on the issue. He mentioned Haaretz, “I’ve tried working with almost all the banks, but the minute they hear the word Bitcoin they freeze up.”
Because Gross is not able to pay taxes to the tax authority of Israel, a claim has been placed on his bank account, scooters, and home. Gross also stated that the Israeli tax authority knows about the issue, but they say that the matter is in the court.
Meanwhile, Gross is not the only investor in facing difficulties. One more Bitcoin investor, Roy Arav has been refused to transfer his crypto profits into his personal account in Israel. Arav had managed to open a trustee account at Discount bank that was run by Bit2C- a domestic crypto exchange. When Arav tried to transfer funds from the trustee’s account into his own account, the Discount bank declined to execute this operation due to money laundering issue and terrorist funding. This made Arav impossible to pay the taxes, further resulted in Arav to file suit against the Discount bank.
He also mentioned that the tax official recognizes the issue and made him postpone tax payments until the lawsuit is heard.
While back in May, the court of Israel said clearly that Bitcoin currency is an asset and not a traditional currency. The court gave the verdict against DAV. Network founder, Noam Copel, who believes digital currencies are taxable things. He further mentioned that his bitcoin investments were international currency and non- taxable.