For Israelis

How tax residency works

Israel taxes residents on worldwide income and foreign residents only on Israeli income. Residence turns on your centre of life (merkaz chayim): where your permanent home is, where your family lives, where you work and run your business, and where your economic and social ties are.

Two day count presumptions support the test. You are presumed resident if you spend 183 days or more in Israel in a tax year, or 30 days or more in the year and 425 days or more across that year and the two before it. Either you or the Israel Tax Authority can rebut them, and you can still be resident without meeting either.

There is also a positive route out, often called the 2 plus 2 test: you are a foreign resident if you spend at least 183 days abroad in each of two consecutive years and your centre of life is not in Israel in the two years that follow. A 2025 draft bill would replace much of this with fixed day count tests based on 75 days a year and weighted days over three years. It was still a draft, and we confirm the position before you plan around it.

For people moving the other way, olim (new immigrants) and veteran returning residents keep their 10 year exemption on foreign income, but those arriving from 1 January 2026 must now report that income. A temporary 2026 law also exempts part of the Israeli earned income of people who arrived or returned between 5 November 2025 and the end of 2026, with caps from NIS 600,000 to NIS 1 million a year. Leaving again in 2028 or 2029 can cancel that benefit.

Leaving properly

Leaving Israel properly means moving your centre of life, documenting it, and dealing with the exit tax in the year you go.

1. 01

   Fix the date and the evidence

   Choose a clear departure date and move the core of your life with you: home, family, work and memberships. Keep leases, school records and a residency certificate from your new country, because the burden of proof is yours.

2. 02

   Value your assets

   Obtain valuations of shares, companies and other assets as at the day before you cease residency, because that is when the deemed sale happens.

3. 03

   File with the Israel Tax Authority

   Report the year you leave on Form 1301, the annual return, and make your exit tax choice. In any later year in which you meet a day count presumption but claim to be a foreign resident, attach Form 1348, the residency declaration, with your supporting evidence.

4. 04

   Tell Bituach Leumi

   The National Insurance Institute decides residence separately, under its own centre of life test. Notify it of your move abroad, because its view governs contributions, health insurance and later benefits, and the Tax Authority looks at it too.

5. 05

   Update your Israeli accounts

   Give Israeli financial institutions a foreign resident declaration so that Israeli income is withheld at the correct rates.

Exit tax, property and investments

Israel’s exit tax, in section 100A of the Income Tax Ordinance, treats your assets as sold the day before you stop being resident. Capital gains on shares are generally taxed at 25%, or 30% for a shareholder holding 10% or more. A 3% surtax applies to annual income above NIS 721,560 (the 2026 figure), with a further 2% on capital income above that level.

You choose when to pay. You can pay on the deemed gain when you leave, or defer until you actually sell, which is the default. On a deferred sale, Israel taxes the share of the real gain that matches the time you held the asset as a resident, on a straight line basis. The Finance Minister has not issued detailed implementing rules, so your accountant confirms the approach and the valuations before you go.

Israeli property stays within Israeli tax after you leave: rent and gains on sale remain taxable in Israel. Israeli source income in general continues to be taxed, through withholding or a return, whatever your residence.

Pensions and social security

Israeli pension funds, provident funds (kupot gemel) and study funds (keren hishtalmut) can stay in Israel when you leave. The money is meant to stay until retirement age, and withdrawing it early triggers a 35% tax under section 87 of the Ordinance. The Tax Authority resists treaty claims against that charge, so leaving the funds in place is usually the calmer option.

Bituach Leumi, the National Insurance Institute, applies its own residence test. If it stops treating you as resident, your public health insurance rights end, and if you return you face a waiting period of up to six months unless you pay a set amount (NIS 16,860 in 2026).

The Bituach Leumi old age pension needs a minimum insurance period, such as 60 months in the ten years before pension age or 144 months in total. Payment abroad depends on whether your new country has a social security convention with Israel. Where there is none, the pension is generally paid abroad only if you reached pension age while resident and meet minimum residence and insurance periods, so review your record before you leave.

Dual citizenship

Israel allows dual and multiple citizenship, so a second residency or passport does not affect your Israeli nationality. You must still enter and leave Israel on an Israeli passport.

Renouncing is possible but not simple. It needs the Interior Minister’s consent, and your military status and Interior Ministry records must be settled first. Until the renunciation is approved, you remain an Israeli citizen.

The practical issue is travel. A number of countries, including Malaysia, Kuwait, Lebanon and, since 2025, the Maldives, do not admit Israeli passport holders. Israeli law also restricts visits to states it classes as enemy states, whichever passport you use. The residency countries we suggest below all admit Israeli passport holders, and Panama includes Israel on its friendly nations list.