In brief
Under section 1 of the Israeli Income Tax Ordinance, an individual is an Israeli resident if their centre of life is in Israel, and this is determined by the totality of their family, economic and social ties, not by a single form. Presence of 183 days in a year, or 30 days in a year and 425 days over three years, creates a presumption that the centre of life is in Israel, and either side may rebut it; someone claiming not to be resident attaches Form 1348 to their return. On the day residency ends, exit tax applies under section 100A: assets are deemed sold the day before, and payment can be deferred until the actual sale. The National Insurance Institute examines residency under its own rules, and usually keeps a person who leaves registered as resident for the first five years.
Key takeaways
- 1The test is the centre of life: permanent home, the family's place of residence, place of work, economic interests and activity in organisations (section 1 of the Ordinance).
- 2Presumption that the centre of life is in Israel: 183 days or more in the tax year, or 30 days or more and 425 days in aggregate over the tax year and the two preceding years. Any part of a day counts as a day.
- 3Someone who meets the presumption and claims not to be resident files a return setting out the facts and attaches documents (section 131(a)(5e)), and in practice also Form 1348, the residency declaration.
- 4Exit tax (section 100A): assets are deemed sold on the day before the break. Someone who did not pay then is treated as having asked to defer payment, and the tax is calculated on the actual sale on the proportionate part of the gain.
- 5The National Insurance Institute keeps a person who leaves registered as resident for the first five years, but an early termination can be requested, and the request is examined for the whole family unit.
- 6Someone who returns after 10 years or more as a foreign resident is a veteran returning resident: a 10-year exemption on income from abroad, but from 2026 the exemption from reporting it was abolished.
Most people moving abroad first ask one question: “When am I no longer an Israeli resident for tax purposes?” The short answer is that no form or date ends residency. Residency is a conclusion drawn from the facts, and the Israel Tax Authority, the National Insurance Institute and the tax authority in the new country each examine them under their own law. This guide summarises the Israeli side of the move: how residency is determined, how the day-count presumptions work, what is filed, what exit tax is, what remains taxable in Israel, what happens with National Insurance, and the state of legislation in 2026. The side of the new country is best read in the dedicated guide for each country, for example Tax residency in Israel and Romania.
When do you stop being an Israeli resident for tax purposes?
When the centre of life moves outside Israel. Section 1 of the Israeli Income Tax Ordinance defines an individual Israeli resident as someone whose “centre of life is in Israel”, and provides that for this purpose the totality of their family, economic and social ties is examined. The Ordinance lists five indicators, “among other things”, meaning the list is not closed:
- The location of the permanent home. Whether a home remained available in Israel, and if so, whether it is let on a long-term basis.
- The place of residence of the individual and their family members. A spouse and children who remained in Israel are a weighty indicator.
- The place of regular occupation or employment. Where you actually work, not only where the employer is registered.
- The place of active and substantial economic interests. An active business, a managed company or income-producing assets.
- The place of activity in organisations, associations and institutions. Health fund, workplace, community institutions and memberships in organisations.
In practice: someone who moves with the whole family, lets or sells the home, works in the new country and registers there as a resident builds a consistent picture of a break. Someone who moves alone, leaves a family and an active business in Israel and travels back and forth can expect difficulty showing that the centre of life has moved.
What are the 183- and 425-day presumptions, and how are they rebutted?
Alongside the centre-of-life test, the Ordinance sets two numerical presumptions. They do not replace the test, but shift the burden of proof: someone who meets them must show that their centre of life is nonetheless not in Israel.
| The presumption | The condition | Notes |
|---|---|---|
| The 183-day presumption | Presence in Israel of 183 days or more in the tax year | The Israeli tax year is the calendar year |
| The 425-day presumption | Presence of 30 days or more in the tax year, and a total of 425 days or more over the tax year and the two preceding years | Catches someone who spends several months in Israel each year |
| Counting days | A “day” includes part of a day | A flight day counts |
| Rebuttal | The presumption can be rebutted both by the individual and by the assessing officer | Even someone who does not meet the presumption may be treated as resident under the centre-of-life test |
Someone who meets one of the presumptions and claims it is rebutted must, under section 131(a)(5e) of the Ordinance, file a return setting out the facts on which they base their claim, and attach the supporting documents. The section exempts that individual's spouse and children from this obligation. If they had taxable income in Israel, the ordinary obligation to report it also remains.
