Israel Passes Bill to Exempt Foreigners from Crypto Taxation in Preliminary Reading

Tax Benefits for Digital Assets Holders in Israel

The Israeli parliament, the Knesset, recently passed a bill granting tax exemptions and other benefits to digital asset holders. Sponsored by Knesset member Dan Ilouz, the bill enjoys the full support of the ruling coalition parties.

According to the explanatory note of the bill, it should enhance the country’s appeal to investors around the globe, and exempt foreign residents from capital gains tax on the sale of digital currencies from Israeli-based companies. Furthermore, the bill would reduce the current 50% tax on crypto bonuses to 25%, bringing it in line with stock options for employees.

Nir Hirshman and Shauli Rejwan, co-founders of Israeli Crypto Companies Forum (ICBW3), believe that the country is witnessing a broadening in regulatory openness. They told Cointelegraph that the bill is a positive step in the right direction for crypto investors.

The bill also proposes to distinguish between “digital currency” and “security”. However, the Israeli Securities Authority (ISA) proposed to include digital assets under the “security” category in the beginning of 2023, which caused concern in the industry. In April, the Bank of Israel revealed its central bank digital currency project, although a final decision has not been made yet. The bank’s special committee also presented potential scenarios for developing and deploying the digital shekel, also known as crypto today.

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