Voluntary disclosure is a process that allows taxpayers who have committed tax offenses to report undeclared income, settle their tax liabilities with the Israeli Tax Authority, and, in return, receive criminal immunity. The Tax Authority has published several procedures in the past. On August 25, 2025, a new procedure was issued, effective until August 31, 2026.
We often encounter individuals with many questions on this subject. This article aims to provide clear answers to the most common questions regarding voluntary disclosure.
A new voluntary disclosure procedure was published on August 25, 2025 – what should I do now?
If you have undeclared income, you must submit a voluntary disclosure request to the Investigations Department of the Tax Authority. The request must be submitted in accordance with the rules set out in the 2025 procedure, using Annex B.
Who is eligible for the voluntary disclosure process?
The procedure applies to anyone with taxable income that was not reported and for which tax was not paid in Israel, whether the income originated domestically or abroad. It applies even to relatively small amounts, provided they were not reported as required by law.
What are the advantages of voluntary disclosure?
The process offers significant benefits both to the Tax Authority and to taxpayers. For taxpayers, the main advantages are:
- Criminal immunity – failure to report income is a criminal offense; the procedure provides protection.
- A fresh start with the Tax Authority – aligning and regularizing all income reporting.
- Legitimizing funds – while the procedure itself does not automatically legitimize funds, as part of the process, it is advisable to conduct a review of the source of funds, which may also assist in legitimizing them with banks.
What are the disadvantages of voluntary disclosure?
Despite its advantages, the process also has drawbacks for taxpayers:
- Full payment of taxes on all previously undeclared income.
- Additional interest, indexation, and sometimes penalties or fines.
- Requirement to provide documentation of the source of funds – otherwise, tax may also be imposed on the principal.
What is the difference between the “Green Track” and the “Regular Track”?
Criterion | Green Track | Regular Track |
Residential rental income | Up to 250,000 NIS per year | Above 250,000 NIS per year |
Foreign financial assets | Principal up to 4 million NIS (as of 31.12.2024) with no deposits made during the disclosure period | Principal above 4 million NIS and/or deposits made during the disclosure period |
Digital assets | Up to 500,000 NIS for the disclosure period and fair value up to 1.5 million NIS (as of 31.12.2024) | Above these amounts |
Process | Submission of reports/amended reports; the Tax Authority may request discussions | Tax assessment discussions with the Tax Authority |
Duration | Usually relatively short | Longer, includes negotiations |
How long does the voluntary disclosure process take?
The duration depends on the complexity of the case. Typically, the process takes several months, but criminal immunity is granted from the moment the request is approved by the Investigations Department.
Can the Tax Authority use the information provided in a criminal proceeding?
Yes and no. If the request is approved and the tax is paid, the taxpayer receives criminal immunity. If the request is not approved, but the eligibility criteria were met, the Tax Authority cannot use the information. However, if the tax is not paid or the eligibility criteria are not met, the Tax Authority may use the information as evidence in criminal or civil proceedings.
When does the procedure not apply?
The procedure does not apply in the following cases:
- Income derived from illegal activity.
- Administrative offenses under the Administrative Offenses Law.
- Cases where an investigation or audit (open or covert) is already underway by the Tax Authority or another authority.
- The taxpayer has already been convicted of tax offenses.
- The taxpayer has previously paid a settlement (compromise fine) for a tax offense.
- The taxpayer has already submitted a voluntary disclosure request in the past.
Is anonymous voluntary disclosure possible?
No. Under the new 2025 procedure, anonymous requests are not permitted. Requests must be submitted exclusively via the Tax Authority’s online system.
When does criminal immunity not apply?
Immunity does not apply if the Tax Authority already has prior information about the taxpayer and an investigation is underway, or if the taxpayer’s file is already under review or audit. Immunity is also conditional upon full disclosure – if the taxpayer conceals or misrepresents information, immunity will not apply.
Can the process be used more than once?
No. A taxpayer may submit a voluntary disclosure request only once.
Does the statute of limitations apply to unreported income?
