Israel: Goodnight 2017…

Last Updated: 4 January 2018
Article by Ariella Dreyfuss

It has certainly been an interesting 2017 in the Israeli Hi-Tech world, here is a rundown of 5 highlights, in case you missed them.

Autonomous Cars and Drones

This year's acquisition by Intel of Israeli autonomous vehicle technology company Mobileye for $15.3 billion was not only the largest tech deal in Israel's history, but it also propelled Israel into the limelight in the autonomous cars space. Israel, home to a plethora of startups active in the field (from GPS accuracy and sensors to cyber security), is now competing with the big boys in Detroit and Germany as the leader in the industry.

Doing its bit to help, the Ministry of Transport opened the new Road 531 exclusively for companies conducting trials for self-driving cars. Although there has been criticism that these pilots should be tested on public roads, this decision shows the government's interest in supporting the Israeli hi-tech sector in the development of autonomous cars.

In a similar vein, in March, the Civil Aviation Authority of Israel (CAAI) made history and headlines when it made the unprecedented move of granting an Israeli startup the first right to fly fully automated unmanned commercial drones in Israel's airspace.

Airbotics become the first company in the world to receive such kind of approval – putting Israel front and center of the global drone industry.

Bitcoin and Cryptocurrencies

Although it was born in 2009 (when 1 Bitcoin was worth 5 cents), 2017 was the year that the first cryptocurrency – Bitcoin – exploded into the main stream market, rocketing in value to almost $20,000 per coin and then falling.

The jury is still out as to whether cryptocurrencies are a bubble, a money-laundering tool or have intrinsic value, and in Israel it has yet to be decided whether they constitute an asset or a currency, with both the Israeli Tax Authority (ITA) and Israel Securities Authority (ISA) considering their position.

In January, the ITA published a draft circular which suggested that the ITA was leaning towards defining these "tokens" as assets. For individuals this is not great news, as if this position is adopted, any profit generated on their sale will be taxable as a capital gain (25%), whereas if the "token" was classified as a currency they would be exempt. On the other hand it is believed that the ITA is contemplating concessions for reporting such capital gains, from the current monthly reporting obligations to the ITA to every 6 months or a year.

The ISA is also in deliberations and has yet to decide whether digital currencies constitute a security for the purpose of Israel's security regulations. We imagine the ITA and ISA are conferring on this matter. We also imagine that the ISA will take a similar position to that of the US Securities and Exchange Commission (SEC), i.e. "What’s in a name?" Calling a cryptocurrency a "coin", does not render it a currency rather than a security, the nuances of each "coin" need to be analyzed. In other words, while some cryptocurrencies such as Bitcoins that are used like fiat money may be viewed as a currency, other tokens which offer the public a right in the issuing company or its technology, would be viewed as a commodity and subject to securities regulations.

The cryptocurrency bug has certainly caught on, and if December's rumors are to be believed the Israeli Ministry of Finance and the Bank of Israel are looking into an official Israeli state cryptocurrency, following in the wake of Sweden, Japan, and China, which have announced an interest in doing the same.


On a similar subject, the number of Initial Coin Offerings (ICOs) (the first of which was held in 2013) experienced a massive boom in 2017 with some raising serious capital (Filecoin raised $257 Million and Tezos raised over $232 million).

In brief an ICO is the means by which startups (typically those engaged in blockchain technology) raise funds, not in consideration for shares, but by selling their own cryptocurrency (in the case of Tezos, the Tez (XTZ)). The original idea was that a startup could crowdsource the public and sell its digital "tokens" in exchange for legal tender or other more established cryptocurrencies, while bypassing both the regulations applicable to securities as well as the necessity to grant any rights in their company, for example voting and dividend rights.

The question however was raised again, is it a scam?

China's answer was to ban ICOs and the SEC ruled that if the "tokens" being offered constituted commodities, the relevant ICO would be subject to federal securities regulations. Singapore followed the SEC's lead and it is expected that Israel will follow suit. The ISA established a committee to examine the applicability of domestic securities laws to ICOs which is scheduled to give its opinion shortly, and again the expectation is, if it quacks like a duck...

Data Protection

With data being equated to oil and power in today's world, privacy and data protection has been on everyone's lips.

The amount of "bits" being processed on us to create actionable intelligence is staggering, and the regulators are out in force seeking to protect our personal information.

While, the new European General Data Protection Regulations (GDPR) which will come into force in May 2018 and its frightening fines have overshadowed local legislation, it should be noted that 2017 saw the introduction of Israel's new Protection of Privacy Regulations (Data Security) 2017. These Israeli regulations will also come into force in May 2018 and address the security requirements and procedures to be adopted by anyone who owns, manages or maintains a database in Israel. The regulations classify databases into four levels, each subject to increased security requirements, and provide when a data breach is to be notified to the Israeli Law, Information and Technology Authority (ILITA) and when to data subjects.

While this transparency on data breaches is commendable, we imagine that class actions are waiting in the wings.

Earnout Payments

More often than not, upon a sale of a company, part of the consideration is held back and payable upon, and subject to, achievement of certain milestones (for example, development of technology, achievement of a sales targets or profits etc.) This is particularly true in early hi-tech exits, where the underlying technology is not always ripe or proven.

However, to date, the ITA's formal position was to tax the sellers for the entire consideration on the date of signing the sale agreement. If the contingent payments were never paid (or not paid in full) the seller was then faced with the uphill battle of seeking reimbursement from the ITA for the applicable portion of the tax already paid at signing.

Thankfully, it seems the ITA has had a change of heart. According to its draft circular published in November, the ITA is considering splitting the tax due on the sale. The tax will now only become payable when the relevant portion of the consideration is actually paid to the sellers, or becomes certain, all subject to the prior approval of the tax assessor.

If this position is formally adopted by the ITA, it will mean that sellers will have less tax liability and more cash to play with on day one.

Now bring on 2018!

Originally published on the "TOI website"

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions