Background
On August 25, 2025, the Israeli Tax Authority published a new voluntary disclosure procedure – (the “NVDP”), which will remain in effect until August 31, 2026.
The purpose of the NVDP is to encourage taxpayers — including individuals, business owners, corporate officers, Israeli and foreign residents — who have failed to report income and/or assets as required by law, to get their tax affairs in order, pay the applicable tax, and receive immunity from criminal proceedings related to tax offenses.
Elimination of Anonymous Applications
Unlike previous procedures, the NVDP does not allow anonymous submissions
The voluntary disclosure application must include:
- Applicant’s full identification details
- Relevant tax years
- Source of assets and income
- Amount of unreported capital gain or income
- Estimate of the tax owed
- All relevant supporting documents
Applications must be submitted online and will be accepted until August 31, 2026.
Application Processing Tracks
Applications will be processed through one of two tracks:
Regular Track
Reaching an assessment agreement with the relevant tax assessment office.
Green Track
Submission of corrected returns or first-time returns (for those without an existing income tax file), covering the income included in the voluntary disclosure.
Criteria for the Green Track
The Green Track is available in the following cases:
- Foreign Financial Assets — Assets held in financial institutions outside of Israel with an account balance less than NIS 4,000,000 as of December 31, 2014, provided no new deposits or transfers were made during the disclosure period.
- Rental Income — Rental income from residential properties in Israel and/or abroad not exceeding NIS 250,000 per year.
- Digital Assets — Income from digital assets not exceeding NIS 500,000 for the entire disclosure period, and the fair market value of all digital assets not exceeding NIS 1,500,000 as of December 31, 2024.
- A combination of the above assets and income.
Eligibility Criteria
To be eligible to submit an application under the NVDP:
- The applicant must not have been convicted of tax offenses or paid fines for tax violations.
- No previous voluntary disclosure application may have been approved for the applicant.
- No investigation or examination may be ongoing or have been conducted by the Tax Authority or other enforcement bodies regarding the applicant, his or her spouse, companies under his or her control, or partnership files.
- The Tax Authority must not possess prior information relating to the voluntary disclosure.
- No criminal investigation is ongoing with the Israeli police concerning the applicant, his or her businesses, or income-generating activities.
Tax Payment Obligations
Once the application is approved under either track, the applicant is required to pay the principal tax, linkage, interest, and civil penalties according to the applicable legal provisions.
Under the Green Track, payment must be made within 90 days of receiving approval.
Use of Information Provided Under the NVDP
As a general rule, if a voluntary disclosure application is rejected, the Tax Authority may not use the information provided, whether in civil or criminal proceedings.
However, there are important exceptions:
- If the information becomes available to the Tax Authority from other sources.
- If the application was submitted in bad faith.
- If it is revealed that material information was intentionally concealed.
Important Clarification by the Tax Authority
Furthermore, the NVDP specifies that if the application is approved but the taxpayer fails to pay the tax, the Tax Authority is entitled to use the information submitted for both civil and criminal proceedings.
Following the publication of the NVDP, the Tax Authority issued an important clarification regarding the use of information when taxes remain unpaid:
- The Tax Authority will only use the information in relation to tax that is not in dispute.
- For the Green Track: the taxpayer must pay the tax in accordance with the returns submitted.
- For the Regular Track: the taxpayer must pay either the tax they declared in their voluntary disclosure, the tax agreed upon with the assessing officer, or the amount determined by a District Court ruling in case of appeal.
If the tax is in dispute, the information will not be used for criminal proceedings. However, it may still be used for managing the dispute in civil proceedings.
Practical Implications for Taxpayers
This clarification resolves a point of uncertainty that existed in previous voluntary disclosure procedures. Taxpayers can now challenge the assessment officer’s determinations — including by filing an appeal — without jeopardizing their eligibility for the Procedure or exposing them to criminal proceedings, provided that they pay the undisputed tax by the deadline specified in the NVDP.
We Would Be Happy to Assist
The voluntary disclosure process is complex and requires in-depth expertise in tax laws, especially given the significant distinctions between different types of income — such as unreported rental income, trusts, and digital assets like cryptocurrencies, where tax calculations can be challenging. Our firm has extensive experience assisting taxpayers in similar matters, including providing legal opinions on tax liabilities and representing clients before the Tax Authority. We would be happy to assist with any questions you may have regarding this Procedure.
The above content is a summary provided for informational purposes only and does not constitute legal advice. It should not be relied upon without obtaining further professional legal counsel.
