Israel · Tax regime
Ten-Year Tax Holiday for Olim Chadashim and Senior Returning Residents
THE most important change in the region for UHNW families. Amendment 168 (2008) gives new immigrants and senior returning residents a 10-year exemption from Israeli tax on foreign-source income and foreign capital gains. Amendment 272 — known as the 'Milchan Law' — was passed by the Knesset on 2 April 2024, published in Reshumot on 7 April 2024, and took effect 1 January 2026. It REPEALED the accompanying reporting exemption. The TAX exemption remains fully intact; only the confidentiality is gone. It applies to those who become Israeli residents on or after 1 January 2026; those resident before that date are grandfathered and keep the reporting exemption for their remaining benefit period. The driver was the OECD Global Forum, which found Israel non-compliant on transparency because it lacked access to information on olim and their trusts and entities, and warned the policy risked Israel being treated as a tax haven. It was NOT part of the Economic Arrangements Law.
Ten years of zero Israeli tax on all foreign income and gains remains one of the best tax regimes available to a relocating UHNW family anywhere — better than Italy's flat tax, Portugal's IFICI or Greece's lump sum, because it is a complete exemption rather than a capped or flat charge. Amendment 272 did not touch that. What it took away was the ability to enjoy it invisibly, and for many families the confidentiality was doing more work in the decision than anyone admitted.
Qualifying routes
10 years' exemption from Israeli tax on all foreign-source income and foreign capital gains, from the date of becoming an Israeli resident
Former Israeli residents who lived abroad for at least 10 consecutive years receive the same 10-year exemption
The facts
- Total landed cost
- No cost to claim — but budget materially for compliance from 2026: Israeli tax return preparation, Form 150 for foreign corporation holdings, and trust reporting where relevant
- Physical presence
- You must become an Israeli tax resident. The test is 'centre of life', with rebuttable presumptions: 183+ days in a year, or 30+ days in the year plus 425+ days across that year and the two prior. Day counts are aids only — centre of life governs.
- Family
- each individual qualifies in their own right based on their own residency start date
- Permanent residency
- Not applicable — this is a tax regime attaching to residency
- Citizenship
- Not applicable — but almost always paired with the Law of Return
- Language test
- Not applicable
- Dual citizenship
- Permitted
- Requirements
- become an Israeli tax resident for the first time, or return after 10+ consecutive years abroadfrom 2026: full annual reporting of foreign income, assets, trusts and controlled foreign companies
- The distinction that matters: the TAX exemption survives, the REPORTING exemption does not. Anyone who tells you Israel 'ended the oleh tax holiday' is wrong; anyone who tells you nothing changed is also wrong.
- From 1 January 2026 benefited individuals must file a full annual return covering foreign-source income and foreign assets even though the income remains exempt — nature, origin, geographic distribution and spousal allocation, via the new Appendix 1324א. Trust reporting applies (creation notice within 90 days; existing trusts 120 days; controlling parties from 2025), as does corporate reporting of controlling shareholders and their tax residency, plus Form 150 for controlled foreign company interests.
- Reporting is not tax, but reporting IS exposure. For a UHNW family the value of the old regime was substantially the opacity. From 2026 the ITA sees the entire foreign structure — trusts, controlling parties, CFCs — from day one. If a family's structure has legacy weaknesses, aliyah now surfaces them to a competent revenue authority.
- The trigger is your residency start date. Become resident on 31 December 2025 and you are grandfathered; on 1 January 2026 and you are not. Anyone advising on timing should have flagged this well before now.
- The acclimation-year election is now a trap: an oleh who arrived in 2025 and elects the one-year acclimation year becomes tax-resident in 2026 and thereby falls into Amendment 272, forfeiting the reporting exemption they would otherwise have kept.
- The exemption is 10 years, not forever. At year 11 you face worldwide taxation at up to 50%, full CFC rules, and an exit tax if you then leave.
- A foreign company is generally not treated as Israeli-resident merely because an oleh manages it during the 10-year period — but the ITA may now demand financial statements and reports from that company purely because a benefited individual manages it. The substantive relief survives; the confidentiality does not.
- The exemption covers foreign-source income only. Israeli-source income is taxable from day one, subject to the separate and time-limited 2026 regime.
- Israel was under OECD Global Forum pressure on transparency; this repeal is the remediation. Expect the direction of travel to remain restrictive.