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Capital Market Taxation

In 2003, a significant tax reform brought about the introduction of capital gains tax to the Israeli stock market. Prior to this reform, profits earned on the Tel Aviv Stock Exchange remained untaxed. Capital gains tax, as the name suggests, is a tax imposed on the profits derived from the sale of various financial assets such as securities, bonds, mutual funds, and more. Its primary objective is to ensure that all participants in economic activities play their part in financing the state, while also contributing to the economic stability by discouraging high-risk investments.

Let's delve into the specifics of capital gains tax rates in Israel for private investors. The rates vary depending on the type of asset generating the profit:

  • 15% Rate: This rate is applicable to profits stemming from direct holdings in shekel-denominated assets. This category encompasses a wide range of financial instruments, including stocks, indexed bonds, options, futures contracts, and more.
  • 25%Rate: If your gains arise from any other securities or financial assets, such as foreign stocks, indexed foreign bonds, or foreign mutual funds, a 25% tax rate will be imposed.

It's crucial to highlight a vital point - capital gains tax is only collected when a taxable event occurs, such as a sale, redemption, or receipt of payment. If you're holding securities in your account without selling them, even if their value increases, you won't be subjected to capital gains tax.

Additional Information

Deduction of purchase expenses, custody, portfolio management and sales commission

Financing and other expenses

How does offsetting losses from traded securities work?

How to calculate capital gain on the sale of a security by an individual investor

Semi-annual report

securities withholding tax