Concept
For decades Israel has drawn wealthy newcomers with one of the world's most generous welcomes: anyone who becomes a tax resident of the country for the first time, or returns after a long absence, is exempt for ten years from tax on income from foreign sources. From 2026 the picture shifts on two fronts at once. The ten-year benefit stays in place, but the exemption from reporting is withdrawn for new immigrants, and alongside it a separate, temporary incentive has appeared — a zero rate on Israeli employment income itself. What any given person receives is decided by the date on which they move their center of life to Israel.
Where the Exemption Came From
The idea is not new. The regime took its modern shape in 2008: for the state's 60th anniversary, Amendment No. 168 to the Tax Ordinance was adopted, putting new immigrants and veteran returning residents (vatikim) on an equal footing and giving both categories ten years of full exemption on foreign income together with exemption from reporting. The aim was plain — to bring home both capital and the people who carried it out of the diaspora, without frightening them with Israeli tax on what they had built abroad. For a decade and a half the regime worked exactly this way and became one of the arguments for the aliyah of wealthy families. The 2024–2026 recalibration was driven by international pressure on transparency and by budgetary considerations.
Ten Years Without Tax on Worldwide Income
The mechanics are simple. Anyone who becomes a tax resident of Israel for the first time, or returns after a long absence, receives a ten-year exemption from Israeli tax on income and capital gains from sources outside the country. Dividends, interest, gains on the sale of foreign assets, income from a foreign business and most foreign pensions go untaxed for all ten years. The benefit does not depend on the amount and runs from the date the person became a resident.
Who Qualifies
There are two categories. The oleh hadash is someone becoming an Israeli tax resident for the first time in their life. The toshav hozer vatik, the "veteran returning resident," is an Israeli who has lived abroad for at least ten consecutive years; they get exactly the same ten-year package. There is also a third, more modest figure — the ordinary toshav hozer, back after six years abroad: they receive targeted reliefs for a few years, but not the full ten-year exemption.
Everything hinges on the date from which a person counts as a tax resident. Israel fixes it by "center of life": where the family, the home, and the main economic and personal ties are. The formal date of repatriation and the date of tax residency can diverge, and the tax authority is entitled to dispute the chosen day — and on that day depend both the start of the ten-year clock and the reporting rules a person falls under.
What Changed in 2026
Until recently the benefit also covered reporting: for all ten years an immigrant could avoid declaring foreign income and assets altogether — this is precisely what made Israel a convenient quiet harbour for private capital. Amendment No. 272 to the Tax Ordinance, published on 7 April 2024, removed the concession, but not for everyone: only for those who become residents from 1 January 2026 onward. The trigger was an audit by the Global Forum on Transparency and Exchange of Information (a body under the OECD), which found Israel non-compliant with transparency standards — information on the income and assets of new immigrants stayed outside the automatic exchange. New olim now file returns and disclose foreign income, assets, trusts and controlled foreign companies — although the tax itself on that income is still not levied for all ten years. Those who managed to immigrate before the end of 2025 keep the previous reporting exemption.
New Incentive for 2026 Immigrants
In parallel, Israel has launched a separate, temporary incentive that exempts Israeli employment income itself. Olim and returning vatikim who became residents in the window from 5 November 2025 to 31 December 2026 receive a zero rate of income tax on active income from Israeli sources — salary and business income — within an annual ceiling. The ceiling changes year by year: about 600,000 shekels in 2026, up to 1 million in 2027–2028, and tapering off toward 2029–2030 (the exact figures and rates for the later years should be verified against the final text of the 2026 budget law). Passive income — interest, dividends, rent, capital gains — does not fall under the incentive. It works on top of the classic ten-year exemption and is aimed at doctors, engineers and developers whose Israeli earnings will be substantial.
How the Regime Is Used in Practice
In practice the ten-year window is used to calmly restructure foreign assets before they enter the Israeli tax orbit. Holdings and trusts are reassembled, asset values are locked in, and decisions are made about which income to recognise now and which to defer. A separate storyline is the exit tax of the country a person is leaving: for those leaving Russia this is sensitive, and the exit is worth coordinating in advance.
From 2026 the work of disclosure has been added to this. The tax exemption remains, but full reporting has appeared, so a move is prepared not only around the ownership structure but also around a set of returns — on foreign income, trusts and controlled companies. The more complex the foreign portfolio, the earlier it makes sense to sit down to this preparation: agreeing a position with the tax authority after the fact is harder.
Israel Among Other Regimes for New Residents
It helps to measure the Israeli benefit against its neighbours in the market for mobile capital. In April 2025 the United Kingdom closed the classic non-dom regime and replaced it with the four-year FIG regime. Italy keeps its flat tax for new residents, Greece and Cyprus offer their own non-dom regimes, and Switzerland has its lump-sum tax based on expenditure. Against this backdrop Israel's ten years of full exemption on foreign income remain generous, and their price is now transparency before the tax authority.
This material is of an expert-analytical nature and does not constitute individual legal or tax advice.