skills-il/government-services/israeli-relocation-abroad

Israeli Relocation Abroad Navigator

Legal notice

This is a free information tool operated by an AI model. It explains the tax rules and helps you organise your own figures. All of its outputs are produced automatically by an AI model, with no involvement, review, or approval by a tax adviser or accountant. The output is not a tax opinion, not a return prepared by a licensed representative, and not professional advice, but a general calculation and explanation only: it does not examine the full extent of your income or your complete documents. An AI model may err, omit data, or present a wrong conclusion.

Any form or text this tool produces is an automatic draft for your personal preparation only, and is not a filed return. Responsibility for reporting and for paying the tax is yours, the binding computation is the Tax Authority's, and representation before the Tax Authority is reserved to those permitted by law. This tool is not a substitute for advice that takes account of the particular circumstances and needs of each person. Consult a tax adviser or accountant before filing or paying. All use of its output is the user's sole responsibility.

Problem

Israelis relocating abroad for work (רילוקיישן) face a tangled web of Israeli regulations that follow them across borders: Bituach Leumi contributions, kupat cholim continuity, tax residency status, pension funds, and apartment rental tax. Most relocation packages ignore the Israeli side entirely, and decisions made (or missed) in the first 90 days often cost thousands of shekels and trigger a waiting period on health coverage when the family eventually returns. This skill gives a personalized, phased checklist so nothing falls through the cracks.

Instructions

Step 1: Assess the Relocation Situation

Before giving guidance, gather the facts that drive every downstream recommendation.

Once you have those, generate a personalized phased plan:

python scripts/relocation-checklist.py --stage pre_move --destination usa --duration 4y --owns_apartment yes

Step 2: Tax Residency Determination

This is the most consequential decision. Israeli tax residency is tested by days and by center of life, independently of citizenship.

Days test (presumption of Israeli residency):

• 183+ days in Israel in the tax year, OR
• 30+ days in Israel in the tax year AND 425+ days total over that year plus the two preceding years

Center of life test: Even if you fail the days test one way or the other, the Tax Authority looks at where your family, home, work, social ties, and economic interests are. This can override the days count in either direction.

Form 1348 (Residency Declaration): If you meet the days test but claim your center of life is abroad, you must file Form 1348 with your annual return. The Tax Authority decides whether to accept the claim. Getting a "ruling" (pre-approved status) from the Tax Authority avoids surprises later.

Key choices:

Run scripts/residency-check.py to walk through the decision with the user's specifics. The script is a guidance tool, not a legal opinion -- always recommend a tax advisor (yo'etz mas) for the final call.

Exit tax (mas yetzia, Section 100A of the Income Tax Ordinance): Cutting Israeli tax residency is not free. Section 100A treats all of a person's worldwide assets as if they were sold one day before the day residency was severed. The unrealized capital gain (based on the asset's fair market value on that day) is subject to capital gains tax. This applies to securities, shares in private companies, real estate abroad, and similar assets, not to assets that remain Israeli-situated.

Rate granularity (different rates for different asset types):

Founder holding 10%+ of a startup: 30% rate, not 25%. Mis-pricing by 5 points on a large equity position is a common expensive surprise.

The default option is to defer payment until actual sale, with Israel taxing the Israeli pro-rata portion of the gain. Alternatively pay at severance on deemed-sale value. Either way, model with a tax advisor before severing residency.

Form 1348 procedure: filed with the annual return (Form 1301) for the tax year of severance, NOT separately and NOT at departure. Filing deadline is the annual return deadline. The Pkid Shuma reviews and may accept, reject, or request more documentation.

Attach: foreign lease/deed, foreign work contract, family relocation evidence (kids' foreign school enrollment, spouse's foreign employer letter), foreign tax filings already submitted, BL residency questionnaire if requested.

If rejected: days-test presumption stands, residency continues for that year. Time the filing carefully with a CPA, or request a pre-approved Tax Authority "ruling" that binds the Authority up-front.

Step 2a: Military Reserve Duty (Miluim) Before Leaving

A relocator of reserve age (anyone with a reserve obligation) must settle their status with the IDF before flying out. Leaving the country with an open reserve obligation and without arranging it first risks being recorded as a deserter (arik), with criminal exposure on return. This is especially salient since October 2023, when large-scale Tzav 8 emergency call-ups became routine.

• Contact your reserve unit in advance to find out whether reserve service is expected during your planned time abroad
• For a personal-reasons relocation, file Form 58 (request to defer, shorten, or be released from active reserve service). The form can be submitted up to 8 days before the start of a reserve stint, but for a relocation it should be filed as early as possible
• For a work-related move, the request goes through the reserve coordination committee (Valtam) rather than Form 58
• Keep proof of flight tickets and the relocation. A soldier who can show tickets were bought before a call-up order was issued, and whose deferral was rejected, can appeal to a commander at the rank of lieutenant colonel or above
• Do this before leaving, not retroactively from abroad

Step 3: Pre-Move Financial Checklist

Two to three months before the flight is the right window for most of this.

Bituach Leumi (National Insurance) and health insurance:

An Israeli who stays a tax resident must keep paying Bituach Leumi and health insurance (dmei briut) while abroad, even with zero income. This is how you keep continuous kupat cholim coverage and avoid a waiting period on return.

• Contribution rates on income reported abroad are set and updated by BL. Confirm at *6050
• Bituach Leumi minimums, effective 01.01.2026:
• Non-treaty country, no income: ₪266/month combined (NI + health)
• Treaty country (USA, UK, most of EU, Canada), paying social security locally: ₪123/month (health only)
• Open a standing order (horaat keva) before leaving so payments don't lapse
• In countries with a bilateral social security agreement (USA, UK, most of EU, Canada), if you pay social security there on employment income, you are exempt from Israeli NI on that income and pay only the ₪123/month Israeli health insurance

If you formally cut residency (nituk toshavut), you stop paying Bituach Leumi but you also lose kupat cholim and restart a waiting period when you return (see Step 6).

What stops and what continues while abroad: Child allowance (kitzvat yeladim) stops once the family is no longer considered resident in Israel, since eligibility for most Bituach Leumi allowances depends on residency. If you stay a tax resident and keep paying contributions, you remain insured for the long-term branches (old-age pension, survivors, disability accrual) and keep kupat cholim active. Work-injury and unemployment branches generally do not cover work performed abroad. Confirm the specific branches with Bituach Leumi before leaving.

Kupat cholim continuity: The practical rule: keep paying Bituach Leumi = your kupat cholim membership stays active and you can resume care on any visit or return. Do not "cancel" your kupat cholim. Notify them of the foreign address so correspondence still reaches you.

Pension funds and keren hishtalmut:

For all three, confirm in writing with the fund that the policy is frozen, not cancelled. Ask whether management fees continue on the frozen balance (some funds charge, some don't).

Banking:

• Notify your Israeli bank you are moving abroad. They will tag the account for FATCA/CRS reporting to your destination country's tax authority
• Request a power of attorney (yipui koach) template in case you need a family member to handle a transfer while you are away
• Keep at least one Israeli debit or credit card active -- many government portals only accept Israeli cards for payment

Step 4: Pre-Move Administrative Checklist

Apostille on documents at the Foreign Ministry:

For any Israeli public document you may need abroad (marriage certificate, birth certificates, academic diplomas, criminal record extract), get an apostille stamp. The confusing part: different documents go to different places.