Israel's Tax Treaties with Greece, Cyprus, the USA, Portugal, Romania, Bulgaria, Italy and Ukraine: What They Say About Real Estate

Many investors ask "is there a treaty?" and assume that if there is, they pay nothing in Israel. In most cases that assumption is wrong. This guide brings together in one place what Israel's tax treaties with the eight countries in which we assist transactions say about real estate: about rent, about selling the property and about the credit in Israel. Each country has a detailed tax guide on the site, and the links appear in each section.

1What does a tax treaty do for an owner of property abroad?

An Israeli resident is taxed in Israel on worldwide income. At the same time, the country where the property is located levies its own tax. The treaty does not cancel either of them. It sets an order: usually Article 6 of the treaty gives the country of the property the right to tax income from real estate, including rent, and Article 13 gives it the right to tax the gain from selling the real estate. Israel, as the country of residence, taxes as well and gives a credit for the foreign tax, up to the Israeli tax on the same income.

Three points apply to all the countries. First: in Israel, for rent from a residential property abroad you can choose the 15% track under section 122A of the Income Tax Ordinance, but on that track there is no credit for the foreign tax. Second: the treaties apply to income taxes, not to transfer tax, purchase tax or municipal property tax. Third: even when the treaty gives the country of the property exclusive taxing rights, you report in Israel. We expanded on the Israeli side, the forms and the deadlines in the guide to the Israeli side of property abroad.

2Comparison table: Israel's tax treaties and real estate

The table summarises the rule for an individual Israeli resident who holds a property directly. Holding through a company, selling shares in a company that holds real estate, and questions of dual residence change the picture. The data is correct as of November 2026.

3The Israel-Greece tax treaty: what matters for a property owner?

The treaty was signed in Jerusalem on 24 October 1995 and ratified in Greece by Law 2572/1998. It was drawn up in Greek, Hebrew and English, and in case of divergence of interpretation the English text prevails.

Rent. Article 6(1) in the English text provides that income from immovable property "shall be taxable only in that other State", that is, only in Greece. According to an analysis by an Israeli law firm, the Hebrew text gives Greece only a primary taxing right. We found no public position of the Israel Tax Authority on the matter. So the position that the rent is exempt in Israel is well founded, but not immune from dispute, and it is worth forming it with a tax adviser and reporting it.

Sale. Under Article 13(1), a gain from a direct sale of real estate in Greece is taxed only in Greece, and in this article the texts are identical. The rule does not apply to a sale of shares in a Greek company holding the property (Article 13(4)), and does not exempt you from reporting in Israel. Details in the guide to rental income tax in Greece and the guide to selling property in Greece.

4Israel-Cyprus tax treaty: is there one?

No. As of November 2026 there is no double tax treaty between Israel and Cyprus. In 2024 it was reported in Cyprus that there were contacts between the two countries that had not yet matured into a treaty, and PwC's Cyprus summary, updated in May 2026, does not mention a new treaty with Israel.

What this means: Cyprus taxes under its own law, and Israel gives a unilateral credit for the Cypriot tax, up to the Israeli tax on the same income. According to PwC, unused excess foreign tax can be carried forward to the following five tax years. There are no reduced treaty withholding rates, and no agreed mechanism for deciding residence. Which Cypriot payments count as "income tax" for the credit, for example the levy on a sale, is checked with your accountant. Details in the guide to rental income tax in Cyprus and the guide to capital gains tax in Cyprus.

5The Israel-USA tax treaty: what matters for a property owner?

The treaty was signed in 1975, amended by protocols, and entered into force on 1 January 1995. Under Article 7, income from real property, including rent and gains on sale, may be taxed in the country where it is located. Article 15 expressly excludes gains from selling such real property from the general exemption for capital gains, so the treaty does not exempt you from FIRPTA withholding on a sale. Under Article 26(3), Israel gives a credit for income tax paid in the USA, up to the portion of Israeli tax attributable to the US income.

A sensitive point is the LLC. In the USA it is usually tax-transparent, while in Israel it is generally treated as a body of persons. The classification mismatch may impair the credit, so the structure is decided before the purchase. Details in the guide to US rental income and the tax treaty, the FIRPTA guide and the guide to an LLC for Israeli investors.

6The Israel-Portugal tax treaty: what matters for a property owner?

