On August 25, 2025, the Israel Tax Authority published a new voluntary disclosure procedure, as a temporary order valid until August 31, 2026. The new procedure allows individuals, corporations, trusts, and corporate office holders to settle missing or incorrect tax reports while receiving immunity from criminal proceedings, subject to compliance with the conditions of the procedure and full discharge of the tax.
Main Provisions of the New Procedure
Criminal immunity: this will apply only with respect to tax and money laundering offenses, pursuant to the laws enumerated in the procedure (Income Tax, Real Estate Taxation, VAT, Excise, Customs, and others), and in any event will not apply to income derived from illegal activity.
Eligibility conditions: The application must be complete, accurate, and submitted in good faith. Several additional eligibility conditions apply, including the requirement that no investigation or audit into the applicant’s tax offenses has been initiated by the date of submission of the application under the procedure, or, that no application will be approved if the applicant has previously been convicted of tax offenses, paid a fine in lieu of prosecution for a tax offense, or submitted a prior voluntary disclosure application that was approved. In any case, the Tax Authority has the discretion to reject an application where material information is publicly available or held by another governmental authority in connection with the matter.
Submission of the application: the application may be submitted online only, with full identification of the applicant. Unlike the Tax Authority’s previous voluntary disclosure procedures, the new procedure does not include an anonymous track, and the application may only be submitted by fully disclosing all of applicant’s details.
Processing the application and payment of the tax: Following approval, the application will be referred to the relevant civil unit (Income Tax Assessor / Real Estate Taxation / VAT, etc.). Upon completion of the process, the applicant will be required to bear the tax liabilities arising from the procedure, which shall include the outstanding principal tax, interest, indexation, fines, and even monetary sanctions, as applicable. The voluntary disclosure procedure does not grant any reduction in the tax payable; however, the tax assessor has the discretion to ease the payment of fines and/or monetary sanctions, to the extent imposed.
Tracks for handling the procedure and the payment of tax
Green Track: intended for offenses relating to assets and income of relatively low amounts (e.g., rental income of up to NIS 250,000 per year, or income from digital assets in an amount of up to NIS 500,000 for the entire disclosure period, subject to an additional limitation on the value of the digital assets). Entry into the green track is not automatic and requires approval following submission of the application. Where entry into the green track is approved, the process will be relatively simple and expedited, through the filing of tax returns for the relevant period and, in principle, without the need for a preliminary assessment process with the civil department of the Tax Authority.
Ordinary Track: this applies to cases of larger scope or greater complexity and involves handling before the tax assessor until reaching an assessment agreement or the issuance of a scrutiny assessment by the tax assessor. If a scrutiny assessment is issued by the tax assessor, the applicant will have the right to pursue proceedings against such assessments, including, if necessary, appealing against such assessments to judicial instances.
Protection of information provided under voluntary disclosure procedure
Unapproved application: As a general rule, the Tax Authority may not use the information provided in the application, in either civil or criminal proceedings.
Nevertheless, the Tax Authority may use information that has reached it from another source, or where the applicant has concealed information, acted in bad faith, or failed to pay the tax charged under the procedure.
In any event, an application cannot be “withdrawn” after submission, and where the tax is not paid, the Tax Authority shall be entitled to use the information provided.
Criminal Immunity
It is important to understand that criminal immunity will apply only with respect to the information provided within the framework of, and in connection with, the voluntary disclosure procedure.
Where the information provided under the voluntary disclosure procedure proves to be false or misleading, the criminal immunity shall be subject to revocation.
The Tax Authority emphasizes that this is a time-limited opportunity. Upon the expiration of the temporary order, stricter enforcement measures are expected, including the use of information obtained from external sources (such as international information-exchange agreements). It should be noted that, at present, the “Temporary Order Procedure for the Receipt of Tax Payments on Gains from the Realization of Decentralized Means of Payment” remains in force (currently valid until the end of 2025), which, together with the provisions of the new voluntary disclosure procedure, will facilitate an efficient and effective solution for those operating in this field and whom, due to various obstacles, have not yet settled their tax liabilities arising from such assets in Israel.
In conclusion, this is a limited-time, and likely final, opportunity to settle assets or income not lawfully reported in Israel, while avoiding exposure to criminal proceedings. To the extent the matter may be relevant, it is recommended to consider reaching a settlement under the current voluntary disclosure procedure before its expiration in August 2026.
Our firm has extensive experience in accompanying our clients in various settlement proceedings with the Tax Authority (including representation in voluntary disclosure proceedings). It is appropriate to highlight that there is a significant advantage in proceeding with a voluntary disclosure procedure with legal representation, due to the attorney-client privilege applying to the information provided to legal counsel representing applicant in the process.
Our firm’s tax team is at your disposal and available to answer and address any questions or concerns.
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