Cryptocurrency

Israel Tax Service urges citizens to report their digital assets

The Israel Tax Authority (ITA) has sent out letters to cryptocurrency investors and traders demanding disclosure of information about their digital assets and income from cryptocurrency transactions.

According to local media reports, the ITA has begun to pressure the digital currency market in Israel by launching rigorous tax audits. In addition to the notifications sent to the owners of digital wallets, the agency sent inquiries to local and international cryptocurrency exchanges in order to obtain information about citizens trading in cryptoassets.

Using the common EU standard for the automatic exchange of tax and financial information (CRS), the Israel Revenue Service obtains information about funds and accounts held in Europe. In addition, the ITA receives additional information under the Foreign Account Tax Reporting Act (FATCA), under which the IRS transfers data to Israel.

In Israel, the tax on realized digital asset value gains for individuals is 25%. Such high tax rates can hinder the development of the cryptocurrency industry in the country. Therefore, earlier, the Israeli government expressed its readiness to use alternative solutions for calculating taxes on income from cryptocurrencies. 

A few months ago, members of the Israeli parliament introduced a bill that abolishes the 25% capital gains tax on some crypto assets and proposes to treat them as currencies. Such close attention of the tax authorities may be associated with the growth of bitcoin, which is trying to take the next “round figure” – $ 30,000, and pulls up the entire altcoin market.

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