on July 2, 2025, the Israel Tax Authority published for public comment a draft bill to amend the Income Tax Ordinance (Amendment No. …) (Individual’s Place of Residence), 5785-2025 (hereinafter: the “Draft Bill”).
As a general rule, Israel operates a tax system that combines both personal and territorial principles. This means that Israeli residents are taxed on their worldwide income, whether generated in Israel or abroad, while non-residents are taxed only on income sourced in Israel.
Until now, determining an individual’s residency status has been based on the “center of life” test, which is a qualitative assessment examining the individual’s overall connections to Israel, including family, economic, and social ties. Among the factors considered are the location of the permanent home, family members’ residence, place of occupation, center of economic interests, and membership in Israeli organizations.
Alongside this test, and in fact subject to it, there are rebuttable presumptions based on days of presence in Israel as follows:
An individual is presumed to have their “center of life” in Israel in a specific tax year if they stayed in Israel for 183 days or more during that tax year, or if they stayed in Israel for 30 days or more in that tax year and their total days of presence in Israel over three years (the tax year in question and the two preceding tax years) amounts to at least 425 days. This presumption can be rebutted through qualitative evidence proving that the individual’s “center of life” is abroad.
The Draft Bill seeks to replace the rebuttable presumptions with conclusive presumptions based on the days of presence of the individual and their spouse in Israel.
According to the Draft Bill, an individual is conclusively presumed to have their “center of life” in Israel in a specific tax year if that individual stayed in Israel for 75 days or more during that tax year, and in one of the three-year periods detailed below, stayed at least 183 weighted days of presence.
Alternatively, an individual is conclusively presumed to have their “center of life” in Israel in a specific tax year if the individual stayed in Israel for 30 days or more in the tax year, when the individual’s spouse is an Israeli resident, and in one of the three-year periods detailed below, stayed at least 140 weighted days of presence.
The three-year periods are any of the following:
(a) The tax year and the two tax years preceding it;
(b) The tax year, the tax year preceding it, and the tax year following it;
(c) The tax year and the two tax years following it.
A weighted day of presence will be calculated as follows: each day in the tax year under examination counts as a full day, each day in the year immediately before or after the tax year counts as one-third of a day, and each day in the more distant years (two years before or after) counts as one-sixth of a day.
Conversely, a non-resident is someone who stayed in Israel for 74 days or fewer in the tax year, and their total period of stay in Israel in each of the three-year periods (as detailed above) is at most 110 weighted days of presence. Alternatively, an individual and their spouse stayed in Israel for 90 days or fewer in the tax year, and each of their total periods of stay in Israel in each of the three-year periods is at most 125 weighted days of presence.
According to the Draft Bill, if one of the conclusive presumptions is met, there is no longer a need to examine the “center of life”, and this test cannot rebut the conclusive presumption. However, in cases that do not fall within the scope of the conclusive presumptions, the assessment will be conducted using the “center of life” test, without reference to the rebuttable days of presence presumptions, which have effectively been eliminated.
Despite the above, it is important to note that in any case, the provisions in international treaties to which Israel is a signatory (treaties for the prevention of double taxation) override the provisions of domestic law, including the conclusive presumptions regarding the determination that an individual is an Israeli resident. Therefore, if according to the provisions of an international treaty an individual is considered a resident of another country, they will be regarded as a resident of that country for the purpose of granting the relief stipulated in the treaty, even if the conclusive presumptions apply to them.
For your convenience, please see the table below summarizing the proposed changes in the Draft Bill:
| Topic | Current Situation (Before Change) | Proposed Change |
| Main Test | “Center of Life” Test (qualitative): examines the entirety of personal, family, economic, and social circumstances. | Conclusive presumptions based on days of presence (quantitative), with the “Center of Life” Test applicable only to cases not falling within the conclusive presumptions. |
| Rebuttable Days of Presence Presumptions | 183 days in a year, or 30 days in a year and 425 in three years. | None |
| Conclusive Days of Presence Presumptions | None | Israeli Resident: 75 days or more in a year and 183 weighted days of presence in one of the three-year periods; OR 30 days or more in a year, spouse is an Israeli resident, and 140 weighted days of presence in one of the three-year periods. Non-Resident: 74 days or fewer in a year and up to 110 weighted days of presence in one of the three-year periods; OR The individual and their spouse stayed 90 days or fewer in a year and up to 125 weighted days of presence, each, in one of the three-year periods. |
| International Agreements | International agreements override domestic law. | International agreements override domestic law (including the conclusive presumptions). |
Note: “Weighted days of presence”: Each day in the examined year = full day; Each day in an adjacent year (before/after) = one-third of a day; Each day in the more distant years = one-sixth of a day.
Our firm has extensive experience advising individuals on tax matters, particularly with respect to residency status, as well as providing ongoing representation before the Tax Authority. We will continue to keep you informed of further developments and remain at your disposal to address any questions or concerns you may have.
This memorandum is provided for general informational purposes only and does not constitute legal advice or a substitute for legal counsel. Each specific case should be reviewed with its own merits.
