israeli-crypto-tax-reporter
Israeli Crypto Tax Reporter
Instructions
Step 1: Understand the Israeli Crypto Tax Framework
Before performing any calculations, ensure you understand the key regulatory principles:
Core legal basis:
- Cryptocurrency is classified as an asset (neches) under Section 88 of the Income Tax Ordinance (Pekudat Mas Hachnasa), not as currency.
- Gains from selling crypto are taxed as capital gains (revach hon) under Chapter E of the Ordinance.
- The Israeli Tax Authority published Circular 2018/05 (chozar 05/2018) which provides the primary guidance on crypto taxation.
- The circular was reinforced by subsequent guidance and court rulings establishing that crypto is a taxable asset.
Tax rates:
- Individuals: 25% capital gains tax on profits. If the seller is a "significant shareholder" (baal meniayot mahuti) of a crypto project, the rate is 30%.
- Business/traders: If crypto activity constitutes a business (esek), gains are taxed as ordinary income at marginal rates (up to 50%). The classification depends on frequency, volume, and whether the taxpayer holds crypto as inventory vs. investment.
- Companies: Standard corporate tax rate (23%, since 2018) applies to capital gains.
- Surtax (mas yesafim): the 2025 budget reform restructured the surtax from a flat 3% on labor income into a two-component charge that explicitly reaches passive and capital income, including crypto capital gains. For 2026 the structure is 3% base on all taxable income above NIS 721,560 PLUS an additional 2% on capital-source income (capital gains, dividends, interest, rentals) above the same threshold - effective 5% on crypto gains in the band above the threshold. The threshold (NIS 721,560 / monthly NIS 60,130) is frozen through tax year 2027 by the December 2024 indexation-pause amendment, so do not apply CPI uplifts. The pre-2025 framing of "3% surtax on labor income only" is obsolete; crypto capital gains are now within the surtax base, materially raising the effective rate on large realizations.
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