New Voluntary Disclosure Procedure (Israel, August 2025)
On August 25, 2025, the Israeli Tax Authority published a new Voluntary Disclosure Procedure. At the same time, an operational directive was issued, detailing the process of submitting applications and reviewing requests.
Why is this procedure important?
It allows taxpayers who have violated tax legislation to correct their reports and submit accurate data. In return, the Tax Authority, in coordination with the State Attorney’s Office, guarantees that, if the program’s conditions are met, no criminal proceedings will be initiated against the applicant.
Key provisions:
- Valid until August 31, 2026.
- Full and honest disclosure must be voluntary.
- No ongoing investigations: at the time of submission, there must be no audits or investigations against the applicant (or their spouse), and the Tax Authority must not already possess related information.
- Anonymous submissions are not permitted.
- Use of information: if the request is rejected, under certain conditions, the information will not be used in criminal or civil proceedings.
“Green Route” (simplified procedure):
The updated version outlines categories generally excluded from income tax cases:
- Foreign assets: balances in foreign financial institutions as of 31.12.2024 below ₪4 million, with no new transfers/deposits above ₪250,000 during the disclosure period.
- Rental income: if total annual rental income does not exceed the statutory limit, there is no requirement to open a tax file.
- Digital assets: income not exceeding ₪500,000 for the entire period, and total fair value of assets as of 31.12.2024 below ₪1.5 million.
Additional notes:
The circular also defines rules for:
- offsetting losses reported under disclosure;
- limitations on expense deductions and VAT refunds for professional fees.
Important:
This overview is provided for informational purposes only. It does not replace professional advice and is not an official legal text. Only the original legislative acts and official instructions have binding force.
TOPICS > CPA Israel, CPA Services in Israel, CPA Services in Israel Financial Reporting, Income Tax in Israel, Israel taxes disclosure, Roeh Heshbon, Tax Reporting in Israel