The presumptions work in one direction only: they can create an assumption that you are resident. Someone who spent fewer than 30 days in Israel may still be treated as an Israeli resident, if the family, home and business remained here. The reverse is also true: someone who exceeded 183 days because of a parent's medical treatment, for example, can try to show that their centre of life is already abroad.
How does the Ordinance define a “foreign resident”?
Section 1 of the Ordinance defines a foreign resident as someone who is not an Israeli resident, and adds a further route for individuals: someone who stayed outside Israel for at least 183 days in each of two consecutive tax years, and whose centre of life was not in Israel in the two following tax years. This route allows the years of departure to be examined in the light of what happened in the two years after them. How it applies to the year of the move itself is a question of interpretation, and it is worth building the position in advance with a tax adviser.
What is Form 1348 and when is it filed?
Form 1348 is a “declaration of residency”, and it appears in the list of forms accompanying the annual return for individuals on the Israel Tax Authority website, as the form for someone claiming not to be an Israeli resident. It is filed with the annual return, and where a day-count presumption is met, together with the detailed return under section 131(a)(5e). The declaration deals with the questions that make up the centre-of-life test: days of presence, family, home, work, assets and ties. It is worth starting to collect the evidence before the flight, because it is hard to reconstruct afterwards:
- A record of days of presence in Israel for each year, based on passport stamps and flight confirmations.
- A tax residency certificate from the new country, and where there is a treaty, a certificate under the treaty.
- A lease or purchase contract for the home abroad, and the children's registration in educational institutions there.
- The employment contract or business documents in the new country.
- What was done with the home in Israel: a long-term lease, a sale, or an explanation of why it remains available.
- Notices to the National Insurance Institute, the health fund, banks and financial institutions about the change of status.
What is exit tax under section 100A?
Section 100A of the Ordinance provides that an asset of an Israeli resident who has ceased to be an Israeli resident “shall be deemed sold on the day before the day on which they ceased to be an Israeli resident”. In other words, the capital gain accrued up to the break is treated as a gain of the period of residency. A “person” in the Ordinance also includes a company, and an “asset” for the purposes of the section expressly includes shares and rights granted to employees under sections 3(i) and 102, such as options. The law allows two ways to pay. Someone who did not pay the tax at the time of the break “shall be treated as having asked to defer payment of the tax until the asset is realised”. On the actual sale they pay tax on the “taxable portion of the gain”: the real gain on the sale, multiplied by the holding period up to the break and divided by the whole holding period up to the sale. Linkage differentials and interest are added only from the date of realisation.
| The method | When you pay | On what |
|---|---|---|
| Payment at the time of the break | In the year of the break | On the capital gain as if the asset were sold the day before the break |
| Deferral until the sale (the statutory default) | When the asset is actually sold | On the proportionate part of the real gain, according to the ratio between the holding period up to the break and the whole holding period |
| An asset whose sale is taxable in Israel anyway | At the time of sale | Under section 100A(c), the ordinary tax on the capital gain on the sale is paid, instead of the proportionate calculation |
When the asset is sold years after the move, the new country may also tax the whole gain, because you are by then its resident. Whether and how each country will recognise the other's tax depends on the treaty and on domestic law. The list of assets, their value on the day of the break and the choice between paying and deferring should be documented with an accountant already in the year of the move.
What remains taxable in Israel after the move?
A foreign resident is taxable in Israel on income produced or derived in Israel. Section 4A of the Ordinance determines where each type of income is “produced”, so it is the key to what remains taxable here:
| Type of income | Place of production under section 4A | What it means in practice |
|---|---|---|
| Employment | The place where the work is performed | Work performed abroad is not income from Israel, even when the employer is Israeli, subject to an exception for state employees and public bodies |
| Business | The place where the income-producing business activity takes place | A business that continues to operate in Israel remains taxable here |
| Rent | The place where the property is used | A let apartment in Israel remains taxable in Israel |
| Interest and dividends | The payer's place of residence | Interest from an Israeli bank and dividends from an Israeli company are income from Israel |
| Pension | The payer's place of residence | A pension from an Israeli pension fund is income from Israel, and a treaty may allocate the taxing right |
For some of these types of income the payer withholds tax at source. Section 170 of the Ordinance requires anyone paying taxable income to a foreign resident to withhold tax from it, and under section 125B dividends paid to an individual are generally taxed at 25%, or 30% for a substantial shareholder (10%+). A tax treaty with the new country, if there is one, may limit the rates, usually on presentation of a residency certificate. As for an apartment in Israel: section 122 of the Ordinance allows an individual to pay 10% on rent from a residential apartment in Israel, without deducting expenses, and the section is not limited to Israeli residents. On a sale, the exemption from Israeli capital-gains tax on real estate (mas shevach) for a qualifying residential apartment under section 49A of the Real Estate Taxation Law applies to a foreign resident only if they have no residential apartment in their country of residence, and a foreign resident is treated as having such an apartment as long as they have not presented a certificate from the tax authorities there. On how a property abroad affects a single-home status, see A property abroad and a single home in Israel.
