Tax returns are filed on a calendar-year basis.
Subject to certain exceptions, as detailed below, an individual who is a resident of Israel is required to file an annual tax return. Should a tax return be required, 30 April is the prescribed filing due date, subject to extensions.
A resident taxpayer may not be required to file a tax return for 2019 where tax is withheld at source from one’s wages and at the prescribed levels from other specified sources (e.g. rent, dividends, interest, and capital gains) unless one of the following exceptions apply, in which case the individual would be required to file a tax return (detailed rules apply; certain further exceptions may also be applicable):
- Wages exceeded ILS 653,000.
- The taxpayer or spouse are subject to the 3% surtax (income exceeds ILS 649,560)
- Any of the following categories of income exceeded ILS 339,000:
- Rental income.
- Foreign income.
- Non-exempt foreign pension income.
- Certain other income (detailed definitional rules apply).
- Income from the sale of traded securities (turnover) exceeded ILS 2,538,000.
- Interest income exceeded ILS 647,000.
- The taxpayer together with one’s spouse and children under age 18 at any time during the year owned:
- shares of a foreign non-publicly traded company
- foreign assets having a value of at least ILS 1,883,000, or
- deposits with a foreign banking institution of ILS 1,883,000 or more.
- The taxpayer is the settlor or beneficiary of a trust during the tax year.
- The taxpayer received a distribution (direct/indirect) from a trust or from the creation of a trust an amount of more than ILS 100,000 (cash/equivalent), even if not subject to tax in Israel.
These amounts are periodically updated.
Married couples are permitted to file separate or joint returns. In the latter case, a separate calculation may still be obtained for tax on income from personal exertion in any business or vocation or from employment, provided the income is from independent sources.
A non-Israeli tax resident employee will generally not be required to file an Israeli income tax return if proper withholdings are remitted to the tax authorities, the employee's annual income does not exceed ILS 649,560, and the employee has no other Israeli-source income.
Payment of tax
Payroll withholding of income and social tax is statutory, irrespective of the residence of the employer or employee. In general, withholding taxes in respect of salary payments effected from the 14th day of one month to the 13th day of the following month are payable on the 15th day of that following month.
Tax advances are required to be paid by an individual for interest, dividends, capital gains, and rental income in amounts and according to specific deadlines set out in detailed Israeli tax rules.
Self-employed individuals are generally required to make monthly or bimonthly advance tax payments, usually based on a percentage of turnover.
Statute of limitations
The statute of limitation period for taxation of individuals is generally four years from the end of the tax year in which the relevant tax return is filed.