Tax Updates
Property Tax ("Mas Rechush") Returns: The 2026 Revolution in Vacant Land Taxation
Economic Efficiency Bill Draft
Global Investors: Significant Easing of Withholding Tax on Transfers Abroad
Israel Tax Authority (ITA) – Professional Division
New Tax Incentives for New Immigrants and Returning Residents: A Boost for Aliyah in 2026
Israeli Ministry of Finance
Reform in Taxation of Small Businesses – Update on Regulations, Tax Coordination, and Year-End Highlights
Elyashiv Maman, CPA Director of National Unit for Taxation and Transportation & Project Manager "Small Business"
Taxation of Investment Funds: A Tax Revolution for High-Tech?
The Ministry of Finance and the Israel Tax Authority
Is a New Immigrant Entitled to a Tax Benefit Even in Case of Delayed Apartment Delivery?
22899-10-22
Israel's High-Tech Tax Revolution: A Comprehensive Reform to Boost Innovation and Investment
The Ministry of Finance, the Tax Authority and the Israel Innovation Authority
The Complete Guide to Offsetting Capital Losses – Rules, Pitfalls, and Opportunities
Income Tax Circular 10/2025
Tax Ruling as a Binding Contract: Court Rules Israeli Company Liable for Tax on Sale Performed by Foreign Entity
71029-01-20
Developments in Income Tax Regulations: Expected Changes for New Immigrants and Veteran Returning Residents
Income Tax Regulations
Key Definitions
The Income Tax Regulations (Exemption from Filing a Return), 5748-1988, define key concepts such as "Rental Income," "Foreign Income," and "Salary."
- Rental Income: Defined as income upon which tax was paid under Section 122 of the Ordinance, and the amount of which does not exceed the limit set in Appendix B.
- Foreign Income: Income generated outside of Israel, up to the amount set in Appendix D, upon which a tax advance was paid.
- Salary: Income the amount of which does not exceed the limit set in Appendix A, and from which the full applicable tax was deducted at source.
Exemption from Filing a Return
The regulations stipulate that an individual Israeli resident shall be exempt from filing an annual tax return if their entire income in the tax year was derived from the sources detailed in the regulations. These sources include salary, rental income, foreign income, foreign pension income, interest income, securities income, renewable energy income, or additional income, or a combination thereof.
Exceptions to the Exemption
Despite the general exemption, there are several exceptions. For example, the exemption shall not apply to:
- Controlling shareholders in a company.
- Individuals whose income includes the income of a spouse without the possibility of separate calculation.
- Individuals holding rights in a foreign resident entity or foreign assets exceeding a certain amount.
- Individuals liable for Surtax (Additional Tax) under Section 121B of the Ordinance.
Expected Changes Regarding Section 14
The latest amendment to the regulations focuses on significant changes concerning Section 14 of the Income Tax Ordinance, which deals with New Immigrants (Olim Chadashim) and Veteran Returning Residents.
Effective January 1, 2026, material changes are expected to come into force regarding the reliefs granted to these groups specifically concerning the exemption from filing a report.
Background to the Change
Section 14 of the Ordinance grants significant tax benefits to New Immigrants and Veteran Returning Residents, including a tax exemption on certain income generated outside Israel for ten years (the "Aliyah Tax Holiday"). The amendment to the regulations reflects a trend of reducing these administrative reliefs.
Details of the Change
The amendment repeals sub-regulations 3(c) and 3(d), which granted special exemptions from the duty to file a report to New Immigrants and Veteran Returning Residents. This means that from 2026 onwards, these groups will be subject to the same rules that apply to all Israeli residents regarding the obligation to file an annual report.
Expected Implications
This change is likely to increase financial transparency and expand the Tax Authority's information base regarding the income of New Immigrants and Veteran Returning Residents. On the other hand, it may reduce Israel's attractiveness for foreign investors and individuals considering making Aliyah or returning to Israel.
Importance of Preparation
In light of the expected changes, it is recommended that New Immigrants, Veteran Returning Residents, tax consultants, and accountants prepare for these changes in advance. This includes a deep understanding of the new requirements and adjusting tax strategies accordingly.
Conclusion
This amendment to the Income Tax Regulations marks a significant shift in tax policy towards New Immigrants and Veteran Returning Residents. It reflects the global trend of increasing financial transparency and uniformity in reporting requirements. However, it is important to monitor further developments on this issue, as there may be changes or additional clarifications before the amendment enters into force in 2026.
New Tax Ruling Expands Financing Options for Israeli Technology Companies
Tax Ruling (No. 24/1175)
Online Business Registration - A Digital Revolution for Dealers and Representatives
Senior Deputy Director General of Customer Service - Israel Tax Authority
The Tax Authority Steps Up Fight Against Tax Evasion in Real Estate Sector
Transparent Reporting: New, Returning Residents, and Companies Will Also Report
Proposal to Amend the Israeli Real Estate Taxation Law: Potential Impacts on the Israeli Housing Market
New tax benefit for owners of individual housing units: Section 122(f) of the Income Tax Ordinance
Amendment 264 to the Income Tax Ordinance
When will the assessor classify a debt between companies that has a special relationship, as additional income from interest according to sections 3(j) and 2(4) of the ordinance?
5157912-20
An apartment purchased with inheritance money
Taxation Decision 3342/21
Does a distinction exist between current income and income from the sale of fixed assets for the purpose of taxing a financial institution in corporate income tax?
55757-01-18
Partial recognition of expenses listed in disputed (fictitious) invoices by the tax authority
ע"מ 8862-12-16
What is the VAT due date for a combination transaction in real estate?
53560-11-21
When will it be possible (if at all) for the tax authority to provide information to an external consultant under section 105 of the real estate taxation law?
59579-02-11
How to distinguish between a payment for the employer's convenience and the employee's convenience
24090-01-17
When is a fine or financial penalty recognized as an expense, if at all?
4004/22
Does a dividend received by a shareholder, constitute part of the consideration for the sale of the shares?
11758-01-21
What is the deadline for issuing a credit notice to the tax authority for a bad debt?
3498/21
What is a "Household Company" and what is the tax regime applicable to it?
49880-06-15
Should an investment in a company that was made by purchasing preferred and, ordinary shares be considered as a single asset, which is sold as a single unit in the context of the sale of the shares by the buyer?
44520-03-18
How to Determine Whether a Property Is a "Residential Apartment" or "Land" for the Purposes of Purchase Tax?
25210-02-21
Reservists will receive their National Insurance benefits for their military service at the beginning of November, immediately and not at the end of the service period.
The United States will grant an extension to Israeli residents for filing their annual tax return.
The opportunity to submit applications for a relief grant for evacuated residents of the Gaza envelope has opened.
7 must-know rules on how to offset capital losses on securities in Israel and maximize your tax benefits
The Two-Step Process for Determining the Tax Treatment of Non-Compete Payments:
3 Frameworks for Taxing Transactions in Negotiable Documents and Securities:
4 Benefits of the new Israel's Knowledge-Intensive Industry Encouragement Law
Tax Rate for Dividends Paid under Section 102 of the Income Tax Ordinance:
Tax Exemption on Capital Gains from Securities Sales in Israel: Insights for Non-Residents
Classification of compensation for tax purpose
To classify the taxpayer's compensation, it must be compared to the reason for which it was received. If the compensation is paid from taxable income as defined in Chapter B of the Income Tax Ordinance (withholding rate of up to 47 percent) or Chapter E of the Ordinance (income from capital gains). If the goal of the compensation is to compensate the taxpayer for the loss of the source of income rather than for the revenue from daily activities, it will be taxed under Chapter E of the Ordinance (Capital Gains).