Summary of tax benefits for new immigrants and returning citizens.

tax advantages Cabinet Expert Comptable Dray & Dray
The main benefits for new immigrants to Israel and returning residents, who became citizens on January 1, 2007, are as follows:
  • 10 years' exemption from tax on foreign-source income (i.e. income from outside Israel).
  • 10-year exemption from reporting foreign-source income.
  • For 10 years, a company established abroad and owned by an "Olé" or "long-term returning resident" will not be considered a resident company in Israel.
  • Possibility of being considered a foreign resident for tax purposes, for one year from arrival.
  • 3.5 years' entitlement to tax relief, with possibility of extension.

Who qualifies for tax benefits?

  • "Le Olé"The New Immigrant.
  • "The long-time returning resident"- Persons who have returned to Israel after living continuously outside Israel, for a period of 10 years after ceasing to be Israeli residents. These people will be considered "Olé".
  • Point measurement - People who returned to Israel during the years 2007-2009 are considered "Long-term returning residents", even if they have lived continuously outside Israel for at least 5 years (instead of 10).

Tax-advantaged income :

  • Passive income - 10-year exemption on dividends, interest, rents, royalties and pensions generated by assets held abroad.
  • Capital gains - 10-year exemption on capital gains arising from the alienation of assets located abroad. Extended to assets located abroad, acquired after becoming an Israeli resident.
  • Business income - 10-year exemption on business income generated by assets held abroad.
  • Professional and labor income - 10-year exemption on salaries and income from self-employed activities from abroad.
Applies to businesses and professions acquired or begun before or after becoming an Israeli resident.

Adaptation option :

A one-year adjustment period, starting from arrival in Israel, is granted upon request, allowing the individual to choose not to be considered an Israeli resident for tax purposes, during this one-year period. The application for the adjustment year must be submitted within 90 days from the date of arrival in Israel.

Foreign companies owned by "Olim" and long-term returning residents:

A company established abroad and owned by an "Olé" or "long-term returning resident" will not be considered an Israeli company for tax purposes for a period of 10 years, and will therefore be exempt from taxation in Israel during this period, on foreign-source income (i.e. income from countries outside Israel).

Tax relief (Nekoudote Zikouye):

All Israeli residents are entitled to two points of tax relief (a reduction of 430 NIS per month on their tax liability), plus an additional 0.25 points for a working man and 0.75 points for a working woman. See also Who is a resident of Israel? Working olim are entitled to additional points in addition to this, for a period of three and a half years following their Aliyah. This benefit can be extended during their compulsory military service and during their studies at university or an institution of higher learning. Please apply for this benefit by filling in the relevant paragraphs of Form 101 (filled in at the time of hiring and at the beginning of each year, provided by your employer):
  • For the first 18 months - 3 points of additional tax relief (reduction of NIS 645 per month or NIS 11,610, for the first 18 months).
  • The following twelve months - 2 additional points of tax relief (reduction of 430 NIS per month or 5,160 NIS per year).
  • And for the following twelve months - 1 additional point of tax relief (reduction of 215 NIS per month or 2,580 NIS per year).
Additional discounts are available for parents with young childrensingle-parent families, demobilized soldiers, and for a number of many other reasons. This guide for the new immigrant has been published by the tax authorities in Israel, and can be found in full at this link.



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