Increased transparency versus lower taxes: olim weigh options

“In this world, nothing can be said to be certain, except death and taxes,” Benjamin Franklin famously observed. Yet for those contemplating aliya, taxes have now become a matter of choice. 

Israel’s new tax incentives, announced last week in the state Budget, offer olim and returning residents who move to Israel in 2026 unprecedented relief, not only on their foreign income, but also on their Israeli income. However, there is a sting in the tail: those arriving after 31 December 2025 will be required to make full financial disclosure of all their worldwide assets. The new tax incentives still need to be passed by the Knesset, and the details could be subject to change and internal negotiation. 

In a single policy shift, Israel has transformed the fiscal calculus of aliya. The difference of just a few months could define one’s financial reality for the next 10 years. 

Those who make aliya in 2025 will retain the existing framework – a 10-year exemption from Israeli tax on all foreign income such as overseas dividends, interest, and rental income. Crucially, they will also preserve the right not to report offshore assets to the Israel Tax Authority for 10 years. Under this model, foreign investments; trusts; bank accounts; properties; and business interests remain private. No forms. No filings. No questions asked. 

From 1 January 2026, that world ends. New immigrants and returning residents will, in addition to the 10-year exemption on foreign income, enjoy an extraordinary two-year exemption on Israeli-source earnings. Thereafter, they will benefit from a reduced tax rate – 10% in 2028; 20% in 2029; and 30% in 2030 – on Israeli income up to NIS 1 million (R5.3 million). 

Finance Minister Bezalel Smotrich calls this a “revolution” in immigration policy. For professionals earning substantial Israeli income, the savings could indeed be transformative. A new immigrant earning NIS 600 000 in 2026 would save more than NIS 150 000 in tax in the first year alone. 

Yet this revolutionary benefit comes with a revolutionary cost. For decades, Israel uniquely allowed new immigrants to avoid reporting overseas holdings. Under pressure from the Organisation for Economic Co-operation and Development (OECD) to comply with global transparency standards, that exemption will now end. 

All new immigrants and returning residents arriving after 31 December 2025 will be required to file annual Israeli tax returns disclosing their global income and assets, including foreign companies, trusts, and cryptocurrencies. The Israel Tax Authority will gain unprecedented visibility into structures previously beyond its reach. 

This isn’t merely bureaucratic. Under the OECD’s Common Reporting Standard, Israel can now automatically exchange such information with other jurisdictions. The tax authority will also be able to question where income is truly generated, and whether foreign entities are effectively managed from Israel, and thus taxable there. 

For individuals with substantial foreign wealth or complex offshore structures, making aliya before year-end preserves 10 years of financial privacy while retaining the foreign-income exemption.  

As Sartre observed, we are our choices. The choice to move to Israel in the months ahead will define the financial dimension of your aliya for a decade. There is no one-size-fits-all solution. Expert advice tailored to your personal circumstances, financial complexity, earning potential, and values around transparency and privacy is essential. 

One thing is certain: if you are considering making aliya, you must act quickly. The window for financial privacy closes on 31 December 2025. What begins on 1 January 2026 is an entirely new paradigm – of transparency and disclosure, balanced against unprecedented tax benefits. 

• Michael Kransdorff is an international tax practitioner writing on behalf of the Institute of International Tax and Finance. Visit: https://www.intltax.org/