Voluntary Disclosure: The 2025 Procedure — and the Position Since It Ended

Category: Voluntary Disclosure | Reading time: approx. 5 minutes

Voluntary disclosure is the deal the Tax Authority offers anyone with unreported income or assets — a foreign bank account, undeclared rental income, crypto gains, an inheritance received overseas: you report at your own initiative, pay the tax, and in return receive immunity from criminal proceedings. In September 2025 the Authority, in coordination with the State Attorney's Office, published a new procedure — materially different from its predecessors — and this is the updated guide to it.

What Changed in the 2025 Procedure? Three Big Innovations

• No more anonymous track — unlike previous procedures (where the anonymous track was the most popular), applications are now filed under full name only. The meaning: the preparatory work done before filing matters more than ever;
• Crypto — explicitly covered for the first time — the procedure regulates reporting of digital assets: coin-to-coin conversions, NFTs, staking, airdrops and DeFi activity;
• A fast "green track" — for straightforward cases, with no negotiation: returns are filed within 90 days and the tax is computed per your own declaration.

Who Is Eligible? The Threshold Conditions

The procedure is built on a simple principle: it is for those who come forward before the Authority reaches them — not for those already caught. An application will be rejected if any of the following applies:

• An investigation or examination is underway concerning you at the Tax Authority or another enforcement agency — including your spouse and companies under your control;
• The Tax Authority already holds information related to the application (increasingly common — see below);
• You were previously convicted of a tax offense, or you already used voluntary disclosure in the past — the procedure is available once in a lifetime;
• Income originating from illegal activity — is not covered by the procedure.

And the most important condition of all: the disclosure must be honest, complete and in good faith. Concealing material information voids the immunity retroactively — and the information you provided may then be used against you.

The Two Tracks: Regular and Green

The Green Track — Fast and Simple

For "household-scale" cases, tax is computed per your declaration and returns are filed within 90 days, with no negotiation. Eligibility (balances and values as of 31.12.2024):

• Financial assets abroad — a balance of up to NIS 4 million, provided no deposits were made during the disclosure period;
• Rental income — up to NIS 250,000 per year (see also: Rental Income Tax — the full tracks);
• Digital assets — income of up to NIS 500,000 where the assets' value does not exceed NIS 1.5 million.

The Regular Track — For Complex Cases

Anyone above the thresholds, or with complex circumstances, proceeds before the relevant civil authority (assessing officer, VAT director, real-estate-tax director), with one year to reach an assessment agreement. If no agreement is reached — the civil authority determines liability at its best judgment, subject to the ordinary appeal rights. Here the quality of representation changes the outcome: questions such as the source of the capital (inheritance and gifts are exempt — income-producing capital is taxable), the reporting years, and offsets are all on the table.

What Do You Get — and What Does It Cost?

What you get: if the application is approved and you meet the conditions — full immunity from criminal proceedings for the offenses covered by the disclosure (for trusts — the settlor, beneficiary and trustee can be included together). And an important point: even if the application is rejected — the Tax Authority is barred from using the information you provided as evidence against you.

What it costs: the tax itself (at the ordinary rates of each income source), plus 4% annual interest and linkage differentials. Note the special rules: losses included in the disclosure may be offset only against gains within the disclosure, and foreign tax credits apply only against foreign income within the disclosure. In the regular track a deficiency penalty may also apply, which the civil authority has discretion to reduce.

Read our full article: Foreign Accounts — what the Tax Authority already knows about you →

The above article does not constitute a recommendation, professional advice or a legal opinion. If you have any questions, you are welcome to contact us — we will be happy to advise, accompany and represent you before the Israeli tax authorities.

Kind regards,
Hager-Alperowitz & Co. — Certified Public Accountants