Do you pay tax on crypto in Israel?
The short answer
Yes. The Israel Tax Authority treats a digital coin as an asset rather than a currency, so a gain realized on selling it is subject to capital gains tax in Israel.
In brief
- How a coin is classified
- An asset, as defined in section 88 of the Income Tax Ordinance
- Type of tax
- Capital gains tax on the real gain
- When liability arises
- On realization, not while holding
- Who has to report
- An Israeli resident who realized a gain with no tax withheld at source
- Official source
- Income Tax Circular 05/2018
Why is a digital coin an asset rather than a currency?
In Income Tax Circular 05/2018 the Israel Tax Authority ruled that a decentralized payment means, commonly called a virtual currency, is not a currency for tax purposes but an asset, as defined in section 88 of the Income Tax Ordinance.
That distinction has one central practical consequence: selling an asset is a taxable event, so every realization of a digital coin requires a gain-or-loss calculation and a report, whereas exchanging foreign currency for personal use is not treated that way.
What counts as a sale that triggers tax?
Selling a digital coin for shekels is the clear case. But selling one digital coin for another is equally a realization, even when no money ever reaches your bank account.
The same applies to paying for goods or services with a digital coin: for tax purposes that is a sale of the asset at a price equal to the value of what you received.
Moving coins between two wallets belonging to the same owner is not a sale, because ownership has not changed.
Do you still report if the investment lost money?
Yes, and it is usually worth doing. A realized capital loss can be offset against capital gains, and reporting it is what makes that offset available.
An unreported loss is not preserved, so reporting in a losing year generally works in the filer’s favour rather than against it.
How does Crypto Tax calculate this?
Crypto Tax imports your trading history from your exchanges, identifies every realization event, converts each trade to shekels at that trade date’s rate, offsets losses and calculates the tax under Tax Authority rules.
The result is a ready-to-file capital gains report for any tax year, including previous ones.
Sources
Last updated: 2026-09-28
This page is general information only and is not tax advice. For your own circumstances, consult a tax advisor or accountant.