Client updates

In 2025, the Bank of Israel, the Ministry of Finance, and the Israel Securities Authority accelerated measures to significantly increase competition in the banking system. These included regulatory and legislative amendments, some of which are expected to come into effect in 2026.

Following an extensive public consultation process, a final report on the use of AI in the financial sector was published last week. The report was prepared by a committee comprising representatives of the Ministry of Justice, the Ministry of Finance, the Competition Authority, the Israel Securities Authority, the Capital Market, Insurance and Savings Authority, and the Bank of Israel.

On December 30, 2025, the Supervisor of Banks published Directive 412, aimed at instructing banking corporations on providing services to customers subject to international sanctions.

The latest amendment to the Contracts Law does not overturn Supreme Court rulings nor does it dramatically change contract interpretation. Rather, it anchors in legislation the trend in Supreme Court case law of differentiating between business contracts and other types of contracts, while increasing certainty and stability in the business world.

2025 will be remembered as the year financial regulation succeeded in catching up with the pace of technological innovation, progressing from regulatory uncertainty to a clear framework encompassing many aspects of financial activity and suited to the modern era.

The European Commission recently published the Digital Omnibus, aimed at simplifying data regulation within the European Union by amending key legislation governing digital data. In this update, we summarize the proposal’s key aspects.

In 2025, several significant changes took place in the international trade arena that directly impacted Israeli companies operating in global and domestic markets. For Israeli society, 2025 underscored the need to quickly adapt to changing rules, including trade becoming a tool for political and economic leverage.

In 2025, Israeli real estate taxation was characterized by strict adherence to statutory requirements: reliefs, exemptions, and lower tax brackets were granted only when the conditions prescribed by law were met, within the defined deadlines, and with full proof of the relevant facts.

2025 marked a major regulatory turning point in the fields of artificial intelligence (AI) and privacy protection. In Israel, Amendment 13 to the Privacy Protection Law forced Israeli companies to make significant changes in their routine operations and granted regulatory authorities unprecedented enforcement powers.

The trends recorded in 2025 show that regulatory authorities are tightening enforcement, not only in cases of coordination between competitors, but also in cases involving public statements that may spur such coordination, non-controlling minority shareholding in competitors, or any other conduct that may raise barriers to competition.

Legislative amendment focusing specifically on the pharma market: the Knesset is expected to approve an amendment to the Food Law, which seeks to adapt the unique regulations governing the pharma market to the competitive characteristics of the industry.

The recently published draft bill seeking to reinstate property tax could have a significant impact on dozens to hundreds of thousands of landowners in Israel. Although only a draft bill at this stage, it is advisable to understand the potential changes, whether they affect you, and how to prepare in advance to reduce exposures and avoid surprises.

The New York Times recently filed a major lawsuit against the artificial intelligence platform Perplexity AI for infringement of intellectual property rights. The importance of this lawsuit lies in the fact that it does not rely solely on “classic” claims of copyright infringement, but also includes innovative claims of trademark violations and damages.

Public companies in Israel are required to disclose material information to the public and act with full transparency in compliance with the law. Within this framework, anyone deemed a “substantial shareholder” must report to the company any change in status within a designated time frame, and the company must then report that change to the public. The rationale is simple: the market must know who can influence the company and when an interested party’s status has changed.

The Israel Securities Authority published a new staff position recently on the regulation of advertising in digital space (including on social networks), focusing on advertising relating to mutual funds. The staff position seeks to bridge the gap between the law and the dynamic reality in today’s digital age, and focuses on regulating ongoing online activities and activities with external parties.

At the end of October 2025, the Tel Aviv District Court issued a precedent-setting ruling in the Hexadite case, which deliberated fundamental issues relating to transfer prices and the appropriate way to determine the value of assets in restructuring transactions between related parties. This ruling is particularly relevant for multinational companies in Israel that carry out complex acquisition, sale or restructuring transactions, since it clarifies how these complexities should be resolved in practice, particularly within the context of tax gross-up, holdback payments and secondary adjustments.

A recent Israeli Supreme Court ruling held that in disputes over management agreements for vacation units, detailed commercial contracts must be interpreted according to their explicit wording, giving full primacy to the contract text.

The Israeli Money Laundering and Terrorist Financing Prohibition Authority (IMPA) published a document recently to raise awareness of the new challenges abuses of Generative AI and Deepfake pose to the financial sector. The document reviews the potential risks of use of these technologies, presents case studies from Israel and around the world, discusses emerging threats, and provides a list of “red flags” to help identify suspicious activities.

On October 19, 2025, the Competition Commissioner published her detailed position regarding the proposed anti-dumping levy on imports of aluminum profiles from China. This position expresses strong opposition to the recommendations of the Commissioner of Trade Levies to impose high anti-dumping levies on aluminum imports from China.

In August 2025, after receiving the recommendations of the Simhon Committee, the Bank of Israel published new guidelines for banking corporations. Banks providing financing for residential construction projects will now be prohibited from including stipulations in their financing agreements that relate to the price of an individual apartment.