One of the most appealing purposes of voluntary disclosure procedures in Israel is the criminal immunity it provides.One of the main advantages of the voluntary disclosure procedure is the criminal immunity it provides.
One of the main advantages of the voluntary disclosure procedure is the criminal immunity it provides.
During the periods in which the voluntary disclosure framework was in effect, it proved highly successful. Many taxpayers used it to regulate their reporting and tax liabilities, significantly enriching the state treasury. A major benefit of the procedure is the assurance that the process will be conducted solely on a civil level, without criminal proceedings.
Nevertheless, some taxpayers refrain from using this procedure out of concern that the Tax Authority may not uphold its commitment. In the new voluntary disclosure procedure published by the Tax Authority on August 25, 2025, greater certainty is provided regarding the use of submitted information. Thus, subject to certain conditions, the Tax Authority undertakes not to use the information to initiate proceedings against the taxpayer.
The purpose of this article is to shed light on the scope of criminal immunity and the Tax Authority’s ability to use submitted information against the taxpayer.
When Does Criminal Immunity Apply?
The new procedure outlines several requirements that must be met, including genuine and good-faith submission, absence of an ongoing investigation (open or covert) against the taxpayer, and lawful origin of the income. In addition, the transfer of funds must comply with one of the laws specified in the circular. If the request meets the conditions, it is approved, and the tax liability is settled, the taxpayer will be granted criminal immunity. It is important to note that immunity applies only to the information disclosed within, or in connection with, the procedure.
The procedure also clarifies how the Tax Authority treats information submitted in a request that is not approved. In such cases, and subject to the procedure, the Tax Authority undertakes not to use the information to initiate proceedings against the taxpayer. However, it may use related information obtained through other means.
Criminal immunity applies only to offenses under the following laws:
- Income Tax Ordinance (New Version), 1961.
- Real Estate Taxation Law (Appreciation and Purchase), 1963.
- Value Added Tax Law, 1975.
- Purchase Tax Law (Goods and Services), 1952.
- Customs Ordinance (New Version).
- Law for the Reduction of the Use of Cash, 2018.
- Fuel Excise Law, 1958.
- Property Tax and Compensation Fund Law, 1961.
- Import and Export Ordinance (New Version), 1979.
- Tobacco Ordinance (New Version).
- Alcoholic Beverages Ordinance (New Version).
- Distilled Spirits Ordinance (New Version).
- Prohibition on Money Laundering Law, 2000 (where the predicate offense is one of the above laws).
- Any tax-related provision under or pursuant to the above laws.
When Does Criminal Immunity Not Apply?
The new procedure specifies several instances where immunity will not be granted:
- Income derived from illegal activity.
- Administrative offenses under the Administrative Offenses Law, 1985.
- Cases where the tax was not paid or the request did not meet the procedural requirements. In such cases, the Tax Authority may use the submitted information as evidence in civil or criminal proceedings.
Exchange of Information Between Countries
Today, it is much easier for the Tax Authority to obtain information on foreign accounts, due to international information exchange agreements, including the CRS Convention, to which Israel and many other countries are signatories. Under this framework, the Tax Authority receives information about Israeli residents’ accounts abroad and provides information about foreign residents’ accounts in Israel.
For example, in July 2023, an Israeli resident was arrested by the Tax Authority for failing to report €20 million in income held in a Spanish bank account. Israel received this information under the CRS Convention. This case illustrates the Tax Authority’s ability to uncover funds held abroad, further emphasizing the importance of settling tax liabilities to avoid criminal exposure and civil sanctions.
In addition to account reporting, transferring funds between countries is also challenging. In most cross-border transfers, banks require proof of tax payment. Without such proof, transferring funds may be extremely difficult, if not impossible.
It is important to note that there are still options available for taxpayers who wish to settle their tax liabilities but do not meet the requirements of the procedure. Our firm has assisted clients in regularizing their tax obligations both during periods without a formal procedure and in cases of non-compliance with its conditions.
Nimrod Yaron & Co. includes a team of attorneys, accountants, tax advisors, and economists with extensive experience in voluntary disclosure procedures and tax liability settlements. To contact a member of our team, click here.
Q&A
Is there a current voluntary disclosure procedure?
Yes. As of 2025, the Tax Authority published a new procedure on August 25, 2025, valid until August 31, 2026.
On what types of income does immunity not apply?
Immunity does not apply to income derived from illegal activity, such as drugs, illegal gambling, and similar sources.
Can the Tax Authority use the information I submitted against me?
Yes and no. If the request is not approved, the Tax Authority may not use the submitted information (though it may use information obtained through other means). However, if the tax was not paid or the request did not meet the procedural requirements, the Tax Authority may use the submitted information.
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