However, for olim and returning residents who move to Israel from January 2026 onward, the exemption from reporting foreign assets and income has been cancelled. At first glance, this may appear to be a relatively modest procedural change. In practice, however, it creates what can be described as a \u201chole in the wall\u201d \u2014 a new window through which the Israel Tax Authority (ITA) can see into the foreign assets, companies, and business activities of olim.<\/p>\n
This change also comes alongside another recent development. The ITA has expanded the information required under Form 150, which now includes additional disclosure regarding non-Israeli entities held by the taxpayer. This is another example of the ITA seeking greater visibility into foreign assets and structures, even in situations where a full Israeli tax return is not otherwise required.<\/p>\n
The cancellation of the reporting exemption reflects a broader international trend toward increased tax transparency.<\/p>\n
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In 2025 there were 457 new Olim from the United States and Canada moving to Tel Aviv\u2013Yafo (credit: REBECCA ZWIREN)<\/p>\n
Tax authorities worldwide are receiving growing amounts of financial information through international reporting frameworks and automatic exchange of information agreements. As a result, maintaining a reporting exemption has become increasingly difficult and less consistent with the growing international cooperation between tax authorities aimed at improving transparency and compliance.<\/p>\n
This change significantly increases exposure to Israeli tax risks<\/a> and makes advance planning far more important than in the past.<\/p>\n The tax holiday does not protect against permanent establishment claims<\/p>\n Under Israeli tax law, a non-Israeli company may be treated as an Israeli resident company if it is effectively controlled and managed from Israel. In addition, where a foreign company has mainly passive income, and most of its shareholders are Israeli residents, it may be classified as a Controlled Foreign Corporation, resulting in attribution of income to Israeli shareholders, even if no dividends are distributed.<\/p>\n The tax holiday provisions generally protect olim and RR from Israeli taxation on income from foreign companies that they control or on income attributed under the CFC rules during the holiday period.<\/p>\n However \u2013 and this is critical \u2013 the tax holiday does not protect against claims that a foreign company has a permanent establishment (PE) in Israel.<\/p>\n