Voluntary Disclosure and Asset Regularization After 31.8.2026

No. The Israel Tax Authority's voluntary disclosure procedure was a temporary provision that expired on 31.8.2026, and the Authority announced on 7.9.2026 that it has ended. As of 11.10.2026, no new procedure or extension has been published.

Regularizing unreported assets and income is still possible: you file returns and pay the tax, but without the procedure's commitment to refrain from criminal proceedings. Therefore, the exposure is first assessed in a confidential meeting with an attorney, and only then is the Authority approached. This area is handled by Adv. and CPA Shlomi Vaknin, who served for nearly a decade as a National Inspector at the Israel Tax Authority's headquarters.

Clients typically contact us in one of the following situations:

• You have an unreported bank account or investment portfolio abroad — your own or inherited. What must be reported is explained on the Foreign Bank Accounts and Assets.

• You rented out an apartment for several years without checking whether the income is taxable.

• Your bank in Israel is requesting an explanation of the source of funds before accepting an overseas transfer.

• You have unreported crypto gains from prior years.

• You filed a voluntary disclosure request before 31.8.2026, and it is still being processed.

• You received a letter from the Assessing Officer or a summons for investigation regarding unreported income.

The procedure was published in August 2025 with the approval of the Attorney General, and applied to income tax, VAT, customs, and land taxation. Applicants whose requests were approved paid the full tax, including linkage differentials and interest and sometimes penalties. In return, the Authority committed not to initiate criminal proceedings regarding the disclosed matters. No tax reduction was included.

The 2014 and 2017 procedures allowed an initial anonymous application. Under the most recent procedure, only identified requests could be filed. The conditions were that the disclosure was honest and complete, that no audit or investigation had been opened regarding the applicant, their spouse, or a company under their control, and that the Authority did not already possess information about the matters being disclosed. Requests were processed through a regular track involving a tax assessment agreement, a green track of amended returns, and a short-form report at a 10% rate for rental income.

According to the Tax Authority's announcement, 823 requests were filed covering assets of approximately NIS 1.89 billion, about half of them in August 2026. Rental income led in the number of requests (324), while foreign bank accounts led in asset volume: 197 requests totaling approximately NIS 623.1 million. The previous procedures, in 2011–2012, 2014–2016, and 2017–2019, handled approximately 9,000 cases. Whether an additional procedure will be issued, and under what terms, the Authority has not announced.

There are several lawful options, none of which grants automatic immunity. The choice among them depends primarily on whether the Authority has already contacted you and on the amounts involved.

• Checking whether there was a tax obligation at all. Some income is exempt — for example, residential rental income below the statutory ceiling and subject to the conditions prescribed by law — in which case there may be nothing to regularize.

• Filing amended returns, or returns for years in which no return was filed, and paying the tax with linkage differentials and interest. The Income Tax Ordinance contains no provision shielding a taxpayer from criminal proceedings for an amended return filed outside the procedure, so the returns and explanations are prepared before filing.

• Approaching the Assessing Officer and reaching a tax assessment agreement, where multiple years, multiple income sources, or a dispute over the classification of income are involved.

• If an audit or investigation has already been opened: representation during the investigation and consideration of a request for compounding, whereby criminal proceedings are terminated in exchange for a monetary payment. Details on the investigation stage can be found on the Representation in Income Tax Investigations.

If the Tax Authority publishes a new voluntary disclosure procedure, we will review its terms against every open case in our office. At this point, there is no way to know whether or when one will be published.

On the civil side, the Assessing Officer may review a return and issue a best-judgment assessment within four years from the end of the tax year in which the return was filed (Section 145 of the Income Tax Ordinance). For a taxpayer who did not file a return, the Assessing Officer issues a best-judgment assessment, and the section does not specify a time limit. A deficiency exceeding 50% of the tax may be subject to a 15% deficiency penalty (Section 191(b)), and if the deficiency was caused intentionally, the penalty is doubled.

An amended return is not a right: the Assessing Officer decides whether to accept it. In a material amendment, the filing date changes to the date of the request, and the four-year period restarts (Income Tax Execution Directive 3/2018). The Ordinance contains no provision exempting a taxpayer who voluntarily amended a return from a deficiency penalty. Amending before an audit is opened can support an argument that there was no negligence, which is the question that determines whether the penalty is imposed.

On the criminal side, the Ordinance distinguishes between degrees of severity. Failure to file a return without reasonable cause is an offense under Section 216. Filing an incorrect return without reasonable justification is an offense under Section 217, carrying a maximum sentence of two years' imprisonment. Deliberately omitting income with intent to evade tax is an offense under Section 220: up to seven years' imprisonment, or a fine plus twice the concealed income. For business income, there are also offenses under Section 117 of the Value Added Tax Law.

An indictment under the Ordinance may be filed within six years from the tax year in which the offense was committed, and for an offense under Section 220, within ten years (Section 225). An offense under Section 220 involving income exceeding NIS 2.5 million over four years, or exceeding NIS 1 million in a single year, also constitutes a predicate offense under the Prohibition of Money Laundering Law.

Some of the information reaches the Authority automatically. Since 2019, Israel has been receiving information under the CRS standard on accounts held by Israeli residents in approximately 100 countries. In November 2024, Israel announced its adoption of CARF, the OECD framework for the automatic exchange of information on digital assets, effective from 2027.

One of the conditions of the expired procedure was that the Authority did not already possess information about the applicant. In other words, even when the procedure was open, anyone whose information had already reached the Authority was ineligible.

1. Initial meeting under attorney-client privilege. It is advisable to bring previously filed returns, account statements, and any correspondence received from the Tax Authority or the bank.

2. Mapping the years, income sources, and amounts, and calculating the tax for each year including linkage differentials and interest.

3. Risk assessment: whether there are signs of an open audit, how the Authority is likely to classify past conduct, and whether there is also VAT exposure.

4. Choosing the track and filing: amended returns, a tax assessment agreement with the Assessing Officer, or representation in an investigation and a compounding request.

5. Closing: payment or a payment arrangement, and documentation explaining the source of funds to the bank.

This area is handled by Adv. and CPA Shlomi Vaknin and his team. Shlomi has been a certified public accountant since 2000 and an attorney since 2008, and served for nearly a decade as a National Inspector in the Professional Division of VAT at the Israel Tax Authority's headquarters.