Israel Exit Tax When Leaving: Section 100A in 2026

TL;DR:

• Leaving Israeli residency triggers a deemed sale of nearly all assets at FMV.
• Section 100A allows deferral until actual sale — common practice.
• 10-year oleh exemption gives a step-up at the start of the window; only post-window appreciation is hit.
• Israeli real estate is exempt from exit tax (taxed only at actual sale).
• Pre-departure planning (acceleration, restructuring, gifts) is far cheaper than reactive cleanup.

The Statutory Text

Section 100A of the Israeli Income Tax Ordinance: an individual who ceases to be an Israeli resident is treated as having sold all assets on the day before cessation. Two regime choices for taxpayers:

1. Pay now: recognize deemed gain in the departure year and pay tax immediately.
2. Defer until actual sale: recognize and pay only when the asset is genuinely disposed of, with apportionment between Israeli-period gain (taxable) and post-departure-period gain (foreign).

Deferral requires annual reporting and (usually) security.

Apportionment Formula for Deferred Tax

If deferred, the actual-sale gain is split:

Israeli-period portion = total gain × (Israeli residency days during asset holding period / total holding days)

The Israeli portion remains taxable in Israel at the historical rate. The foreign-period portion is outside Israeli tax. Documentation of acquisition date, residency dates, and asset history is critical.

Olim Step-Up: How the 10-Year Exemption Helps

For an oleh selling foreign assets within the 10-year window, the exemption removes Israeli tax. But what happens if the oleh later sells in year 11 or beyond? The asset is deemed acquired at FMV at the start of the exemption window (effectively a step-up). Only appreciation from that step-up date is taxable.

If the oleh leaves Israel during the window: Section 100A applies but the deemed FMV is at the start of the window for foreign assets. Often zero or minimal Israeli tax.

What's Exempt

• Israeli real estate (taxed only at actual sale under Mas Shevach rules).
• Pensions and provident funds (separately regulated).
• Personal use property below threshold.
• Foreign currency held as cash (no gain since basis = FMV).

Common Mistakes

1. Departing without notifying the ITA. Section 100A doesn't excuse non-filing. Discovery years later via FATCA/CRS triggers penalties and interest.
2. Failing to obtain valuations. Private-company shares, real estate, art — all need contemporaneous FMV documentation.
3. Forgetting the security for deferral. Election without satisfying security requirements is invalid.
4. Treating Aliyah-window step-up as automatic. Documentation of the FMV at start of window is the taxpayer's burden.

Planning Levers Before Departure

• Accelerate disposals while still resident at favorable rates (25% capital gains vs eventual marginal in another country).
• Section 104 reorganization to consolidate holdings into a single entity for cleaner valuation.
• Family gifts to remaining Israeli-resident family (Israel has no gift tax for relatives).
• Trust structures created BEFORE departure with clean classification — see our foreign trust guide.
• Coordinate with new-country exit/entry tax. Many countries (US §877A, UK temporary non-residence rules, France 167 bis) interact with Israeli departure.

If You Left Without Filing

The ITA has expanded its data sources (CRS, FATCA, exchange data). Voluntary disclosure can cap penalties and provide criminal immunity in some tracks. See our voluntary disclosure guide.