April 7, 2022
In a clarification notice published by the Israeli Tax Authority, NFT was declared as an intangible asset and therefore it is liable to capital gains tax. However, the Israeli Supreme Court also ruled that an intangible asset can be considered as “Chattels” – and therefore shall not be taxable.
This raises the question, is NFT an asset, to which capital gains tax applies, or “Chattels”, and should be excluded from the tax base? The tax authority has ruled that since it is intangible, NFT is necessarily defined as an asset and not as a “Chattels” – which must exist on the physical plane.
Our firm tax expert and partner, Racheli Guz-Lavi, interviewed for “The Marker”:
“If NFT assets were acquired on a crypto exchange or similar trading venue, and the information contained therein has no real economic value, then investing in NFT is essentially similar to investing in a financial asset, which is subject to capital gains tax. In such a case, the trading operation is related to the digital asset itself, and not to the information inherent in it. ”
If you have any questions or required clarifications, our privacy-cyber team including CISO and cyber experts, will be happy to assist.