How is the shekel value of a crypto trade determined?

In brief

Value of a trade

Fair value in shekels at the time of the trade

Paying for an asset with a listed price

The value is the listed price

Price source

The published guidance names no specific price source

The index

The index last published before the day in question

Inflationary amount

Cannot exceed the capital gain

Representative USD/ILS rate

Published on business days only

What does the Tax Authority’s guidance require?

Income Tax Circular 05/2018 provides that where consideration is paid in a digital coin, the consideration is set at the coin’s fair value in shekels, and the same amount is also the original price of what was received. Where the asset or goods bought have a listed price, the value is the listed price.

According to the Tax Authority’s Q&A, the capital gain is the proceeds from selling the digital asset less its cost and the transaction costs allowed as a deduction, taking changes in the Consumer Price Index into account.

This guidance does not say which exchange, or which price, the fair value of a digital coin is taken from.

How is inflation taken into account?

Section 88 of the Income Tax Ordinance defines the index as the Consumer Price Index last published by the Central Bureau of Statistics before the day in question.

The inflationary amount is the part of the capital gain equal to the amount by which the index-adjusted original price exceeds the original price. According to the notes to form 1399(י), where the inflationary amount is larger than the capital gain, only the amount of the gain is recorded as the inflationary amount.

The 25% rate for an individual applies to what remains: the real capital gain.

What about the dollar rate?

The Bank of Israel calculates the representative rate once a day, on business days only. There is no representative rate on Saturdays, Sundays or Israeli holidays, nor on Christmas, New Year’s Day or Easter.

According to the Bank of Israel, the representative rate is an indicator of the rate in the foreign-exchange market, based on an average of the banks’ rates, and has no official binding status in law.

The published guidance on digital coins does not say which exchange rate applies to a trade made in dollars or a stablecoin.

What goes with the report?

According to the notes to form 1399(י), the capital gain is calculated for each transaction separately. Where there are many transactions in a month, all of them can be grouped and reported as one, with a weighted average of the transactions entered as the purchase date.

Either way, a worksheet setting out the calculations must be attached.

How does Crypto Tax determine the value?

Where the exchange’s record states the trade’s value in shekels or another currency, Crypto Tax uses it. A fiat currency other than the shekel is converted at the Bank of Israel’s representative rate for the day of the trade, or the last rate published before it when none was published that day. A dollar-pegged stablecoin such as USDT is converted at the dollar’s representative rate.

Where the record states no value, Crypto Tax takes the coin’s closing price against USDT in the last one-minute Binance candle up to the moment of the trade, and converts it to shekels at that same representative rate. A coin Binance doesn’t trade against USDT can’t be imported yet. The method is the same for every trade, every user and every tax year, and where a coin has no price at the time of the trade, Crypto Tax does not fill in an estimated one.

Indexation uses the Central Bureau of Statistics’ Consumer Price Index as last published before each relevant day, and the report sets out the calculation for every sale.

Sources

• Income Tax Circular 05/2018 - taxation of decentralized payment means, Israel Tax Authority (opens in a new tab)
• Digital assets Q&A, Israel Tax Authority (opens in a new tab)
• Income Tax Ordinance [New Version], section 88, 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)
• What is a representative exchange rate, Bank of Israel (opens in a new tab)