Voluntary Disclosure 2025 – All Relevant Information

New Voluntary Disclosure Procedure – August 2025

Over the past year, discussions took place between the Israel Tax Authority and the Attorney General regarding the publication of a new voluntary disclosure procedure. On August 25, 2025, the Tax Authority published the Voluntary Disclosure Procedure – Temporary Order 2025.

The procedure allows taxpayers who failed to report their income over the years to settle their reporting obligations and tax liabilities (including interest and indexation differentials from the end of each year until payment) while receiving criminal immunity. Applications must be submitted to the Tax Authority’s Investigations Department, including a brief background and relevant calculations. The Investigations Department will then review the taxpayer’s background, whether the case is already under assessment, whether an investigation (open or covert) is ongoing, and whether there are grounds to deny the request. If all conditions are met, the taxpayer will be approved to proceed with the voluntary disclosure process and receive criminal immunity.

The new procedure includes two tracks:

1. Green Track – When certain conditions are met, a simplified process applies (without the taxpayer’s choice). Cases eligible for the green track include:

• Financial income – only if the capital as of 31.12.2014 was below NIS 4,000,000 and no deposits/transfers were made into the financial account during the 10 years preceding the application.
• Rental income (domestic/foreign) – total rental income did not exceed NIS 250,000 per year.
• Digital assets – total income during the disclosure period did not exceed NIS 500,000, and the fair market value of the digital assets as of 31.12.2024 did not exceed NIS 1,500,000.

2. Regular Track – If the green track conditions are not met, the Investigations Department will notify the taxpayer that they may proceed with voluntary disclosure. In such cases, assessment discussions with the tax assessor must be conducted.

Key Developments

In previous procedures, undeclared income typically involved rental income from real estate in Israel or abroad, or passive income (interest, dividends, capital gains) from foreign banks. This year, a new player has entered the picture – the crypto market.

At the beginning of 2024, a temporary order was issued titled “Procedure for Receiving Tax Payments from the Realization of Decentralized Assets.” This was intended to ease tax payments for crypto investors due to the difficulties banks imposed on receiving such funds. It appears that the Tax Authority was preparing the ground for the 2025 Voluntary Disclosure Procedure, which explicitly includes crypto-related income.

During assessment discussions, taxpayers must present supporting documentation and the basis for their calculations. At the conclusion of these discussions, a tax assessment agreement will be signed between the taxpayer (through their representative) and the Tax Authority. Once the agreement is signed and the tax is paid, the taxpayer will receive criminal immunity.

Our firm participated in a panel at the Israel Bar Association on the topic of the 2025 Voluntary Disclosure Procedure that is expected to be published. Click here to read about the conference.

Important Points to Note:

1. The 2025 procedure is expected to be stricter. Based on the history of voluntary disclosure programs, the Tax Authority is likely to impose more rigorous checks on the source of funds, as well as higher tax rates in cases where the assessor is not satisfied, particularly with respect to virtual currencies such as Bitcoin and Ethereum.
2. The “carrot and stick” approach. In the past, voluntary disclosure programs were offered for a limited time before the Tax Authority began enforcement actions. For example, the 2014 procedure was published about 18 months before the Tax Authority announced it had obtained information on numerous Israelis with Swiss bank accounts. Shortly thereafter, criminal proceedings were initiated against non-compliant taxpayers. It is reasonable to assume that the Tax Authority already holds data it will use once the 2025 procedure expires. For instance, it has long been receiving information from crypto exchanges about Israeli holders of digital assets.
3. No more anonymous applications. In previous procedures, taxpayers could begin the process anonymously, without disclosing their identity until reaching a tax settlement framework. Under the new procedure, however, the taxpayer’s identity must be disclosed at the outset.
4. This will be the last voluntary disclosure procedure. The Attorney General conditioned approval of the 2025 procedure on it being the final one. The Tax Authority has committed to this requirement. Accordingly, legislation is expected after the expiration of the 2025 procedure, setting clear rules and penalties for late disclosures – without granting criminal immunity.

It is still possible to settle undeclared income, including crypto-related income, outside the voluntary disclosure framework through assessment discussions and signing a tax agreement. However, in such cases, no criminal immunity will be granted.

Given the complexity of the process, it is crucial that applications be submitted by a tax attorney or accountant with expertise and practical experience (including prior Tax Authority experience), as the procedure may have significant implications for the taxpayer.

Our firm includes former senior officials of the Tax Authority who handled numerous voluntary disclosure cases during their tenure, and who are deeply familiar with the Authority’s internal practices. In addition, our team includes attorneys, accountants, tax advisors, and economists with extensive experience in voluntary disclosures and tax settlements, particularly in the crypto sector.

Background – Previous Voluntary Disclosure Procedures

The first voluntary disclosure procedure was introduced in 2005, allowing taxpayers to settle undeclared income in exchange for criminal immunity. Between 2011 and 2019, the Tax Authority issued three additional temporary orders. Over time, the conditions became progressively stricter. The most recent procedures were highly successful: in the last two programs alone, approximately NIS 5 billion in taxes were collected, and about NIS 30 billion in assets were reported, generating an estimated NIS 500 million annually in ongoing tax revenue.

In the early procedures, the main goal was to “bring taxpayers into the tax net.” In later procedures, however, the Tax Authority raised the bar. While criminal immunity was always granted, the Authority began examining issues of money laundering as well, particularly following Amendment 14 to the Prohibition on Money Laundering Law (effective 7.10.2016), which classified tax evasion as a predicate offense.

In practice, this meant that the Tax Authority required documentation proving the legitimacy of the funds that generated the income. Where it was not satisfied that the source of funds was lawful, additional taxation was imposed (beyond the regular tax on income from the past ten years), at rates of 10%–15%, and in exceptional cases even 50%, on the capital itself.