How does a tax treaty decide when you are resident in two countries?
In the year of the move, dual residency almost always arises: the new country treats you as resident from the day of arrival or after counting days, and Israel still treats you as resident. Where there is a treaty, its residency article decides according to tiered tests, and you move to the next stage only if the previous one was not decisive:
- An available permanent home. In the country where you have a permanent home available. A home in both moves the question on.
- The centre of vital interests. The country with which personal and economic relations are closer.
- Habitual abode. Where you stay as a matter of routine.
- Nationality. And if that too is not decisive, the authorities of both countries decide by agreement.
Israel has tax treaties with Greece, the USA, Portugal, Romania, Bulgaria, Italy and Ukraine, and no treaty with Cyprus. See Israel's tax treaties by country. With a country that has no treaty there is no tie-breaker mechanism, so it is especially important that the facts are clear.
What happens with National Insurance when you move abroad?
The National Insurance Institute (Bituach Leumi) determines residency under its own rules, which are not identical to those of income tax. According to the Institute's website, a resident who goes abroad continues to be registered as a resident for the first five years, and keeps their entitlement to benefits and state health insurance. The Institute may also examine residency earlier, if it has information about a break.
- Early termination. Someone who has fully moved their centre of life abroad may file a declaration cancelling residency, and according to the Institute in most cases residency will be withdrawn from the date of the notice.
- Examination of the family unit. A person's request to terminate residency will not be approved if their spouse and children remain in Israel.
- Retroactive examination. Spouses who terminated residency and returned, and whose centre of life did not actually move, may be recognised as residents also for the period in which residency was terminated.
- The price of a break. Someone who is not a resident and does not work in Israel pays no contributions, but is also not entitled to benefits and state health insurance.
- Returning to Israel. Someone who returns after an absence without maintaining their insurance may have to wait two to six months for health services, and this waiting period can be redeemed by payment.
On the minimum amounts for a resident staying abroad and on social security agreements, see the checklist for a family move to Romania, which details the decision regarding National Insurance before departure.
What do you get on returning to Israel: returning resident and veteran returning resident?
Section 14 of the Ordinance distinguishes between two types of returnee, according to the number of consecutive years in which you were a foreign resident. The period is counted according to tax residency, not according to the number of visits.
| Status | Condition | The main benefit |
|---|---|---|
| Returning resident | A foreign resident for at least 6 consecutive years | 5 years of exemption on pensions, royalties, rent, interest and dividends from assets abroad acquired after ceasing to be resident, except business income |
| Veteran returning resident | A foreign resident for at least 10 consecutive years | 10 years of exemption on income produced outside Israel or derived from assets abroad, and the option to elect an “adjustment year” by notice within 90 days of arrival |
| 2026 temporary provision | A new immigrant or veteran returning resident who became an Israeli resident between 5.11.2025 and 31.12.2026 | According to PwC, an exemption on employment or business income in Israel in 2026 to 2030, up to an annual cap: ILS 600,000 in 2026, ILS 1 million in 2027 and 2028, ILS 350,000 in 2029 and ILS 150,000 in 2030 |
Under the updated wording of section 14, the exemption from reporting income and assets abroad was deleted for anyone who became a new immigrant or veteran returning resident from 2026. The tax exemption remains, but the exempt income is reported. According to PwC, the benefit of the temporary provision is cancelled retroactively if the beneficiary ceases to be resident in 2028 or 2029 and spent fewer than 75 days in Israel in one of those years.
Is a change in the definition of residency expected in 2026?
In July 2025 a draft bill was published proposing to add conclusive presumptions to the Ordinance, meaning presumptions that cannot be rebutted, based on the days of presence of the individual and their family members, and to leave the centre-of-life test for cases that do not fall within them. The draft replaced an earlier proposal from 2023. In the consolidated text of the Ordinance we checked in November 2026, the definition of resident in section 1 had not changed, meaning the proposal is not yet law. Anyone planning a move should check the state of legislation before the year of the move, because conclusive presumptions may change how visit days in Israel are planned.
What is the practical order of steps before and after departure?
