TL;DR:
- Default rate: 25% capital gains tax per disposal, calculated in NIS.
- Crypto-to-crypto swaps, NFT sales, and DeFi unwraps are all taxable events.
- Staking and mining create ordinary income at receipt.
- Active traders risk reclassification to business income (marginal rates up to 50%).
- Olim get treaty-style protection on pre-Aliyah holdings under the 10-year rule.
The Classification That Changes Everything
The ITA splits crypto activity into two buckets:
- Capital asset (Section 88): 25% flat rate, deductible losses, simple Form 1399 reporting. The default for passive investors.
- Business income (Section 2(1)): ordinary marginal rates plus full Bituach Leumi, but with deductible expenses (rigs, electricity, software).
Factors pushing toward business classification: frequency of trades, holding period, leverage, use of trading bots, mining operations at scale, professional knowledge, and dedicated infrastructure.
Calculating Gain on a Swap
The ITA requires NIS-denominated accounting. A swap of 1 ETH (cost basis ₪8,000) for 0.04 BTC (FMV ₪12,000) generates a ₪4,000 capital gain. The 0.04 BTC then carries ₪12,000 basis for the next disposal.
Staking, Yield, and DeFi Mechanics
- Staking rewards: ordinary income at receipt at FMV in NIS.
- Liquidity providing (Uniswap-style): deposit may be a disposal of underlying tokens; LP tokens have their own basis.
- Lending (Aave, Compound): interest received is ordinary income; principal return is not a disposal.
- Airdrops: ordinary income at FMV when control is established.
- Hard forks: ordinary income at the value of new coins received.
NFTs
NFT mints and resales follow the same asset/business framework. Creators (artists minting their own NFTs) almost always have business income on primary sales and royalty streams. Collectors flipping NFTs frequently can be reclassified into business income.
Olim and Crypto: The 10-Year Window
Crypto acquired before Aliyah is generally foreign-source for an oleh and falls under the 10-year exemption — provided the wallet, custody, and disposal mechanism remain outside Israel. Once you move custody to an Israeli exchange or use Israeli-bank-funded buys post-Aliyah, those new assets are Israeli-source. See our 10-year exemption guide for the full mechanics.
Reporting Mechanics
- Form 1399: annual disposal schedule by transaction.
- Capital-gain advance payment: due 30 days after each disposal at 25% × gain (waived if total annual gains below threshold).
- Annual tax return (Form 1301): aggregates and reconciles.
- New 2026 informational reporting: olim must list foreign wallets and exchange accounts — see Olim Reporting 2026.
If You Haven't Reported
Israel runs periodic voluntary-disclosure programs that cap penalties and (in some tracks) provide criminal immunity. Acting before the ITA discovers your wallet via exchange data-sharing is dramatically cheaper. See our voluntary disclosure 2026 guide.
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