In This Guide
What is Amendment 272?
Amendment 272 to the Israeli Income Tax Ordinance represents a fundamental shift in how Israel treats new immigrants from a tax reporting perspective. While the generous 10-year tax exemption on foreign income remains in place, the amendment introduces mandatory disclosure requirements that apply to all new Olim.
The Key Change
Before Amendment 272, new immigrants enjoying the tax holiday were effectively "invisible" to Israeli tax authorities regarding their foreign assets. The logic was simple: if there is no tax to pay, why report?
Amendment 272 changes this fundamentally. Now, even if you owe zero tax, you must disclose your foreign assets, income sources, and financial structure to the Israeli Tax Authority.
Before Amendment 272
- ✗No reporting required during tax holiday
- ✗Foreign assets remained private
- ✗Full exemption = full anonymity
After Amendment 272 (2026)
- ✓Mandatory reporting regardless of tax
- ✓Full disclosure of foreign assets
- ✓Exemption preserved, transparency required
Who is Affected by Amendment 272?
Amendment 272 applies to a broad category of individuals. Understanding whether you fall under its scope is the first step to compliance. If you are considering buying property in Israel, this is especially important.
1. Olim Chadashim (New Immigrants)
Anyone who made Aliyah and is currently within their 10-year tax exemption period must now file reports.
Note: This includes Olim who arrived as far back as 2016 and are still in their exemption period.
2. Toshavim Chozrim (Returning Residents)
Israelis who lived abroad for extended periods and returned also fall under Amendment 272 requirements.
Categories: Both "Regular" Returning Residents (6+ years abroad) and "Veteran" Returning Residents (10+ years abroad) are affected.
3. High Net Worth Individuals
Anyone with foreign assets exceeding ₪4,000,000 (approximately $1.1M USD) faces enhanced reporting requirements.
Includes: Real estate, investment portfolios, business interests, retirement accounts, and trust holdings.
What Must Be Reported Under Amendment 272?
The reporting requirements are extensive. Here is a comprehensive breakdown of what Israeli authorities now require:
Mandatory Disclosure Categories
Foreign Bank Accounts
- • Account numbers and institutions
- • Year-end balances
- • Interest earned (even if exempt from Israeli tax)
Investment Portfolios
- • Stocks, bonds, mutual funds, ETFs
- • Retirement accounts (401k, IRA, pensions)
- • Cryptocurrency holdings
Real Estate
- • Property addresses and values
- • Rental income generated
- • Mortgage details
Business Interests
- • Ownership in foreign companies
- • Partnership interests
- • Controlled Foreign Corporations (CFCs)
Income Sources
- • Employment income from abroad
- • Dividends and capital gains
- • Royalties and passive income
Important: Report vs. Pay
Reporting does not mean paying. You are still exempt from Israeli tax on foreign income during your exemption period. However, failure to report can result in severe penalties, loss of exemption status, and criminal prosecution in extreme cases.
The 10-Year Tax Holiday: What Changed and What Stayed the Same
There has been significant confusion about whether the famous "10-year tax holiday" is ending. Let us clarify:
Good News: The Exemption Continues
The 10-year tax exemption on foreign-sourced income for new Olim is NOT ending. You still enjoy:
- Exemption from Israeli tax on foreign employment income
- Exemption on foreign rental income
- Exemption on foreign capital gains
- Exemption on dividends and interest from foreign sources
The Change: Transparency Without Taxation
Amendment 272 introduces a new concept: "Exemption with Disclosure". You maintain your tax benefits but must now provide full transparency.
This aligns Israel with international standards (CRS, FATCA) and addresses concerns about the use of the tax holiday for aggressive tax planning.
Income Limit Considerations for 2026
While the exemption remains, there are new considerations:
₪1,000,000 threshold: Income above this may trigger enhanced scrutiny
Passive vs. Active: Different documentation requirements apply
Adaptation Year: Still available for the first year of Aliyah
Key Dates and Deadlines for 2026
Deadline for filing 2025 tax year reports under Amendment 272. This is the first year the new requirements apply.
Extended deadline available for those using authorized tax representatives. We strongly recommend using this option.
End of voluntary disclosure period for unreported assets from previous years. After this date, penalties increase significantly.
Penalties for Non-Compliance
The Israeli Tax Authority has implemented serious penalties for Amendment 272 violations:
Penalty Structure
Accumulating monthly penalty for each month of delay
Per omitted asset category
Plus potential criminal prosecution
Retroactive taxation of previously exempt income
Special Considerations for American Olim
American Olim face unique challenges due to the U.S. citizenship-based taxation system. You are subject to both U.S. and Israeli reporting requirements.
U.S. Obligations That Continue
FBAR (FinCEN 114)
Annual report of foreign bank accounts over $10,000 aggregate. Deadline: April 15 (auto-extended to October 15).
FATCA (Form 8938)
Statement of foreign financial assets for those meeting thresholds ($200,000-$400,000 depending on filing status).
PFIC Reporting
Israeli mutual funds and ETFs are often classified as PFICs, requiring Form 8621 and potentially punitive taxation.
Form 1040 + Foreign Tax Credits
Annual U.S. tax return with foreign income reporting, though credits usually eliminate double taxation.
The US-Israel Tax Treaty
The US-Israel Tax Treaty helps prevent double taxation, but navigating both systems requires expertise. Israeli tax exemptions do not automatically apply to U.S. obligations. Professional coordination between Israeli and U.S. tax advisors is essential. Learn more about our family wealth management services.
How to Prepare: Step-by-Step Action Plan
Gather Documentation
Collect year-end statements from all foreign banks, brokerages, retirement accounts, and real estate holdings. Request official valuations where needed.
Calculate Asset Values
Convert all values to Israeli Shekels using the official Bank of Israel exchange rate for December 31 of the tax year.
Identify Income Sources
Categorize all foreign income by type: employment, rental, dividends, interest, capital gains. Each category may have different forms.
Engage Professional Support
Amendment 272 compliance is complex. Working with accountants and lawyers who specialize in Olim taxation is strongly recommended. Contact RealFix for a free consultation with our team of 5 CPAs and 7 attorneys.
File Before Deadlines
Submit all required forms to the Israeli Tax Authority. Use the extended deadline via authorized representative if needed.
Frequently Asked Questions
Need Help with Amendment 272 Compliance?
RealFix Finance is a One Stop Shop with 5 CPAs and 7 attorneys specializing in both Israeli and international taxation. We have been helping Olim navigate Israeli bureaucracy since 1999.
- 100% client-side representation
- Payment based on success only
- Expertise in US-Israel cross-border taxation
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