From the Tax Office  with love… and a bill
Do Israelis have to pay taxes after renouncing residency?

The question of tax residency is highly relevant both for new immigrants and for long-term Israeli residents planning to relocate permanently abroad. Such a move inevitably raises critical questions: What will happen to my tax status? How should I properly terminate my residency? What steps are needed to avoid future claims from the Israeli Tax Authority?

Criteria for determining tax residency in Israel
In Israel, the primary criterion is the center of life — where your key personal and economic interests are located: family, work, business, property. Alongside this qualitative measure, there are two quantitative tests:

1. Presence in Israel for more than 180 days in a calendar year.
2. Presence for more than 30 days in the current year AND a total of over 425 days across the previous three years.

For example, if you spend 40 days in Israel in 2025, the authorities will also consider 2024 and 2023. If your total presence over three years exceeds 425 days, you may still be deemed a tax resident.

Even if you do not meet these thresholds, the Tax Authority may still classify you as a resident if you maintain substantial ties — such as immediate family, active business operations, or property ownership — in Israel.

Recent court practice

A recent ruling confirmed the Tax Authority’s position that residency is generally retained if an individual spends fewer than two years abroad. In one case, a senior executive relocated to Hong Kong under contract but returned early. The court upheld the Tax Authority’s stance, noting that Hong Kong is an offshore jurisdiction and that Israel lacks a double taxation treaty with China.

This precedent highlights the importance of considering whether your destination country has a tax treaty with Israel before relocating.

Reporting requirements
If you are abroad for over two years, the law does not require a formal residency termination report. However, Form 1348 – “Declaration of Residency” must be filed if you meet the quantitative criteria but are not a resident under the center-of-life test.

Example: you are a tax resident of another country but spend 200 days in Israel for work. You must file an annual return with Form 1348 to document your status.

• Advantage: creates an official record and reduces future disputes.
• Disadvantage: may trigger additional audits.

Failure to file can result in back taxes and penalties.

Special rules for new immigrants in Israel
New immigrants enjoy a 10-year exemption from tax on foreign income. If leaving permanently, Form 1348 is generally not required. However, if you plan to return, formalizing residency termination can help secure “toshav hozer vatik” status and related tax benefits.

Key takeaway
Before making a decision:

• Assess your true center of life.
• Calculate your days of presence over the past three years.
• File Form 1348 if required.
• Seek advice from an international tax professional, as residency status often cannot be changed retroactively, and certain benefits may be lost permanently.

Bottom Line: Terminating tax residency is not just a bureaucratic step — it is a strategic financial decision with long-term implications. Proper preparation will protect you from unexpected tax liabilities and ensure a smoother transition to your new country of residence.

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