Israeli arrested on suspicion of tax evasion with cryptocurrency

A judge of the Rishon LeZion Magistrate’s Court, Tel Anar, has released a Jerusalem resident suspected of restricting virtual currency transactions to an amount of at least NIS 11 million under restrictive conditions. According to the suspicion, the latter did not report the transactions, so he submitted Coz’s reports to the IRS in order to evade paying taxes.

The Authority’s Diamond Unit conducted a confidential investigation, in cooperation with the National Assessment Unit at the Tax Authority, regarding Israeli residents who carry and trade virtual currencies in Israel. The investigation revealed the name of the suspect as having carried out such operations since 2017, without reporting its earnings.

Thus, transfer orders were found for Bitcoin, Etherium, Lightcoin and others, amounting to millions of shekels. The addresses of digital wallets linked to the suspect were also found, the use of which was allegedly intended to conceal his identity as the owner of the funds. Yesterday, the investigation became public, a search of his house was carried out, several investigation materials were confiscated, and the suspect was detained for questioning.

The results of the investigation raise suspicions that the detainee did not submit the annual report for 2017, although he had income from transferring virtual currencies in the amount of at least 5 million shekels. It also appears that in Brooke’s 2018 report, he only mentioned income of NIS 43,000 from his income as an employee and income he received from the National Insurance Institute of NIS 33,000.

In this report, the suspect did not include income earned from his cryptocurrency work in the amount of at least 6.3 million shekels, nor did he indicate that he received income from realizing virtual currency, although it is required and there is room for reporting in this report. In doing so, he filed a false report with the IRS.

The arrest order also states that at the beginning of his interrogation, the suspect claimed that he did not make any sales, and after submitting documents, he changed his copy and claimed that he made an individual sale, he said, despite the transfer of funds from his account, to be a foreign resident, It is his brother’s money and profits.

The Arrangements Act in its previous version included a section whereby holders of digital assets over NIS 200,000 are required to report. That is, fluctuations here and there in currency exchange rates required reporting from time to time, because according to the wording, it was required to disclose the value of assets – not their number. However, it was recently decided to delete this section of the Arrangements Act. However it can be strengthened under ordinary legislation.