How Does the Israeli Tax Authority Obtain Information About Foreign Bank Accounts?

The Israeli Tax Authority has developed a range of tools and methods to detect and identify bank accounts held by Israeli residents abroad. In recent years, the Authority has significantly strengthened both its technological and legal capabilities, enabling it to uncover undeclared accounts with a level of efficiency that was not possible in the past.

If you maintain foreign bank accounts that have not yet been reported, it is important to understand how the Tax Authority obtains such information. In these circumstances, it may be wise to consider applying for the Voluntary Disclosure Program, which allows you to regularize your situation before enforcement measures are taken.

The New Voluntary Disclosure Procedure, published in August 2025, enables taxpayers who failed to report income in previous years to settle their reporting obligations until August 31, 2026. Under this procedure, a taxpayer who submits a good‑faith application, provides full disclosure of all relevant information, and pays the required tax (including interest and indexation from the end of each tax year until payment), may be granted immunity from criminal proceedings with respect to the offenses disclosed in the application.

The process is carried out exclusively online, through a designated form on the Tax Authority’s website, and may be completed either by filing amended returns or through an assessment procedure. It is important to emphasize that this benefit applies only to those who apply voluntarily, before the Tax Authority initiates an audit, investigation, or obtains information regarding their case.

International Agreements – The Basis for Information Exchange

Israel is a signatory to tax treaties with more than 50 countries worldwide. Within these treaties, many countries have also agreed to automatic information exchange regarding the income and financial assets of Israeli residents within their jurisdictions.

Another important mechanism that assists the Tax Authority in identifying undeclared bank accounts is FATCA (Foreign Account Tax Compliance Act), a U.S. law designed to ensure taxation of foreign accounts. Under FATCA, all non‑U.S. financial institutions are required to identify accounts held by U.S. citizens and report them to the U.S. tax authorities. In 2014, Israel signed a FATCA agreement with the United States, which also enables the Israeli Tax Authority to receive information about Israeli residents holding financial accounts in the U.S.

Following FATCA, European countries that are members of the OECD developed the CRS (Common Reporting Standard), a global framework for the automatic exchange of financial account information. CRS applies both to OECD member states and to other participating countries and was designed to strengthen international cooperation in tax enforcement.

Today, the Israeli Tax Authority identifies numerous undeclared bank accounts worldwide belonging to Israeli residents.

For further reading, see the article “The End of Banking Secrecy – How the Tax Authority Knows About Your Money Abroad.”

What Has Recently Changed?

If the Tax Authority has had access to such information for years, what has now transformed this data into active enforcement measures?

Until recently, although the Tax Authority had access to large volumes of information about Israeli citizens with foreign accounts, it faced difficulties in directly identifying account holders. Challenges included discrepancies such as foreign passport numbers, variations in the spelling of names across countries, and other data mismatches.

To address these challenges, the Authority has invested heavily in advanced technological tools that allow it to cross‑reference foreign data and accurately identify undeclared account holders. It has recruited programmers, BI specialists, big data experts, and other professionals, enabling it to transform raw data into actionable insights for enforcement purposes.

If you are an Israeli resident with one or more undeclared foreign bank accounts, it is always preferable to approach the Tax Authority voluntarily before it reaches out to you.

What Should You Do If You Have an Undeclared Account?

If you hold a foreign bank account that you have not reported, we strongly recommend contacting the Tax Authority voluntarily before it initiates action against you.

As of August 2025, the Tax Authority has published a new temporary order allowing voluntary disclosure applications until August 31, 2026.

This procedure allows taxpayers who have not yet reported assets or income to regularize their situation, pay the required tax, and obtain immunity from criminal proceedings. Immunity is conditional upon full and honest disclosure, payment of all taxes due, and cooperation with the Tax Authority. This is a unique opportunity to start fresh with the authorities, before information about your assets and income inevitably reaches them through international information exchange agreements.

It is important to note that these benefits are available only to those who apply voluntarily, before the Tax Authority initiates an investigation, or who already possess incriminating information. Applications may be submitted online until August 31, 2026, provided that the applicant meets all conditions, including full disclosure, payment of all taxes due, and cooperation with the Authority.

For more information about the Voluntary Disclosure procedure – click here.

Nimrod Yaron & Co. has extensive experience assisting clients with voluntary disclosure processes, regularizing foreign assets, and lawful international tax planning. For professional advice to help you navigate the new era of global financial transparency – contact us.

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