Cryptocurrency Accountant and Digital Currencies

Crypto Accountant — Comprehensive Support in the Digital Currency World

Transactions in crypto and digital currencies such as Bitcoin, Ethereum, and others are treated under the Income Tax Law as an asset that generates income or as capital gains. In recent years, a large number of freelancers, investors, and companies in Israel have been active in this field, and each of them is obligated to report their transactions to the tax authorities and maintain accurate records. Ben-Or Kok Law Office specializes in comprehensive support for crypto operators — from daily bookkeeping, through strategic tax planning, to complete income tax reporting.

The difference between a crypto operator handled by an expert accountant and one who manages reporting independently can be significant. An experienced crypto accountant will teach you how to document each transaction, identify recognized expenses, plan taxes wisely, and avoid reporting errors that could result in interest charges and penalties.

What Exactly Must a Crypto Operator Report?

Every crypto operator, whether an exempt operator, registered operator, or a limited company, must report on:

• Profits and losses from purchase and sale transactions — Each time you buy or sell a digital currency, a transaction is created that may result in a tax profit or loss.
• Income from mining or staking — If you generate new coins through mining or earn income from staking, this is considered professional income.
• Salary or self-employment income — If you received crypto in exchange for services or work, this is income that must be reported.
• Fees and insurance — Business expenses such as transaction fees, storage costs (paid wallet) and insurance may be recognized as deductible expenses.
• Annual capital declaration — If you are a registered operator or company, you must declare your cryptocurrency balance at the end of the year.

Exempt Operator vs. Registered Operator in Crypto

An exempt operator receives an exemption from VAT but is still required to report income for income tax purposes. A registered operator pays VAT on his transactions (if he is active in an occupation that is not exempt), but receives a credit for VAT charged to him. The choice between the two forms depends on the scope of activity, expenses, and business structure. A crypto accountant will help you assess the most appropriate form according to your circumstances.

Common Risks in Crypto Reporting and How to Avoid Them

Crypto entrepreneurs who manage their reporting independently or without professional guidance often encounter costly mistakes. Below are the main risks:

1. Incomplete or Lost Transaction Records

Many crypto entrepreneurs keep records scattered across multiple sources — some on the trading platforms they used, some in personal files, and some in memory alone. When reporting time comes, it is difficult to accurately recover all transactions, which can lead to errors or unreported income. A crypto accountant will help you collect all data from every platform, consolidate it, and ensure no transaction is missed.

2. Misunderstanding the Basis for Capital Gains Calculation

Capital gains calculation in crypto requires special care. You must identify the original purchase price, match it to the sale price, and calculate the difference taking commissions into account. A common mistake is using an incorrect exchange rate or forgetting to document fees. Ben Or Cook's office will help you calculate profits accurately, taking every detail into consideration.

3. Failure to Distinguish Between Ordinary Income and Capital Gains

If you trade crypto at high frequency, the authorities may view you as a "professional trader" whose income is considered professional income, not capital gains. This can affect the tax rate and deductible expenses. An experienced accountant will inform you of the correct classification based on transaction frequency and scope.

4. Failure to Report Income from Mining or Staking

Many crypto entrepreneurs forget to report income from mining or staking because they think it is "passive." In reality, this is income that must be reported and can be substantial. Accurate reporting is important to avoid additional tax liabilities.

5. Incomplete or Incorrect Asset Declaration

At the end of each year, a licensed entrepreneur must declare the balance of coins in their possession. If the declaration is incorrect or incomplete, it can lead to a tax investigation. A crypto accountant will ensure that the declaration is accurate and timely.

Ben Or Cook's Crypto Advisory Process

When you choose Ben Or Cook as your crypto accountant, you receive complete guidance from the beginning to the end of the year. Below is the process:

Step 1: Initial Consultation Meeting

In the first meeting (at no cost), we learn about your crypto activities — which coins you trade, how frequently, what the scope of activity is, whether you have related expenses. At this stage, we assess what type of guidance is appropriate for you and what the costs will be.

Step 2: Data Collection and Organization

We ask you to transfer all data related to your crypto activities — statements from trading platforms, reports from wallets, receipts, and any other relevant documents. We organize the data in a structured manner so we can work with it easily.

Step 3: Accounting and Profit/Loss Calculation

We record every transaction, calculate profits and losses accurately, and identify deductible expenses. At this stage, we also manage national insurance contributions, mandatory deductions, and any other obligations you have to the authorities.

Step 4: Tax Planning

Once the data is organized, we analyze your situation and propose tax planning strategies in compliance with the law — for example, timing of transactions, loss management, or selection of an appropriate business structure.

Step 5: Annual Report Preparation and Tax Filing

Near the end of the year or at the beginning of the next year, we prepare an accurate annual report, report all income and expenses, and file the report with the tax authorities on your behalf (if you authorize us to do so).

Step 6: Ongoing Guidance and Answers to Questions

Throughout the year, we are available for questions — about a specific transaction, reporting, tax planning, or any other matter related to your crypto activities. Our service is personal and digital, so you can call or contact us easily.

Cost Comparison and Typical Ranges

The cost of crypto accountant services depends on the scope of activity, the number of transactions, the type of business operator (exempt or licensed), and the complexity of the case. Below are general ranges:

Important Note: The above ranges are general only and depend on the specific circumstances of your case. An exact cost will be determined following an initial consultation meeting where the scope of work is reviewed. Ben Or Cook Law Office offers a free initial consultation so you can understand your needs and receive an accurate quote.