What records should you keep for crypto tax?

In brief

Burden of proof

On the filer, when the assessing officer asks

What an audit looks at

How coins were bought and sold, bank statements, screenshots and the holding period

The coins’ path

Movements and wallet addresses over the holding period

Worksheet

Attached to form 1399(י), setting out the calculations

Source of funds

Evidence of where the money used to buy came from

What does Circular 05/2018 require?

Under section 3.1.3 of Income Tax Circular 05/2018, a person reporting a sale of a digital coin keeps documents proving that the reported income comes from selling such a coin, as the assessing officer may require.

The circular’s audit guidance lists the documents asked for: a letter from the seller explaining how the coin was bought and how it was sold, the bank accounts the purchase money was transferred through, the statements of the bank accounts the purchase and sale money passed through, and a screen capture showing the purchase, the sale and the holding period.

What goes with the report itself?

According to the notes to form 1399(י), the capital gain is calculated for each transaction separately, even when a month’s transactions are reported as one, and a worksheet setting out the calculations must be attached.

So the records need to make it possible to reconstruct, for every sale, the proceeds, the original price of the coin sold and the date it was bought.

What is the coins’ path, and why is it needed?

In the procedure that lets tax be paid out of money that came from virtual currencies, the Tax Authority asks for evidence of the "path of the virtual currency": the movements made in the coins, or the wallet addresses they were held in, across the whole holding period.

The same procedure also asks for a declaration and evidence that the money used to buy the coins came from a lawful source, and confirmation from the financial service provider that the sale proceeds were deposited. These requirements show what records the Tax Authority accepts as proof of the activity.

What if an exchange shut down or wallet access was lost?

In its 2024 report the State Comptroller noted that records for earlier years are often hard to find, because trading venues collapsed or closed, a wallet code was lost, or trades were made for cash outside an exchange.

In such cases it is worth collecting every alternative record the circular’s list points to, such as bank statements, transfer confirmations, screenshots and correspondence with the venue, and consulting a tax advisor or accountant before reporting.

How does Crypto Tax help you keep the record?

The report Crypto Tax generates sets out, for every sale, the proceeds, the original price, the purchase date and the inflationary part, and can be downloaded as PDF and CSV files.

After every API key sync, Crypto Tax compares the balances on the exchange with the imported history and shows any gap, so you know which periods are missing and which export file fills them. Keep the exchanges’ original export files as well: they are the exchange’s own record.

Sources

• Income Tax Circular 05/2018 - taxation of decentralized payment means, Israel Tax Authority (opens in a new tab)
• Form 1399(י) for tax year 2025 and its notes, Israel Tax Authority (opens in a new tab)
• Temporary procedure for receiving tax on gains from decentralized payment means, Israel Tax Authority (opens in a new tab)
• State Comptroller, report 75A (2024) - taxation of digital currencies (opens in a new tab)