The digital assets market in Israel is facing significant regulatory change. In 2026, the Israel Securities Authority (ISA) is expected to finalize its oversight framework for Digital Asset activities — impacting every holder, trader, and business in the field.

What Changed in 2025?

In 2025, the ISA published a draft bill aimed at bringing digital asset service providers under formal regulation, signaling Israel's transition from an informal approach to a structured licensing and oversight regime aligned with global standards such as the EU's MiCA regulation.

Key Regulatory Developments for 2026

• Licensing requirements for exchanges, brokers, and custodians of digital assets
• AML/KYC obligations aligned with FATF guidelines
• Reporting requirements for holdings above specified thresholds
• Tax reporting integration with the Israel Tax Authority
• Consumer protection rules for retail investors in crypto

What This Means for Crypto Holders

If you hold cryptocurrency — as an individual or through a company — the regulatory environment is tightening. Anonymous holdings are becoming increasingly difficult to maintain, and tax authorities are actively cross-referencing exchange data with tax filings.

Voluntary Disclosure — Still an Option

For those who have not yet reported crypto gains to Israeli tax authorities, the voluntary disclosure window remains open. Under Israel's program, taxpayers who proactively come forward can often settle with significantly reduced penalties — and acting early dramatically improves outcomes.

Bringing Crypto to the Bank

Baker Tilly Israel has successfully guided clients in transferring over $100 million in crypto funds into Israeli banks — handling the full process from documentation and tax clearance to bank liaison, ensuring full legal compliance at every step.

Your accountant is not just someone who files your taxes. A great CPA is a strategic partner who understands your business, anticipates risks, and helps you make better financial decisions. Yet many business owners choose based on price or convenience, without asking the right questions.

1. What industries do you specialize in?

Accounting is not one-size-fits-all. A CPA who excels with high-tech startups may not be right for a real estate company or a manufacturing business. Ask for specific examples from your industry.

2. Who will actually handle my account?

In many firms, a senior partner wins the client but a junior associate handles the day-to-day work. Ask who your primary contact will be. At Baker Tilly Israel, we operate on a Partner Led model — a senior partner is directly involved with every client.

3. What is your experience with tax planning — not just filing?

There is a critical difference between reactive tax filing and proactive tax planning. Ask what tax-saving opportunities they have identified for similar clients in the past year.

4. How do you handle regulatory changes?

Tax laws change constantly in Israel. Ask how the firm stays current and how they communicate relevant changes to clients. A good CPA proactively alerts you — not the other way around.

5. Do you have a crypto specialist?

Even if your business is not crypto-focused, employees or shareholders may have digital asset exposure. This increasingly touches businesses in unexpected ways.

6. What does your onboarding process look like?

Switching accountants is a significant undertaking. Ask how the firm manages the transition — what they need, how long it takes, and what happens during the first months. A professional firm has a clear, structured process.

7. How do you price your services?

Understand exactly what is included and what is not. Ask about rates for out-of-scope work. The cheapest option is rarely the best when it comes to professional services.

Cryptocurrency taxation in Israel has long been uncertain for many investors. But as the Tax Authority increases enforcement and exchanges share data, understanding your obligations is no longer optional.

Is Crypto Taxed in Israel?

Yes. The Israel Tax Authority classifies cryptocurrency as an asset, not a currency. Gains from selling, trading, or exchanging crypto are subject to capital gains tax — 25% for individuals, or marginal tax rates for business income.

What Events Trigger a Tax Liability?

A taxable event occurs not just when you sell crypto for fiat, but also when you trade one cryptocurrency for another, use crypto to purchase goods or services, receive crypto as payment, or earn staking or mining rewards.

How Is the Tax Calculated?

The gain is the difference between the sale price and your cost basis (the price you paid), both calculated in Israeli Shekels at the exchange rate on each transaction date. For frequent traders, this can involve thousands of individual calculations.

What Is Voluntary Disclosure?

Israel's voluntary disclosure program allows taxpayers with unreported income to come forward proactively — typically resulting in significantly reduced penalties, and sometimes a full waiver. The key requirement: the disclosure must be made before the Tax Authority opens an investigation.

Bringing Crypto Into the Banking System

Banks require full documentation of the source of funds, tax clearance letters, and often a formal CPA opinion letter. We have guided clients through this process many times, successfully bringing over $100 million into the Israeli banking system.

Act Now

If you have unreported crypto gains, the time to act is now — before the ITA contacts you. Our crypto tax specialists can review your situation, prepare all necessary calculations, and guide you through the voluntary disclosure process.

