Before you start: general information, not tax advice
This guide summarises general information from official forms and publications of the Israel Tax Authority and the US Internal Revenue Service (IRS), as we read them on 3 October 2026. It is not tax advice, and the content has not been reviewed by a CPA. Tax rules, rates and forms change from year to year, so some details may be out of date by the time you read this. Every person's situation is different: residency, scale of activity, type of assets and source of income all change the picture. Before you file a return or make a decision, consult a CPA or a tax adviser. Trading securities, leveraged products and virtual currencies carries a real risk of financial loss, and virtual currencies are especially volatile.
Capital gains tax rates on securities for individuals
Appendix C to the annual return for tax year 2025 (Form 1322) lists the tax rates for individuals on capital gains from selling traded securities. The rate on real capital gains from securities is 25%. For a substantial shareholder the rate is 30%. For capital gains from selling non-linked bonds, commercial paper, debentures or loans, the form states 15%, and 20% for a substantial shareholder. For foreign securities, the part of the gain attributed to the period up to 31.12.2004 is taxed at 35% according to the form, and the rest at 25%, or 30% for a substantial shareholder. These rates appear on the tax-year 2025 form. The form itself does not define a substantial shareholder, so check that definition with a CPA.
Virtual currencies: the Israel Tax Authority's position
In Income Tax Circular 05/2018 of 17 January 2018, the Israel Tax Authority determined that a decentralised payment instrument, commonly called a virtual currency, is not currency or foreign currency for the purposes of the Income Tax Ordinance. According to the circular it falls within the definition of an asset in section 88 of the Ordinance, and its sale is classified as capital income subject to capital gains tax at the rates in section 91. The circular adds that a person whose income in this field amounts to a business is taxed on ordinary (business) income, and that income from mining is treated as business income. A transaction paid for in virtual currency is treated as a barter transaction. The circular also asks you to keep documents that prove the purchase and the sale, such as bank statements and screenshots of the transactions.
The 1301 annual return: what it is and what it asks
Form 1301 is the annual return for individuals, a report on income in Israel and abroad. For tax year 2025 it covers the period 1.1.2025 to 31.12.2025. In the general details part, the form asks, among other things, whether you had income from realising virtual currency, including conversion into other currencies, whether you, your spouse or children under 18 held assets abroad worth NIS 2,086,000 or more, and whether you transferred NIS 500,000 or more out of Israel over 12 months. The return has a line for the sales total from capital gains on traded securities, carried over from Appendix C, and a line for total foreign income, to which you attach Appendix D. The form states that the assessing officer may treat a return that was not properly completed as if no return was filed.
Appendix 1322 and an account with a foreign broker
Form 1322 is Appendix C to the annual return, and it collects capital gains from traded securities. According to the form, when securities were sold through an Israeli withholding agent that withheld the full tax, the figures come from Forms 867. A person from whom the full tax was not withheld at source, for example on securities sold abroad not through the withholding agents, also completes Appendix C1 (Form 1325) and carries the totals to 1322. For transactions with no tax withheld at source, the form asks for separate forms for each half-year and refers to transactions that require reporting and a semi-annual advance payment. To receive a credit for foreign taxes under sections 203 and 204 of the Ordinance, the form says to complete a separate form and Appendix D as well. Check with a CPA how this applies to you in practice.
Offsetting losses as described in Form 1322
The notes on Form 1322 for tax year 2025 describe several offsetting rules. A current capital loss from selling a security, created in the tax year, can be offset against any capital gain. It can also be offset against interest or dividends paid on the same security or on other securities, provided the tax rate on that interest or dividend does not exceed 25%. A carried-forward capital loss from a security, created from tax year 2006 onwards, can be offset against any capital gain, but not against interest and dividends. Losses determined up to 31.12.2005 have a separate rule. The form also has a line for losses from securities carried forward. These rules are technical, so it is worth going over them with a CPA before you file.
Form W-8BEN at a US broker
A US broker may ask you for Form W-8BEN. According to the IRS, an individual who is a foreign person gives the form to the withholding agent or payer when they are the beneficial owner of an amount subject to withholding. According to the form's instructions, it is used to state that you are not a U.S. person and that you are the beneficial owner of the income, and where applicable to claim a reduced rate of, or exemption from, withholding under a tax treaty. The IRS says not to send the form to the IRS but to the person who requested it. As a rule, the form remains in effect from the date it is signed until the end of the third following calendar year, unless a change in circumstances occurs. The form concerns US withholding and does not replace reporting to the Israel Tax Authority.
Does this guide replace advice from a CPA?
No. This is general information from official forms and publications, it has not been reviewed by a CPA, and the rules change. Before filing a return, consult a CPA or a tax adviser.
What is the capital gains tax rate on shares for an individual?
According to Form 1322 for tax year 2025, the rate on real capital gains from securities is 25%, and 30% for a substantial shareholder. The form lists different rates for non-linked bonds and securities.
How does the Israel Tax Authority treat bitcoin and other virtual currencies?
According to Income Tax Circular 05/2018, a virtual currency is not currency for the purposes of the Ordinance but an asset, and its sale is subject to capital gains tax. If the activity amounts to a business, the income is classified as ordinary income.
My foreign broker does not withhold Israeli tax. What does that mean?
Form 1322 describes a case where securities were sold abroad not through an Israeli withholding agent. In that case you also complete Appendix C1 (Form 1325), and the form refers to transactions that require reporting and a semi-annual advance payment. Check your obligations with a CPA.
Can I offset a loss on shares against a gain?
According to the notes on Form 1322, a current capital loss from a security can be offset against any capital gain, and under certain conditions also against interest or dividends. A carried-forward loss created from 2006 onwards can be offset against capital gains, but not against interest and dividends.
Do I need to send Form W-8BEN to the IRS?
No. According to the IRS instructions, you give the form to whoever requested it, for example the broker, and you do not send it to the IRS.
This information is for learning and comparison, not investment advice. Verify product details and eligibility conditions against the current source.
About our methodology