The treaty was signed in Lisbon on 26 September 2006, entered into force on 18 February 2008, and for income taxes not withheld at source it applies from 1 January 2008. Portugal may tax rent (Article 6) and gains from selling real estate (Article 13(1)), and also gains from selling shares deriving more than 50% of their value from real estate in Portugal (Article 13(4)). Under Article 23(2), Israel gives a credit up to the Israeli tax.

Under Article 2, the treaty applies only to income taxes. IMT, stamp duty, IMI and AIMI are not credited under it. Whether IMT can be recognised as part of the cost of the property when calculating the gain in Israel is checked with your accountant. Details in the guide to property taxes in Portugal.

7The Israel-Romania tax treaty: what matters for a property owner?

The treaty was signed on 15 June 1997 and applies from 1 January 1999. It was amended by a protocol signed on 3 November 2020 that applies in Israel from 1 January 2024. Romania taxes first the rent and sale of real estate located there, and under Article 24 Israel recognises the Romanian tax as a credit, but not beyond the Israeli tax on the same income.

Anyone holding a property through a Romanian company (SRL) also needs to know the dividend provisions: according to PwC, Romanian tax on dividends is 16% from 2026, and the treaty limits it to 15% when the paying company receives an Israeli certificate of residence. Details in the guide to the Israel-Romania tax treaty and the guide to Romania's tax treaties for owners living in different countries.

8The Israel-Bulgaria tax treaty: what matters for a property owner?

The treaty was signed in Jerusalem on 18 January 2000, and modified under the Multilateral Instrument (MLI). According to the synthesised text published by Israel, the MLI applies in Israel from 1 January 2019 and in Bulgaria from 1 January 2023. Bulgaria has the right to tax rent and gains from selling a property located there, and Israel gives a credit for the Bulgarian tax. The treaty also allows Bulgaria to tax gains from selling shares in a company at least half of whose assets are real estate in Bulgaria.

Remember that the Bulgarian exemptions on gains from a sale after three or five years apply to residents of Bulgaria, the EU and the EEA, not to Israeli residents. Details in the guide to renting out property in Bulgaria and the guide to selling property in Bulgaria.

9The Israel-Italy tax treaty: what matters for a property owner?

The treaty was signed in Rome on 8 September 1995, ratified in Italy by Law 371 of 9 October 1997, and entered into force in 1998. Under Article 6, Italy may tax income from immovable property, including rent. Under Article 13(1) it may tax gains from selling real estate located there. Under Article 24(3), Israel credits the Italian tax up to the Israeli tax.

In practice, when you sell in Italy within five years, the Italian tax may be higher than the Israeli tax, and then part of the foreign tax is not used. After five years there may be no tax in Italy, and Israel collects its full tax. Details in the guide to renting out property in Italy and the guide to property taxes in Italy.

10The Israel-Ukraine tax treaty: what matters for a property owner?

Israel and Ukraine have a double tax treaty in force, and it appears on Israel's list of treaties. As in most treaties, Ukraine may tax rent and sales of property located in its territory, and Israel gives a credit up to the Israeli tax. The treaty does not reduce Ukrainian tax on real estate.

To get a credit you need to prove the tax paid: receipts for the payment made before the notary on a sale, or a confirmation from the tax agent of the tax withheld from the rent. When the Ukrainian tax on a sale is higher than the Israeli tax, the excess is not used in the year of sale. Details in the guide to property taxes in Ukraine for Israeli residents.

11Where do you lose the benefit of the treaty?

• Choosing the 15% track by default for rent from abroad, which gives no credit for the foreign tax. In countries where local tax on rent is significant, this may cost more.
• No supporting documents. Without an assessment, receipts and payment confirmations from the foreign country, there is no credit.
• A holding structure that does not fit the treaty. A foreign company managed from Israel, or an LLC classified differently in the two countries.
• Assuming a treaty exemption means no reporting. Even when tax is paid only in the country of the property, you report in Israel.
• Forgetting taxes that are not income tax. Transfer tax and municipal property tax are not credited under the treaty.

12What should you do before the purchase?

The treaty is worth checking before signing, not before the first tax return, because the decision on whose name to register in, whether to buy through a company and how to let determines which articles will apply. With Israeli buyers we prepare the questions for a tax adviser familiar with the law in both countries, and coordinate between the accountant in the country of the property and the accountant in Israel.

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