How does Crypto Tax calculate the tax on crypto?

In brief

Matching order

FIFO, per coin, across all exchanges together

Converting one coin into another

A sale of the coin given and a purchase of the coin received

Transfer between exchanges

Not a sale, and keeps the purchase date and cost

Inflationary amount

Separated from the gain, and never more than the capital gain

Loss offset

Within the year, with the remainder carried forward

Tax rate

25% for an individual, the year’s corporate rate for a company

How is each sale matched to a purchase?

Every sale needs the purchase date and original price of the units sold. Crypto Tax matches each sale to purchases of the same coin in the order they were made, oldest first (FIFO), across every exchange imported together. A purchase that is partly used is split, and its remainder waits for the next sale.

This is the matching order Crypto Tax chose, and it is the same for every user and every tax year. According to the notes to form 1399(י), the capital gain is calculated for each transaction separately, so the report sets out for every sale the exchange and purchase date matched to it.

Selling units for which no purchase exists in the history stops report generation, naming the coin and the transaction where the shortfall was found. Crypto Tax does not assume a zero cost: you import the missing purchases or transfers and generate the report again, at no extra cost.

What counts as a sale?

Selling a coin for money, converting one coin into another and paying with a digital coin are all sales. Income Tax Circular 05/2018 sets consideration paid in a digital coin at its fair value in shekels, so for a conversion Crypto Tax records a sale of the coin given and a purchase of the coin received, both at that same value.

A transfer between accounts of the same person is not a sale. Crypto Tax matches a withdrawal from one exchange to a deposit of the same coin on another, and the coins that arrive keep their purchase date and original price. The difference lost on the way as a network fee is recorded as a sale, and the fee is neither deducted nor added to the original price of the coins that arrived. A deposit or withdrawal that is not a transfer between imported accounts is classified by the filer before the report is generated: coins bought elsewhere, cashback, the filer’s own wallet, a payment or gift, or coins lost or stolen. A match that is not clear-cut is shown for confirmation, and a transfer can be linked or unlinked by hand.

A trading fee paid in money or in a third coin is added to the original price on a purchase and deducted from the proceeds on a sale. A fee taken out of one of the trade’s own coins is already reflected in the quantities.

How is the shekel value set?

Where the exchange’s record states the trade’s value in shekels or another currency, Crypto Tax uses it, converting a foreign currency at the Bank of Israel’s representative rate. Where the record states no value, the coin’s market price on Binance at the moment of the trade is used.

Crypto Tax does not fill in an estimated price: where a coin has no price at the time of the trade, report generation stops. The full detail is in the question on how the shekel value of a crypto trade is determined.

What happens to the inflationary part?

Section 88 of the Income Tax Ordinance defines the inflationary amount as the part of the capital gain equal to the amount by which the index-adjusted original price exceeds the original price. Crypto Tax calculates it from the Consumer Price Index last published before the purchase date and before the sale date, and applies the tax rate to the real gain that remains.

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. On a sale at a loss, Crypto Tax records the nominal loss, without indexation.

How are losses offset, and at what rate is the tax calculated?

The year’s capital losses are offset against its capital gains, and a loss left unused is carried forward to later years, as section 92 of the Ordinance provides. Crypto Tax carries the balance forward automatically from the previous year’s report generated in it. Losses from a year with no report generated in Crypto Tax, or from selling assets other than crypto, are not included in the calculation.

For an individual account, the tax rate is 25% of the real gain. For a company account, Crypto Tax applies the corporate tax rate for the tax year being reported.

What does the calculation leave out?

Surtax, which depends on all of the filer’s income, is not calculated in the report.

Staking rewards, interest and airdrops are recorded as income at their shekel value on the day they were received and shown separately. They are not included in the tax estimate or on form 1399, and that same value is used as the coins’ original price when they are sold.

Sources

• Income Tax Ordinance [New Version], sections 88 and 92, 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)
• 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)