What happened?
The Israel Tax Authority’s voluntary disclosure procedure is due to expire on August 31, 2026. The procedure was introduced in August 2025 as a one-year temporary measure (see our client update dated August 27, 2025). Taxpayers wishing to regularize previously unreported income or assets and secure the protection from criminal prosecution available under the procedure should therefore act without delay.
Background
The voluntary disclosure procedure allows taxpayers – including businesses, individuals, corporate officeholders, Israeli residents and non-residents – who have failed to report income or assets as required by law to regularize their tax affairs, pay the resulting tax liability and, in return, receive immunity from criminal prosecution for the tax offenses covered by their application.
Applications must be filed online no later than August 31, 2026.
Unlike previous voluntary disclosure procedures, the current procedure does not allow applications to be filed anonymously. An application must identify the applicant and specify the relevant tax years, the source of the unreported income and assets, the amounts involved, an estimate of the tax liability, and the required supporting documentation.
Routes Available under the Procedure
The procedure offers two routes:
- The standard route – an assessment process conducted with the relevant assessing office;
- The green route – the filing of amended returns, or initial returns by persons not registered for income tax purposes, in cases that meet the eligibility criteria set out in the procedure.
The green route is intended, among other things, for cases involving income below the prescribed thresholds from financial assets held outside Israel, rental income or digital assets, as well as combinations of these income categories.
Who is eligible to apply?
The procedure is available only if no investigation or examination concerning the applicant has been opened by the Israel Tax Authority or another enforcement authority, and if, when the application is filed, the Israel Tax Authority does not already hold information relating to the income or assets covered by the application. It is not available to anyone previously convicted of a tax offense, anyone who has paid a monetary settlement in lieu of criminal proceedings for a tax offense, or anyone whose earlier voluntary disclosure application was approved.
Tax Liability and Use of Disclosed Information
Once an application is approved, the resulting tax liability must be paid, together with interest, indexation and penalties, as required by law.
As a general rule, if an application is rejected, the Israel Tax Authority may not use the information disclosed in the application. There are, however, exceptions, including where the authority obtained the information from another source, the application was not made in good faith, or material information was withheld.
Where an application is approved but the assessed tax is not paid, the Israel Tax Authority may use the information disclosed in the application, including in criminal proceedings.
How we can assist
The voluntary disclosure process requires a careful analysis of the circumstances, an assessment of potential civil and criminal exposure, a calculation of the expected tax liability, and the formulation of an appropriate strategy for engaging with the Israel Tax Authority. Our firm has extensive experience advising on voluntary disclosures and handling matters involving, among other things, foreign assets and income, rental income, trusts and digital assets. We can assist in assessing whether an application is appropriate, preparing the application, and representing the applicant before the Israel Tax Authority through completion of the process. As the procedure will expire on August 31, 2026, and preparing the application and supporting documentation may take time, the matter should be reviewed as soon as possible.
This publication is provided as a general service to the firm’s clients and contacts and is not a substitute for legal advice tailored to the circumstances of a particular matter. No action should be taken on the basis of the information above without first obtaining advice from qualified professionals in light of the specific facts and circumstances.