- 12 to 6 months before: a meeting with an accountant in Israel and a tax adviser in the new country. Map assets, income, companies and options, and check whether there is a treaty.
- 6 months before: decide what to do with the home in Israel, the business and the company, and document the value of assets ahead of exit tax.
- 3 months before: decide with the National Insurance Institute whether to keep residency or request termination, according to the situation of the whole family unit.
- On the day of departure: keep evidence of the date of the move: flight ticket, lease abroad, children's school registration.
- In the first months abroad: register as residents in the new country and request a tax residency certificate when available.
- Throughout the year: count days in Israel, and notify banks and financial institutions of the change in tax residency.
- In the annual return for the year of the move: report in Israel, attach Form 1348 and the return under section 131(a)(5e) where there is a presumption to rebut, and decide whether to pay or defer exit tax.
- In the following years: continue reporting income from Israel, and keep the residency documents for each year.
This guide is general information correct as of November 2026, and every residency determination depends on the facts of the case and requires review with an accountant or tax adviser.
More on relocation: Moving abroad with an Israeli company or business · The family legal checklist
Frequently asked questions
How many days do you need to be outside Israel to stop being a tax resident?
No number of days ends residency on its own. The test is the centre of life, and presence of 183 days in a year, or 30 days and 425 days over three years, only creates a presumption that it is in Israel. Even someone who spent few days in Israel may be treated as resident if the family, home and business remained here.
What is Form 1348?
Form 1348 is a declaration of residency, attached to the annual return by those claiming not to be Israeli residents. Someone who meets a day-count presumption and claims not to be resident must also file a return setting out the facts and documents, under section 131(a)(5e) of the Ordinance.
Do you have to pay exit tax on the day of the move?
Not necessarily. Under section 100A, someone who did not pay at the time of the break is treated as having asked to defer payment until the asset is sold. On the sale they pay on the proportionate part of the real gain corresponding to the period in which they were an Israeli resident.
Which assets does exit tax apply to?
To assets whose sale would have been subject to capital gains tax, such as shares, securities, holdings in companies and assets abroad, and the section expressly includes employee options and shares. An apartment in Israel remains subject to Israeli capital-gains tax on real estate (mas shevach) under the Real Estate Taxation Law even after the move.
After the move, do you still pay tax in Israel on rent from an apartment in Israel?
Yes. Rent from a property in Israel is income produced in Israel. Section 122 of the Ordinance allows an individual to elect a 10% tax on rent from a residential apartment in Israel, without deducting expenses, and the obligation to withhold tax at source for a foreign resident should also be checked.
Does the National Insurance Institute disconnect me automatically when I leave?
No. According to the National Insurance Institute, a person who leaves remains registered as resident for the first five years, unless the Institute examines earlier or a declaration cancelling residency is filed. Such a request will not be approved if the spouse and children remained in Israel.
What is the difference between a returning resident and a veteran returning resident?
A returning resident was a foreign resident for at least 6 consecutive years, and receives 5 years of exemption on passive income from assets abroad acquired after leaving. A veteran returning resident was a foreign resident for at least 10 years, and receives 10 years of exemption on income from abroad, but from 2026 must report it.
Did the definition of residency change in 2026?
As of November 2026, the wording of section 1 of the Ordinance has not changed. A draft bill from July 2025 proposes conclusive presumptions based on the days of presence of the individual and their family members, and its status should be checked before planning the year of the move.
Read next · 10 min readPermanent Establishment and a Remote Employee Abroad: When an Israeli Company Is Taxable in the Employee's Country, and What About Payroll and Social SecurityAn employee working from home abroad may create a permanent establishment for an Israeli company. Fixed place, dependent agent, building site, OECD 2025 home office update, payroll.Read the guideSources
- Israeli Income Tax Ordinance [New Version], consolidated text: sections 1, 4A, 14, 100A, 122, 125B, 131, 170
- Israel Tax Authority: annual tax return for individuals (Form 1301) and accompanying forms, including Form 1348
- National Insurance Institute of Israel: who is considered an Israeli resident when going abroad
- gov.il: redemption of the waiting period for an Israeli abroad
- Real Estate Taxation Law (Capital Gains and Acquisition), consolidated text: section 49A
- PwC Worldwide Tax Summaries: Israel, Individual, Residence (reviewed 29.6.2026)
- PwC Worldwide Tax Summaries: Israel, Individual, Other tax credits and incentives (new immigrants, returning residents, 2026 temporary provision)
- PwC Worldwide Tax Summaries: Israel, Corporate, Withholding taxes
