As of June 2026, anyone in Israel who holds or traded cryptocurrency without reporting their gains is facing a narrowing window. The 2025 Voluntary Disclosure Procedure — the first to expressly cover digital assets — remains open until 31 August 2026. That is roughly two months from now. After that date, the option to come forward voluntarily and obtain criminal immunity closes, while the Tax Authority’s enforcement tools — international data exchange, blockchain analytics, and active criminal investigations — only grow stronger. This guide explains what the procedure involves, who qualifies, and why acting now matters.
The Voluntary Disclosure Procedure is an official track established by the Israel Tax Authority, in coordination with the State Attorney’s Office, that allows taxpayers — individuals, sole traders, and companies — to come forward of their own initiative and report previously undeclared income and capital, pay the tax due on it, and in return receive immunity from criminal proceedings for those tax offenses. The initiative must come from the taxpayer, before the Authority reaches them.
The current procedure was published on 25 August 2025 as a temporary order, valid only until 31 August 2026. After several years in which no official voluntary disclosure track existed, this appears to be the last opportunity for an orderly settlement without criminal exposure. Two key innovations distinguish it from earlier procedures: anonymous filing is no longer available, and — critically for this article’s audience — digital assets (cryptocurrencies) are expressly covered for the first time.
The widespread belief that “they can’t catch me with crypto” is one of the most dangerous assumptions an investor can make today. The blockchain is not anonymous but pseudonymous — every transaction is recorded permanently in a public ledger. The Tax Authority and law enforcement agencies in Israel and worldwide are acquiring advanced blockchain analytics tools (such as Chainalysis and Elliptic) that can trace fund flows and link a digital wallet to a real-world identity, often going back years.
Israel is a signatory to the Common Reporting Standard (CRS), through which the Tax Authority receives data on Israelis’ financial accounts and assets abroad. Equally significant is the OECD’s Crypto-Asset Reporting Framework (CARF), which is gradually taking effect globally. Crypto exchanges and financial institutions worldwide are now reporting, or will soon be required to report, on their customers’ activity — and that information flows to the Israel Tax Authority automatically and on an ongoing basis.
The Tax Authority’s investigations division is already conducting extensive investigations against crypto traders and investors who failed to report, and there have been documented cases of Israelis indicted for concealing crypto gains amounting to tens of millions of shekels. The world of crypto fraud — pyramid schemes, rug pulls, theft of wallet keys — adds further complexity: both victims and participants can find themselves under criminal investigation.
A critical point: the moment the Tax Authority opens an examination or investigation on its own initiative — even an informal inquiry that has not yet become an overt investigation — the door to voluntary disclosure closes permanently. Timing is everything. If you are uncertain whether your activity is already on the Authority’s radar, a confidential conversation with a criminal defense attorney is the right first step — not a tax accountant, and not a formal filing.
The Israel Tax Authority treats virtual currency as an “asset” under the Income Tax Ordinance — not as currency or foreign currency. This means that any realization of the asset triggers a capital gains tax event, taxed at 25% on the real (inflation-adjusted) gain for an individual. Where the activity rises to the level of a business, marginal rates may apply instead.
The single most common misunderstanding among crypto investors: a tax event arises not only when you sell for shekels or dollars, but in each of the following situations:
Merely holding cryptocurrency is not a tax event — the liability arises only upon realization. The practical challenge in crypto cases is reconstructing thousands of transactions across multiple exchanges and wallets, often without orderly records, and applying the FIFO (first in, first out) method used by the Tax Authority. This is technically complex work that typically requires dedicated software and expert assistance.
The 2025 procedure offers two tracks for handling an application:
The eligibility thresholds for the green track are precise:
In practice, most crypto cases do not qualify for the green track. High transaction volumes, sharp price swings, activity spread across multiple exchanges and wallets, and large gain amounts route most cases to the regular track — which requires careful preparation, precise tax calculation, and close legal guidance. Determining which track applies to your situation is one of the first things a criminal defense attorney will assess.
The process is built from clear stages, each requiring precision. A mistake at any early stage can undermine the entire process and increase the applicant’s criminal exposure:
Immunity is not automatic. All of the following conditions must be satisfied simultaneously:
There is an important flip side: if the disclosure is found to have been incomplete, or if the tax is not fully paid, the process is cancelled, immunity is revoked, and the Tax Authority may use the information provided as evidence in criminal or civil proceedings. A negligent filing does not merely forfeit an opportunity — it can hand investigators a detailed, signed confession. Assessing whether these conditions are met in your specific situation requires a criminal defense attorney’s review before anything is filed.
One of the most practically pressing challenges for crypto investors is not the tax liability itself, but what is known as the “trapped millionaires” problem: the capital exists in a digital wallet, but Israeli banks often refuse to accept funds originating in digital currencies, citing anti-money-laundering concerns. The result: the tax cannot be paid, because the bank will not accept the money intended to pay it.
