International Tax Law – The special status of New Immigrants:

I’m sure you were informed when making aliyah that you are entitled to a ten-year exemption from income tax (“Tax Holiday”), which is quite interesting. However, have you really checked the conditions for this exemption?
The primary requirement is that the income must be generated outside of Israel (foreign-sourced income). This means that if you are physically and actively working in Israel—even from home or online—you are considered to be in Israel and will not qualify for this exemption regarding the income derived from your work. Consequently, you are required to report and pay taxes just like any other Israeli resident, although there are a few benefits available to olim chadashim, but these do not constitute a full exemption.
On the other hand, if you are traveling and have an office in Cyprus where you are genuinely and practically working, your income generated abroad will not be taxed in Israel for the days you spend working there. If you have a permanent establishment in Cyprus, you should review your obligations under local law. However, as an oleh chadash, you may still be eligible for a tax exemption in Israel for up to ten years. Additionally, the income generated by assets held abroad during the Tax Holiday should be exempt from income tax in Israel for such period. It is relevant to note that in the past the exemption applied to both taxation and reporting obligations, however these regulations have recently changed and for Olim Chadashim who make Aliyah from year 2026 onwards, reporting obligations will exist.
As I mentioned, the tax authority monitors and calculates the number of working days you actually spend outside the country. For the portion of your income corresponding to those working days abroad, you may qualify for an exemption. Is that clear?

For instance, if you live in Israel, where you have your center of vital interests—your wife lives with you, your children attend school there, – you are an Israeli citizen and resident. For work, you travel to various foreign countries, spending one week each month abroad. These working days may be sufficient, and upon returning to Israel, you simply relax at the beach and study Torah, not sending any emails or answering phone calls. Even you do not work at all in Israel and 100% of you income is generated abroad, you will be entitled to tax exemption only for 5 days out of 30, so only 16 % of your income.

Given the structure of your business, a knowledgeable CPA should be able to help you secure this exemption based on the number of working days spent abroad. Similarly, if you are employed by an Israeli company that sends you around the world for work and you are an oleh chadash, you might also be entitled to the same exemption.

In Israel, the company that employs you will withhold taxes at the source without taking your unique situation into account. However, you can rectify this at the end of the year by submitting a voluntary income report with the assistance of a specialized CPA.
Our office is here to help you to optimize your taxation.

By consulting an expert lawyer or a CPA who is highly specialized in this field, you can be sure you can address all the issues that might arise according to you specific situation.

Yaël Hagege Maruani
Attorney-at-law in Israel and Notary

This circular is intended for general information purposes only and does not constitute a personal legal consultation.