In most organizations, internal audit is treated as something done for the regulator — a box to check. But the most successful companies treat it as a strategic management tool that delivers real, actionable intelligence about what is working and what is not.

What Is Internal Audit?

Internal audit is an independent, objective assessment of an organization's operations, risk management processes, and internal controls. Unlike an external audit — which focuses on financial statements — internal audit examines processes, efficiency, compliance, and risk across the entire organization.

The Regulatory Requirement in Israel

Public companies, government bodies, and organizations above a certain size are required by law to conduct internal audits. However, many private companies also adopt internal audit as a best practice — and for good reason.

Beyond Compliance: What Good Internal Audit Delivers

• Early warning of operational and financial risks before they escalate
• Independent assessment of whether controls are actually working
• Identification of inefficiencies costing the organization money
• Fraud detection — internal audit is often the first line of defense
• Board assurance that management is operating as intended

Forensic Audit — When Things Go Wrong

When fraud or significant irregularities are suspected, forensic audit goes much deeper than standard internal audit. Our specialists have worked alongside Israeli law enforcement on complex fraud investigations, bringing the same rigor and independence to every engagement.

Real estate transactions in Israel involve a complex web of taxes that can significantly affect the economics of a deal. Understanding the tax implications in advance — not after the fact — can save significant money.

Purchase Tax (Mas Rechisha)

Purchase tax is paid by the buyer at acquisition. First home buyers benefit from a reduced bracket structure — the first NIS 1.978 million (2025) is exempt. Investors and additional property buyers pay higher rates starting at 8%, rising to 10% above NIS 5.87 million. Foreign residents and corporations typically pay at the highest bracket from the first shekel.

Capital Gains Tax on Sale

Gains from real estate sales are generally subject to capital gains tax. For properties acquired after January 2014, the rate is a flat 25% on the real gain. For earlier acquisitions, a blended calculation applies. An inflation adjustment (Shiluv) is applied to reduce the nominal gain.

The Single Apartment Exemption

One of the most significant benefits in Israeli real estate law: exemption from capital gains tax on the sale of a single primary residence. This exemption can save hundreds of thousands of shekels — but eligibility must be verified before completing the transaction.

Corporate vs. Personal Ownership

For investors operating through companies, profits are subject to corporate tax (23%), and dividends trigger an additional layer of personal tax. Whether to hold property personally or through a company depends heavily on specific circumstances — and should be planned before acquisition, not after.

The Most Important Advice

Consult a CPA before signing, not after. Many tax optimization opportunities are only available if planned in advance. Once the deal is signed, the options narrow significantly.

Incorporating a limited liability company (Ltd.) in Israel is a significant step — one that many entrepreneurs take without fully understanding the implications. This guide walks you through the process and the ongoing obligations once you are operational.

Why Incorporate a Ltd. Company?

• Limited liability — personal assets are generally protected from business debts
• Tax planning — the 23% corporate tax rate can be lower than personal tax for high earners
• Credibility — many clients, suppliers, and investors prefer dealing with a registered company
• Equity — issuing shares is only possible through a company structure

Step 1: Choose a Company Name

Your company name must be unique, approved by the Companies Registrar, and end in "Ltd." (בע"מ). Check availability at companies.gov.il before committing.

Step 2: Draft the Articles of Association

The Articles of Association define the company's purpose, share structure, shareholder rights, and governance rules. We strongly recommend customizing — especially if there are multiple founders or investors.

Step 3: Register with the Companies Registrar

Register online at companies.gov.il. The fee is approximately NIS 2,788 (2025). Processing typically takes 1–3 business days for online applications.

Step 4: Open a Business Bank Account

After receiving your company certificate, open a dedicated business bank account. This process can take 2–6 weeks depending on the bank and its KYC/AML requirements.

Step 5: Register with the Tax Authority

Register for VAT (Maam) and corporate income tax. If you plan to hire employees, employer tax registration is also required. Our tax team handles these registrations routinely.

Ongoing Obligations

A Ltd. company in Israel must maintain annual financial statements, file an annual report with the Companies Registrar, submit corporate tax and VAT returns, and maintain bookkeeping records per Israeli accounting standards.

Company vs. Self-Employed: Which Is Right for You?

The decision to incorporate is not always obvious. For lower income levels, the administrative overhead may outweigh the tax benefits. Get a proper tax analysis before incorporating — it takes 30 minutes and can save years of unnecessary complexity.