Is Crypto Legal in Israel?

Gains from selling, exchanging, or disposing of cryptocurrencies are taxed at 25% for individual investors, calculated as the difference between acquisition cost and sale proceeds (using fair market value at receipt for mining), subject to potential inflation adjustments per Israeli capital gains rules.

Under recent Israeli Tax Authority Circular No. 10/2025, capital losses are recognized but the method of offsetting against gains has been revised; taxpayers must consult the circular for the updated procedure and must still maintain records on their tax returns.

This treatment stems from ITA circulars since 2014, viewing crypto as an "asset" under the Income Tax Ordinance (New Version), 1961.

For individuals holding as investments: Capital gains tax at 25%.

For business activities (frequent trading, mining): Taxed as ordinary income at marginal rates up to 53%, with mining income includible at fair market value on receipt date.

Payments in crypto for wages or services follow standard property payment rules, subject to withholding and reporting.

Individual investors: No VAT on gains or trades.

Miners or traders: Classified as "dealers," liable for 17% VAT on transactions; business traders as "financial institutions" face additional 17% profit tax and cannot reclaim input VAT.

Applies under the Value Added Tax Law, 5736-1975.

Individuals: Report gains/losses on annual tax returns with transaction records (dates, amounts, fair market values) for audit verification; failure to report is a criminal offense. [9 from 2]

Businesses: Full documentation of trades, VAT accounting, and income reporting; crypto used in payments requires standard withholding.

Pre-2014 non-compliance may qualify for penalty relief with reasonable cause.

ITA classifies virtual currencies as "means of virtual payment" and assets for tax (Income Tax Ordinance 1961; VAT Law 1975); 2018 confirmation of capital nature.

January 2021: Israel Securities Authority (ISA) views certain cryptotokens as securities (not extending to traded cryptocurrencies with blockchains).

Official ITA FAQ on digital assets covers definitions, taxation triggers, and rates: https://www.gov.il/en/pages/faq-digital-assets

Israel Tax Authority (ITA): Responsible for implementing and enforcing tax laws in Israel.

Income Tax Ordinance (ITO): Governs taxation of personal and corporate income, including capital gains from assets situated in Israel.

No specific section dedicated to virtual assets; general provisions apply.

Corporate Income Tax: Levied at a rate of 23% on worldwide income for resident entities.

Encouragement of Capital Investments Law: Provides reduced tax rates based on location and conditions for qualifying operations.

Israel is a member of the OECD’s Anti-Banking Fraud Initiative and participates in FATF recommendations, indirectly influencing AML/KYC requirements for crypto transactions.

CDD (Customer Due Diligence) and EDD (Enhanced Due Diligence) apply to virtual asset service providers.

STR (Suspicious Transaction Reporting) obligations are mandatory for unusual crypto transactions.

Gains from the sale or exchange of virtual assets are treated as capital gains under existing provisions.

Tax rates range up to 47%, with an additional surtax for high-income earners.

Income from providing services related to virtual assets is taxed as regular business income.

No dedicated tax guidance for crypto transactions exists; investors must apply general capital gains and income tax rules.

Individual Taxes on Personal Income - Israel

Corporate Taxes on Corporate Income - Israel

Israeli Tax Reform for High-Tech Sector - EY News

Israel Securities Authority (ISA), established in 1968 (MoneyWiki).

Securities Law, 1968 – Foundational legislation establishing the ISA and defining its mandate (MoneyWiki).

Investment Advisors Law, 1995, Mutual Funds Law, 1994, Capital Market Law – Additional statutes governing securities activities (MoneyWiki).

ISA is a member of the International Organization of Securities Commissions (IOSCO) and aligns with global standards for AML/CFT compliance (IMF Article).

Non-bank payment companies and initiation providers under the 2023 Payment Services Law (Prifinance).

Crypto trading entities through traditional capital market participants (ISA “closed garden” model, August 2024) (MoneyWiki).

Annual fees range from ILS 16,940 to ILS 86,810 by category, set per ISA directives (Prifinance).

Structured submission of programme of operations, safeguarding measures, insurance documentation, and technology compliance files.

Control permits for controlling holders are vetted in parallel with the licence application.

Realistic end‑to‑end timeline: 6–12 months (Prifinance).

Customer Due Diligence (CDD) & Enhanced Due Diligence (EDD): Required for all licensed entities, with continuous monitoring and reporting obligations.

Suspicious Transaction Reporting (STR): Mandatory reporting of any suspicious activities to ISA (ISA Governance).

Beneficial Ownership & PEP Screening: Full transparency on beneficial ownership is mandatory, with additional screening for politically exposed persons (Prifinance).

Administrative fines up to ILS 1 million for violations of securities laws.

Criminal prosecution for serious offenses such as insider trading or market manipulation (ISA Governance).

No specific enforcement cases reported for crypto assets beyond general securities law violations; however, the ISA has sanctioned unauthorized crypto offerings in 2024 (Prifinance).

Corporate Tax Rate: Standard rate of 23% on profit from payment services.

Technology‑Track Relief: Qualifying IP income taxed at 7.5–16%, significantly lower than the headline rate (Prifinance).

No Specific Guidance for Virtual Assets: The ISA has not issued separate tax guidance solely for virtual assets; existing corporate and securities taxation principles apply.

Regulatory Uncertainty: Lack of dedicated digital asset licenses may lead to ambiguity regarding compliance obligations.

AML/CFT Oversight: While robust for traditional securities, crypto‑specific AML tools may lag behind rapid technological changes.

Market Participation Barriers: Capital requirements and control permit vetting can delay market entry for new entrants.

The Israel Securities Authority (ISA) is the primary regulator for crypto‑related securities activities in Israel, overseeing compliance with securities law and AML/CFT obligations MoneyWiki.

In August 2024, the ISA approved a “closed garden” model allowing cryptocurrency trading through traditional capital market participants, requiring licensing under the Payment Services Law Prifinance.

Licensing for non‑bank payment companies and crypto initiatives involves application fees of ILS 34,935 and annual fees ranging from ILS 16,940 to ILS 86,810, set by ISA directives Prifinance.

The corporate tax rate in Israel is 23%, with technology‑track relief reducing qualifying IP income tax to 7.5–16% Prifinance.

Israel Securities Authority (ISA) – Capital Markets Regulator in Israel

Israel - Securities & Stock Exchange

Payment License in Israel - ISA, Payment Services Law | Prifinance

Gov.il – Israel Securities Authority Landing Page

IMF Article on Israel’s Financial Markets