Cryptocurrency investors in Israel cannot pay taxes due to banks refusing to open accounts

Israeli cryptocurrency investors cannot pay taxes on crypto assets, since banks do not accept income from cryptocurrency trading as a deposit.

Israeli media Haaretz reports that local cryptocurrency investors cannot deposit income from their investments in BTC into bank accounts due to banks worrying about money laundering and terrorist financing. Bitcoin is not recognized as a currency in Israel, and trading income is taxed on capital gains tax of 25% for individuals and a corporate tax rate of 47% for companies.

These two factors have reportedly led the Israeli tax authority to expect to receive taxes from cryptocurrency investors. But they are not able to pay them, because they can not place the income received as a result of their investments in national currency on accounts with local banks.

The publication talks about the experience of local BTC investor Ron Gros, who invested in bitcoin in 2011 and reported his income to the local tax authority. He reports that in 2017, Hapoalim Bank began to refuse to place profits from BTC on its account. Gross also met with bank employees and showed them 70 pages of BTC earnings records, but the bank continued to refuse to accept funds. Gross said:

“I tried to work with almost all banks, but as soon as they hear the word bitcoin, they refuse.”

Since he was unable to pay his dues to the Israeli tax authority, an arrest was imposed on his bank account, home and scooters. He also said that “the tax authority is aware of the problem, but they say that it is not in their competence.”

Haaretz also notes that the local tax authority is aware of unpaid taxes of 300 million shekels (more than $ 85.7 million) on profits from cryptocurrency revenues, but this figure is probably much higher.

Recently, Bits of Gold cryptocurrency exchange gained
a notable legal victory over an Israeli bank, gaining access to banking services. In addition, in the spring of this year, the Central District Court of Israel issued a
a decision in favor of the country’s tax authority, recognizing Bitcoin as a financial asset, not a currency.