We would like to inform you that on August 25, 2025, the Israel Tax Authority published a Voluntary Disclosure Procedure – Temporary Order (for the procedure, please click here(hereinafter: the “Procedure“), which will be in effect for one year, until August 31, 2026. Additionally, the Income Tax Implementation Directive 10/2025, titled “Voluntary Disclosure Procedure 2025 – Operational Guidelines,” was published (for the implementation directive, please click here (hereinafter: the “Implementation Directive“).
As in previous years, the purpose of this Procedure is to encourage taxpayers—including individuals, corporations, trusts, corporate officers, Israeli residents, and foreign residents who have not properly reported to the Tax Authority—to regularize the reporting of their income and assets, pay the required taxes, and avoid criminal proceedings.
This is a unique opportunity to “wipe the slate clean” with the tax authorities, regularize your reporting, and obtain immunity from criminal prosecution.
However, it is important to note that, unlike voluntary disclosure procedures from previous years, the Procedure does not permit the submission of anonymous applications. Nevertheless, under the Procedure, the Tax Authority and the State Attorney’s Office commit not to file indictments for the types of offenses (as detailed in the appendix to the Procedure) that arise from the facts specified in the application.
Applications will be processed through one of two tracks:
- Regular Track – This involves reaching a tax assessment agreement with the relevant tax assessor. The Regular Track is available for all types of assets and income, without any limitation on the amount, but requires a comprehensive process with the tax assessor.
- Green Track – This track involves filing amended tax returns or submitting returns for the first time in cases where the applicant does not have an existing income tax file. These returns must include all income subject to voluntary disclosure. The Green Track is shorter and simpler than the Regular Track and is intended for situations where relatively small amounts of income were not reported, as detailed below:
- Financial assets abroad – The source of the assets and income is financial assets, with a balance as of the end of 2024 of less than NIS 4 million, and no new deposits or transfers of funds were made to the financial account during the disclosure period;
- Income from residential rental properties in Israel or abroad not exceeding NIS 250,000 per year;
- Digital assets – The source of income is digital assets, with total income not exceeding NIS 500,000 for the entire disclosure period, and the fair value of the digital assets as of the end of 2024 does not exceed NIS 1.5 million;
- A combination of the above assets and income.
After approval of the application, whether through the Regular Track or the Green Track, the tax principal, indexation, interest, and civil penalties must be paid in accordance with the relevant law. For the Green Track, tax payment must be made within 90 days from the date of receiving approval.
We would like to emphasize that, for the first time, the Procedure explicitly addresses cryptocurrencies and other digital assets. If an individual holds Bitcoin, Ethereum, or other digital assets that have not previously been reported to the Tax Authority, this is an opportunity to regularize their reporting. Tax payments related to the disclosure of income derived from digital assets may be made in accordance with the “Temporary Order Procedure for Receiving Tax Payments Due to Profit from the Realization of Decentralized Payment Methods.” For more information on the digital assets’ procedure, please click here.
Additionally, as a condition of the voluntary disclosure process, the application must be submitted honestly and in good faith. Furthermore, prior to the application date, no investigation or examination should have been initiated concerning the activities of the applicant, their spouse, or any companies under their control.
The Implementation Directive also provides guidance on offsetting losses, recognizing foreign tax credits, and establishing rules for the recognition of professional fee expenses and related input tax.
For the avoidance of doubt, the Tax Authority may use any information related to the application that has come into its possession through other means. Furthermore, if approval for the process was granted but the undisputed tax was ultimately not paid, the voluntary disclosure process, along with the criminal immunity granted, shall be cancelled. The same applies or if it is discovered that the application was not made in good faith or that relevant information was concealed.
Therefore, we recommend thoroughly assessing your eligibility for the voluntary disclosure process before taking any action. It is essential that taxpayers considering voluntary disclosure consult with a qualified representative regarding the procedure, the anticipated tax liability, and the payment deadlines, should the voluntary disclosure be approved by the Tax Authority.
Our firm has extensive professional experience representing taxpayers in significant cases, including individuals, corporations, trusts, and cryptocurrency holders—both Israeli and foreign residents—before the Tax Authority in voluntary disclosure proceedings and tax assessment agreements, including those conducted under previous voluntary disclosure procedures. We are at your disposal to answer any questions on this subject.
This memorandum is intended for general informational purposes only and does not constitute legal advice or a substitute for legal counsel. It is provided as a service to our clients, with the understanding that each specific case requires individual analysis based on its unique circumstances.
