Inheritance Tax in Israel: What Foreign Heirs Need to Know
Israel abolished inheritance tax in 1981 — but there are still real estate taxes and other levies that affect foreign heirs.
Legal Topic
Tax & Finance Law in Israel
A complete resource for foreign nationals and international investors — income tax, property taxes, VAT, double taxation treaties, and new immigrant exemptions.
Get Legal Help →Overview: Taxation in Israel for Foreigners
Israel operates a worldwide income tax system for residents: Israeli residents are taxed on their worldwide income. Non-residents are taxed only on income earned from Israeli sources. Determining residency — and therefore tax exposure — is a critical first step for any foreigner with financial interests in Israel.
Key Israeli taxes that affect foreign nationals include: income tax on wages, rental income, and business profits; purchase tax (mas rechisha) and betterment tax (mas shevach) on real estate transactions; capital gains tax on securities and other assets; and VAT at 17% on commercial transactions.
New immigrants (olim) receive substantial tax exemptions: a 10-year exemption from Israeli tax on foreign-source income, and various other benefits. Israel has double taxation treaties with over 50 countries, which can significantly reduce the overall tax burden for cross-border situations.
What You'll Find in This Section
Key Guides
Israeli Income Tax for Non-Residents: A Practical Guide
When does a foreigner become liable for Israeli income tax? How are different types of income taxed, and what exemptions apply?
New Immigrant Tax Benefits in Israel: The Full 10-Year Exemption
New olim receive a 10-year exemption on foreign-source income. This guide explains what qualifies, the mechanics, and how to claim the exemption.
Frequently Asked Questions
Non-residents pay Israeli income tax only on income derived from Israeli sources — such as wages for work performed in Israel, Israeli rental income, and capital gains on Israeli assets. Residents are taxed on worldwide income. Tax residency is determined by a "centre of life" test.
Israeli income tax is progressive, ranging from 10% on low income to 50% on income above NIS 698,280 per year (as of 2024). Capital gains are generally taxed at a flat 25% rate (or 30% for substantial shareholders).
Israel has tax treaties with over 50 countries including the US, UK, Germany, France, Canada, Australia, and others. These treaties determine which country has primary taxing rights over different types of income and provide mechanisms for avoiding double taxation.
New olim receive a 10-year exemption from Israeli income tax on all foreign-source income (including passive income from abroad). They also receive a reduced tax rate on Israeli-source income during the first few years, and exemptions from certain reporting requirements.
Yes. Rental income from Israeli residential property is subject to Israeli tax. Landlords can choose between a flat 10% rate on gross rental income (with no deductions), or the standard marginal rate with full deductions for expenses. Commercial property rentals are always taxed at the marginal rate plus VAT.