New Voluntary Disclosure Procedure – Effective Until August 31, 2026

On August 25, 2025, the Israel Tax Authority (ITA) published a new directive entitled “Voluntary Disclosure Procedure – Temporary Order.” The aim of this procedure is to encourage both Israeli and foreign residents who have committed tax offenses under Israeli law to correct their filings and submit truthful reports. This is a limited-time opportunity (and likely the last one) to regularize previously unreported assets and income in Israel.

In return, and subject to the conditions set forth in the procedure, the ITA undertakes not to initiate criminal proceedings against applicants who voluntarily disclose. The procedure provides for two principal tracks of disclosure: a “Green Track” and a regular assessment track. Unlike previous voluntary disclosure programs, however, anonymous applications will not be permitted.

It should also be emphasized that once the temporary procedure expires, the ITA is expected to adopt significantly stricter enforcement measures and make broad use of information received from external sources. Accordingly, this directive presents a critical and time-sensitive opportunity for taxpayers to settle their reporting obligations with the ITA.

Summary of the Procedure

The key conditions for submitting a voluntary disclosure request are as follows:

1. The disclosure must be truthful, made in good faith, and complete.
2. The applicant must not have been previously convicted of a tax offense, paid a fine for such an offense, or submitted a voluntary disclosure request approved by the ITA in the past.
3. At the time of filing, no investigation or audit may have been initiated against the applicant by the ITA or other enforcement authority directly or indirectly related to tax offenses. For this purpose, “investigation or audit” also applies to the applicant’s spouse, controlled companies, and business partners.
4. At the time of filing, the ITA must not possess prior information about the voluntary disclosure request.

Processing of Requests

Voluntary disclosure requests will be reviewed under one of the following tracks:

• Regular track – Settlement of tax liability through an assessment agreement with the relevant tax office.
• Green track – Submission of amended tax returns or first-time returns in cases where the applicant does not have an open tax file. This track is intended to expedite cases involving relatively small amounts of undeclared capital and to provide certainty to applicants within a short period.

Eligibility for the Green Track

Requests will be routed to the green track if they involve one of the following:

1. All disclosed assets and income are derived from financial assets held in a foreign financial institution with an aggregate balance below ILS 4,000,000, provided no new deposits or transfers were made into the account during the disclosure period.
2. The source of the disclosed income is rental income from residential properties in Israel and/or abroad not exceeding ILS 250,000 per year.
3. The source of the disclosed income is from digital assets not exceeding ILS 500,000 for the entire disclosure period, provided the aggregate fair market value of all digital assets does not exceed ILS 1,500,000.
4. A combination of any of the above.

Conditional Immunity from Criminal Proceedings

If the ITA does not approve a voluntary disclosure request, it will not use the information submitted for criminal or civil proceedings, unless such information comes to its knowledge independently, or if it determines the disclosure was not truthful or complete, or if the applicant fails to pay the tax assessed under the procedure. In such cases, the ITA may use the information provided by the applicant as evidence in any civil or criminal proceedings.

Given the complexity of the procedure and the potential exposure to criminal liability even within the voluntary disclosure framework, professional legal advice is strongly recommended before submitting a request. Our team is happy to advise you on the new voluntary disclosure procedure and on any other related tax matters.

Conclusion

As noted above, this is a limited-time opportunity and may well be the last chance to benefit from such a procedure. Taxpayers are therefore encouraged to consider voluntary disclosure before the directive expires.

Given the complexity of the process and the potential exposure to criminal proceedings even within the framework of a voluntary disclosure request, professional guidance and representation are strongly advised. Our Tax Department has extensive experience assisting clients in regularization proceedings with the ITA, including voluntary disclosure procedures.

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Adv.Hanna Daher is a partner and Adv. Alon Davidovich is an associate in the firm’s Tax Department.

Barnea Jaffa Lande’s Tax Department is consistently ranked among the leading practices in Israel by local and international directories. The team advises both Israeli and foreign clients on a broad range of tax matters, including international taxation, individual and real estate taxation, employee compensation, cryptocurrency taxation, and incentives and grants.