The Economic Plan approved by the Israeli government on May 10, 2013 1  was initiated in order to save the Israeli economy. The Plan includes sections that deal whit economic efficiency, reducing growth barriers as well as an extensive chapter which deals with taxation. In the tax section many current exemptions were eliminated and additional taxes have been imposed. Below is a review of the changes in the burdens over foreign residents.

Exemptions for foreign residents which were canceled

  • Sale of Short Term Loan or Israel State Bonds.
  • Sale of Israeli Company shares that most of its Real Estate or Natural Resources are in Israel.
  • Sale of residential apartments in Israel.
  • VAT on tourist services.
  • Cancellation of a purchase tax exemption on the purchase of first single apartment 2 .

Increasing the tax burden on real estate 3

  • Eliminating the tax exemption for the sale of one residential apartment once every 4 years 4 .
  • Real Estate association transaction will be subjected to purchase tax.
  • Imposing of municipal taxes of 200% on "ghost apartments" 5  .
  • Payment of tax for sales of residential apartments over ILS 5 million, even if the seller exempted from tax.
  • Adding a purchase tax level for apartment purchasing at a rate of 8% for amounts over ILS 5 million.
  • Housing upgraders will not be entitled to the tax exemption in purchasing individual apartment 6 .
  • Tax exemption of gifts will be granted only if the gift is to an immediate family member.

Immigration Encouragements

Foreign resident who will immigrate to Israel (Aliya) will be eligible to a refund of purchase tax 7 and of exemption of betterment tax 8 .


  • Trusts created by a foreigner and include an Israeli beneficiary shall be taxable 9 over the beneficiary's share.
  • Trusts created by a foreigner that include an Israeli beneficiary shall be subject to taxation 10 over the value increase of overseas assets.
  • Trusts created by a foreigner and one of the creators died, the trust income will be deemed as the beneficiary income and the trust assets will be deemed as the beneficiary assets. In case one of the beneficiaries is an Israeli resident, the whole trust will be deemed as a resident of Israel.
  • Trusts created by a foreigner in which the beneficiary is not a family member, shall be deemed as a trust of an Israeli resident.