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Israeli tax authorities notify cryptocurrency owners to disclose their shares for tax purposes

According to reports, the tax collector Israel Tax Agency (ITA) has sent notices to dozens of Israelis who own digital currencies, asking them to fully disclose their assets and collect taxes accordingly. In addition to sending letters to local residents, the tax agency also sent inquiries to cryptocurrency exchanges in and outside Israel.

Data sharing

The Israeli media speculated that tax assessors across the country were putting pressure on the “digital currency market” before the notice and inquiry report sent by the tax collector. However, as Globes now reports, ITA hopes to “obtain information about Israelis using these currencies for transactions.” Before sending notifications and inquiries to cryptocurrency exchanges, Israeli tax collectors have received “data about Israeli funds and accounts in Europe.”

Israel receives this data in accordance with the “EU Common Reporting Standard (CRS) Regulations for Automatic Exchange of Financial Account Information”. Similarly, it is reported that tax collectors in Israel have different arrangements with tax collectors in the United States. The report explains:

More information is provided by the FATCA agreement, which communicates IRS data to Israel.

At the same time, the Globes report attempts to link the “new interest” in taxation of cryptocurrencies with the renaissance of digital currencies, especially Bitcoin’s leap, and the strong need to fill the treasury.

Capital gains tax

Nevertheless, before the recent tax on cryptocurrency holders, ITA published its position on cryptocurrencies as early as 2018. According to the public document, Israel “digital currency investors must pay 25% of capital gains tax, and activities will not become commercial enterprises.”

However, if this becomes a business activity, “a two-stage corporate tax will be charged to everyone, or a marginal tax will be levied according to each tax band.” At the same time, according to the globe report, the Israeli Tax Office wrote to Israeli cryptocurrency holders The letter aims to encourage them to voluntarily “declare their income before the tax authorities arrive.”

What is your opinion on the tax letter sent by the Israeli tax authorities to cryptocurrency holders? You can share your opinion in the comments section.

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