Client updates

The Tel Aviv Regional Labor Court issued a new ruling expanding employers’ obligations regarding sexual harassment in the workplace and stated that employers may be obligated to prevent and address incidents of sexual harassment by customers, patients, or other third parties, even when the Prevention of Sexual Harassment Law does not directly apply.

The European Parliament has announced that agreement has been reached on the Digital Omnibus proposal for changes in the EU AI Act. Although still subject to completion of the formal legislative process, these changes represent a significant regulatory development and provide greater clarity as to the direction of EU AI legislation.

An Israeli district court ruled, for the first time, that distributable profits may be recognized even when a company has a balance of accumulated losses, provided that the profits accumulated during the holding period actually contributed to reducing the accumulated loss, even if the company ultimately had no surpluses.

At the end of April 2026, the Israel Securities Authority (ISA) published a new draft directive regulating the activities of licensed investment advisors and marketers when providing one-off services and services in relation to alternative assets. The purpose of the directive is to reduce information asymmetries and mitigate potential conflicts of interest identified during ISA audits that, in some instances, even resulted in enforcement proceedings.

On April 15, 2026, the Israel Medical Association’s Ethics Department published a position paper outlining guidelines for the use of artificial intelligence in the healthcare system. Although the position paper addresses physicians and medical institutions, in practice, it has significant implications for healthtech and medtech companies. Since medical institutions will be required to align their activities with these principles, it is reasonable to assume this will directly impact their demands on technology providers.

In March 2026, the Ministry of Economy and Industry published a draft bill to replace the current dual-use export control orders with comprehensive primary legislation. The proposed law aims to broaden regulatory oversight and establish a more effective, modern framework for controlling exports of civilian, nuclear, biological, and chemical items.

The Israeli Privacy Protection Authority (PPA) has published a position paper clarifying its interpretation of Regulation 2(4) regarding the transfer of personal data abroad. In this context, it emphasizes the requirements applicable to organizations transferring data outside of Israel, including to the United States.

Israel’s Supreme Court is stepping up its efforts to address AI-generated hallucinations, and recently ordered the Ramat Gan Municipality to pay exceptional court expenses of ILS 30,000. This is due to the municipality’s reliance on fictitious case law and a non-existent Ministry of Education Director-General circular, in a way that violated a special education child’s right to transportation to his school.

In light of the declaration of a state of emergency on the home front following Operation Epic Fury, the Registrar of Associations and Endowments clarified that NPOs and public benefit companies (PBCs) may continue operating under the lenient directive dated October 10, 2023. This allows them to carry out activities aimed at providing immediate and essential assistance during the state of emergency, even if such activities do not fully align with their approved objectives.

On March 3, 2026, the Minister of Labor announced his intention to issue an extension order of a collective bargaining agreement to regulate the rights of reservists and their spouses. For convenience, the key provisions of the collective bargaining agreement are set out below. We will update when this extension order is announced.

In the wake of October 7, 2023, the Israel Land Authority issued a temporary order increasing the quota for solar fields allocated to kibbutzim in the Tkuma region adjacent to the Gaza Strip. Relying on this temporary order, several communities invested significant resources in advancing solar field projects.

In November 2025, the OECD published an update to the interpretation of the OECD Model Tax Convention to address contemporary business practices in today’s environment. The update addresses, inter alia, how permanent establishment rules should be interpreted in the context of remote work and work performed from another country.

Labor law does not go on unpaid leave, even during wartime. This update outlines several changes in the Home Front Command’s defense guidelines relating to employees returning to workplaces and the extension of permits enabling employers to require employees to work exceptional overtime hours. There is also an important update regarding an increase in the minimum wage.

In its final position statement, the PPA presents a stricter interpretation of the law that more closely aligns with the approach used in European law (the GDPR), under which data subjects must issue active, free, and informed consent. At the same time, the PPA limits the possibilities of relying on the concept of “tacit consent” found in the law.

On March 1, 2026, following the launch of Operation Rising Lion, Israel’s Ministry of Interior published a series of regulatory reliefs and emergency guidelines for local authorities to strengthen municipal resilience and facilitate functional continuity and the provision of solutions to residents in times of emergency.

The draft National Cybersecurity Law was published in January 2026. This significant regulatory measure is likely to have broad implications for organizations across the economy, especially digital service providers and entities that provide technological infrastructure.

If you participated in Mehir LaMishtaken tenders and paid purchase tax, we recommend promptly reviewing whether you may be eligible for a purchase tax rebate. We are at your service to perform a preliminary eligibility review based on the tender documents, lease contract, special conditions appendix, and construction contract.

The Banking Supervision Department has published for public comment a draft Proper Conduct of Banking Business Directive titled “Supervisory Framework for Small and New Banks.” The purpose of the draft directive is to adapt regulatory and supervisory requirements to the size and complexity of small and new banking corporations’ operations, in accordance with the Basel Committee’s principle of proportionality, while maintaining banking system stability and protecting customers.

A settlement was approved recently within the framework of two class actions, which may result in some taxpayers receiving considerable financial refunds, while specifically re-examining the taxation of additional development expenses. Those entitled to a refund must forward the Refund Documents to the class plaintiff’s attorney within 180 days of the settlement approval date. The ITA will transfer the refund due to each class member within 150 days of the date of receipt of the documents.

On December 31, 2025, Israel enacted legislation imposing a minimum corporate tax on multinational groups, which applies to Israeli resident entities that are members of an MNE as of the 2026 tax year.