No. As long as the income was not reported, there is no statute of limitations. In practice, the Tax Authority typically requires settlement for the current year plus ten prior years (the criminal statute of limitations).
How is a voluntary disclosure request submitted?
First, calculations must be made regarding the unreported income, including tax optimization where possible. Then, the relevant forms must be completed and submitted to the Investigations Department. At submission, it is important to determine whether the case falls under the Green Track or the Regular Track.
What documents must be attached to the request?
The required documents depend on the type of income. A non-exhaustive list includes:
- Declaration form (Annex B to the procedure).
- Power of attorney (if submitted by a representative).
- Bank account statements and amended tax returns.
- Lease agreements (for rental income).
- Work papers and supporting documents for digital assets.
What happens after the Tax Authority approves the process?
The case is transferred to the relevant tax assessor, where assessment discussions take place. At the conclusion, a tax assessment agreement is signed, and the taxpayer must pay the resulting liability. After signing the agreement and paying the tax, the taxpayer receives criminal immunity.
Which tax years does voluntary disclosure cover?
Section 225 of the Ordinance provides for a 10-year criminal statute of limitations from the tax year in which the offense occurred. The Tax Authority considers the offense to have occurred in the year the return was not filed, meaning in practice the period covers 11 years (since the return is due the following year).
What if the Tax Authority does not approve the process?
The taxpayer will not receive criminal immunity. Nevertheless, it is still advisable to settle the tax liability, as in such cases the Tax Authority may refrain from pursuing criminal proceedings.
What are the alternatives to voluntary disclosure?
Taxpayers may file reports for all years in which income was not reported. However, in such cases, no criminal immunity is granted.
Can the request be submitted without a representative?
Technically, yes, but it is not recommended. Given the criminal exposure and the complexity of tax procedures, it is advisable to engage a tax advisor, accountant, or attorney. An experienced representative, particularly one with expertise in voluntary disclosure and international taxation, can often save the taxpayer significant amounts.
Which income must be reported to the Tax Authority?
All income, domestic and foreign, that was not reported and for which tax was not paid. Examples include inheritance income abroad, cryptocurrency transactions, foreign bank accounts, foreign rental income, foreign pensions, and sales of foreign assets.
Can the Tax Authority detect foreign income if I do not report it?
Yes. Through international information exchange agreements with numerous foreign authorities, the Tax Authority receives ongoing data about Israeli residents. These agreements include the OECD’s CRS, the U.S. FATCA, and more. The Tax Authority is also working to obtain information from cryptocurrency exchanges in order to identify unreported crypto income.
What should I pay attention to when voluntary disclosure involves foreign income?
It is important to consider the provisions of applicable tax treaties, foreign tax credit rules, and different reporting tracks (e.g., foreign rental income). These issues can amount to significant sums. Therefore, it is highly recommended to consult a firm specializing in international taxation for comprehensive guidance.
I completed voluntary disclosure – what comes next?
First, the tax liability must be paid. In some cases, the funds are held abroad, and transferring them to Israeli banks may require an accountant’s confirmation of the source of funds or bank approval regarding the money trail (e.g., from crypto or other income sources).
What happens if the tax is not paid?
If the tax is not paid, criminal immunity is revoked, and the Tax Authority may use the information provided as evidence in criminal or civil proceedings.
If I do not wish to report now, will there be future procedures?
The current procedure is time-limited, effective from August 25, 2025, until August 31, 2026. The Tax Authority has previously stated that no further voluntary disclosure procedures will be introduced. Instead, it is working to amend legislation to impose significant sanctions on those who attempt to settle tax liabilities in the future without the benefit of immunity.
Is voluntary disclosure available only in Israel?
No. Many countries have voluntary disclosure programs. Some are temporary, similar to Israel’s model, while others are permanent. Some countries even combine both, offering permanent programs alongside temporary initiatives for specific issues.
Our firm includes both attorneys and accountants and has extensive experience assisting taxpayers in regularizing their tax liabilities with the Tax Authority. When foreign income is involved, our expertise in international taxation allows us to provide clients with a comprehensive solution. To contact our team, click here.
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