Drowning currency: Since their entry into our lives just a few years ago, digital currencies have made an impressive leap, but recently the trend is reversed - and investors can not contain the depression.
Only recently has Bitcoin experienced its worst quarter since 2011 and its worst month ever.
The largest crypto currency lost 58% of its value in the second quarter, while the entire crypto market was written off $ 1.2 trillion.
Despite this, it is still too early to eulogize the crypto market, and if at first it seemed that Israelis were suspicious of digital currencies, perceived as "dubious" or unreliable - on the face of it it seems that over time these suspicions were gradually removed, and today these currencies attract investors from all walks of life. the population.
We turned to attorneys Eli Doron and Doron Peso, tax experts from the law firm of Doron, Tikotsky, Kantor, Gutman, Ness, Amit Gross & Co., and with their help we created a detailed guide on the subject.
Why do I even need to report digital currency transactions?
Generally, there is no need to report transactions in digital currencies, but there is an obligation to report profits generated at the time of sale, as long as the actual digital currencies have not been realized, so that in the period they continue to hold before actual sale, no "tax event" occurs. The paper "only (similar to an increase in the value of a share without its actual sale).
Profit (or loss) will be generated only by selling the digital currencies in exchange for "real" money ("hard" currencies such as the shekel or the dollar) or by converting a digital currency to another digital currency (for example - Bitcoin in exchange for Etherium).
How and to whom is it reported?
The reporting obligation applies to all Israeli residents who are required to report to the tax authorities in Israel, and is done through a report form on transactions that generated a profit or loss of capital - Form 1399, which is also attached to the annual reporting form 1301.
According to the position of the Tax Authority, digital currency is defined as an "asset" for tax purposes, and accordingly - the profit generated from transactions in it is subject to the tax imposed on capital gains (25%).
Do I need to keep any documents that testify to my digital currency activities?
It is recommended to keep and maintain maximum documentation for the purchase and sale of digital currencies, such as details of digital wallet transactions, trading operations, transactions in trading accounts and various trading platforms both in Israel and abroad, and references for bank transfers and credit card transactions.
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