Report on activity involving virtual currencies and request for payment of tax due on the sales of currencies (form 909)

The Tax Authority in cooperation with the Bank of Israel and the Money Laundering Authority have issued a temporary order enabling any individual to apply to be subjected to the temporary order procedure to receive tax funds due to a profit from the realization of a cryptocurrency payment.

The procedure is aimed both at regulating the work process and the required inspections by the tax authority, to enable the receipt and collection of tax moneys into the tax authority's bank account held at the Bank of Israel, subject to reducing the risk of money laundering to the minimum possible.

Who can file the application?

• An individual who has realized a profit from the sale of virtual currencies and wishes to pay taxes with funds from virtual currencies, in cases where he/she has no alternative sources of financing.
• Individuals, who have been refused to deposit funds from virtual currency operations in a commercial bank in Israel.
• Individuals, whose financial resources that were used to purchase the virtual currencies which generated the revenues, were legal.

What to add 

• Photocopy of a foreign passport if the taxpayer has an additional nationality.
• A document detailing the calculation of taxable income and the amount of tax resulting from virtual currency activity.
• Attestations of the origin of funds used to purchase virtual currencies.
• A document detailing the history of the virtual currencies throughout the period of ownership.
• Attestation that the proceeds from the sale of virtual currencies have been deposited in the taxpayer's account, or attestation from the financial services if the transactions have been carried out through them.
• Bank account details confirmation from the party transferring the tax payment funds - the taxpayer's account in a foreign bank, cryptocurrency account, investment office or any other financial services provider.
• Attestation from a bank in Israel on its refusal to accept tax money resulting from profits from the sale of virtual currencies, including by refusing to open a bank account.

Ho to file the application

1. Fill in Form 909 and attach the requested attestations.
2. Submit to the tax assessor where your tax file is processed, in one of the following ways:
   • Online – together with the submission of the annual tax report, via the online system (CRM) for sending applications to the assessment offices detailed on the tax authorities' website.
   • In-person – at the tax assessor office where the file is processed.

What next

1. The assessor will process the application. After performing all necessary examinations, he will determine the tax liability applicable to the taxable income from virtual currencies in an assessment agreement under section 145(a)(2)(b) or under section 145a2(1a) of the ordinance. The procedure may also apply to income declared by taxpayers in the report they have submitted, even if no assessment has been issued for the report (“self-assessment”).
2. The agreement, together with any additional documents required, will be sent for inspection and approval by other parties within the tax authority
3. After approval by all parties within the tax authority, a transfer of tax money directly to the tax authority's account held at the bank of Israel, will be possible.