An amendment to the tax Laws in Israel, introduced on April 7, 2024, implementing new reporting obligations for New Residents and Veteran Returning Residents ("Exempt Individuals") and for certain Trustees with respect to foreign arrangements in case they have connections to Israel.

It should be noted that the Amendment does not modify the tax exemptions provided to Exempt Individual for the 10-years period. However, Exempt Individuals who will become and Israeli resident from January 1, 2026, will now have to report their exempt income on an annual basis.

The amendment Law includes the following:

Abolish of the reporting relief for Exempt Individuals: Exempt Individuals, who arrided to Israel after January 1, 2026, will have to file annual tax returns, and report their exempt income and gains. This will also apply to an Israeli Settlor of a Trust, who is an Exempt Individual. Furthermore, foreign entities, owned by Exempt Individuals, will be required to maintain books in accordance with the General Accepted Accounting Principles.
As noted, the amendment does not change the tax exemptions on foreign income and assets for a 10-years period.

Disclosing certain foreign entities: the Assessing Officer may request, in writing, tax returns and financial statements from foreign entities which are assumed to be controlled and managed by an Exempt Individual.

Disclose of Beneficial Ownership: An Israeli Trustee in a foreign Trust which does not have reporting obligations in Israel, will submit a notice, within 90 days from the date of establishing the Trust, with details about the beneficial owners of the Trust and their tax residency (the "Notice"). Any change of beneficial owner should be reported by April 30 of the following year. The Israeli Tax Authority will publish a special form for that purpose. The Notice will apply as of tax year 2025 and onwards.

The definition of an Ultimate Beneficial Owner was amended in order to comply with international standards.

Information provided by Israeli Financial Institutions: The Amended Law enables Israeli financial institutions to share the identification details of a client, including Exempt Individual, to the Israeli Tax Authority, for the later to share with other Taxation Authorities in accordance with international agreements Israel is part of. This part is applicable from October 1, 2024.

Our firm have a lot of experience with the New Residents Tax Haven regime and we will be happy to be at your disposal if you have any questions.