The procedure addresses this through a dedicated bank-bypass mechanism: an individual who has realized crypto and received a written refusal from an Israeli bank may, through a specific procedure including Form 909 and Execution Instruction 6/2024, transfer the tax amount directly from a foreign financial entity — such as an overseas exchange or bank — to the Tax Authority’s account. The transfer requires a thorough examination of the fund trail and its origins, and payment must be made in shekels only. Tax cannot be paid in cryptocurrency.
Beyond resolving the immediate payment problem, regularizing through voluntary disclosure enables capital legitimization: the digital capital becomes a recognized, legal, liquid asset that can be moved to Israeli banks, invested, or used to purchase real estate — without triggering red flags and without the constant threat of investigation.
The immunity granted is not unlimited:
In the crypto world, the source of funds is frequently contested: gains from a platform that turned out to be a fraud, funds received from a rug pull, or assets traceable to an offense all require a careful criminal-law analysis before approaching the Tax Authority. The line between a tax offense and a more serious criminal charge can be thin, and drawing it incorrectly can have serious consequences.
Many people assume voluntary disclosure is a pure accounting exercise, and that a CPA is sufficient. This is a costly mistake. Every application begins its journey at the Tax Authority’s investigations division. The documents submitted are, in effect, a detailed confession to tax offenses. A poorly drafted application, over-disclosure, or filing by someone who is not actually eligible can convert an opportunity into a future indictment. Criminal legal guidance is a necessity, not a luxury.
The crypto world is cross-border by nature: foreign exchanges, decentralized wallets, international data exchange through CRS and CARF, and cross-border fund transfers. Handling these cases requires a rare combination of international criminal law expertise and deep familiarity with digital assets — which is the foundation of the Rotenberg law firm’s practice.
Merely holding cryptocurrency is not a tax event and does not trigger an ongoing reporting obligation. The liability arises only upon realization — a sale, a conversion to another currency, or a payment. If you are required to file a capital statement, however, all crypto assets must be included.
As of June 2026, approximately two months remain. The 2025 Voluntary Disclosure Procedure is a temporary order expiring on 31 August 2026. Preparing a crypto file — reconstructing transaction history, calculating the tax, drafting the application — takes time. Waiting until the final weeks risks running out of it.
No. The 2025 procedure requires full identification from the very first moment. Unlike earlier procedures, there is no anonymous track. This makes precise legal guidance more important than ever — every word filed is attributable to you.
For an individual, the capital gains tax rate on the real (inflation-adjusted) gain is 25%. If your trading activity qualifies as a business, a higher marginal rate may apply. Added to the tax itself are interest and linkage differentials on the period during which the tax went unpaid, and potentially financial sanctions.
There is a dedicated bank-bypass mechanism: an individual who has received a written refusal from an Israeli bank may transfer the tax amount directly from a foreign financial institution to the Tax Authority’s account, following a specific procedure that includes Form 909. Payment must be in shekels.
An accountant calculates the tax. A criminal defense attorney manages the criminal risk — assessing whether you are already under scrutiny, analyzing whether the conditions for immunity are actually met, calibrating the scope of disclosure, and representing you before the investigations division. In complex crypto cases, both are typically required, but the attorney’s role comes first.
Once the Tax Authority has opened an examination or investigation, the voluntary disclosure window is closed — immunity can no longer be obtained through this procedure. The situation now calls for a criminal defense strategy, not a disclosure filing, and legal counsel should be contacted immediately.
From the perspective of June 2026, anyone with unreported crypto gains in Israel is approximately two months from the close of the only available window for voluntary regularization. The Tax Authority’s enforcement capability — blockchain analytics, CARF-driven data exchange with dozens of jurisdictions, and active criminal investigations — will not diminish after that date. The question for those with unreported exposure is not whether the situation will eventually surface, but whether they choose to address it on their own terms or have it addressed on the Authority’s terms.
The key variables are timing and quality of legal guidance. Acting before the Authority makes the first move is what preserves the option of immunity. In cases that involve a criminal dimension, an international dimension, and technical complexity — which describes most significant crypto cases — the guidance of a criminal defense attorney who specializes in crypto and international criminal law is what determines whether the outcome is a clean settlement or an unresolvable problem.
The Rotenberg law firm handles voluntary disclosure matters involving cryptocurrency with full discretion, from initial assessment through final settlement. If you are holding undeclared digital assets, the time to act is now — before the window closes on August 31, 2026.
The content of this article is general information only, accurate as of its publication date, and does not constitute legal advice or a substitute for individual counsel. Each case is examined on its own facts and circumstances.
עו”ד שגיב רוטנברג מתמחה במשפט הפלילי ומעניק ללקוחותיו ייצוג משפטי מקצועי ואמין. עם ניסיון של למעלה מ-25 שנה בתחום, הוא מלווה את הלקוח לאורך כל התהליך המשפטי, תוך שמירה על זכויותיו והבטחת תוצאה מיטבית. עו”ד רוטנברג מחויב למקצועיות, נאמנות ומסירות, ומיישם אסטרטגיות מנצחות עם ראיית הלקוח במרכז.
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