TL;DR: Collect four things every year — your Form 106, your trustee statement, your brokerage statements, and a dated log of every equity event with its Bank of Israel rate. Everything else in Israeli equity compliance is derived from those.
Documents to Collect Each Year
| Document | Source | What it proves |
|---|---|---|
| Form 106 | Israeli employer | Salary and any equity income taxed through payroll, plus tax withheld |
| Trustee annual statement | Section 102 trustee | Holdings, grant dates, deposit dates, sales, and withholding |
| Grant notice and plan | Company | The regime, the track, the grant date, and the strike price |
| Brokerage statements | Broker | Sales, proceeds, dividends, and foreign withholding |
| Vesting log with FX rates | You | The shekel value of every taxable event |
| Foreign tax paid certificates | Foreign authority or broker | Entitlement to foreign tax credits |
The Israeli Filing Map
- Form 1301 — the annual individual return. Everything lands here.
- Form 1322 — capital gains schedule for share sales, including post-vesting appreciation.
- Form 1348 — declaration of foreign income and foreign assets, including foreign brokerage accounts.
- Form 5329 — the short declaration the ITA sometimes issues to people it believes should be filing.
- Advance payments — where there is no Israeli withholding, remit during the year rather than at assessment.
Event-by-Event: What to Record
| Event | Record | Why it matters later |
|---|---|---|
| Grant | Date, quantity, strike, regime, trustee deposit date | Starts the 24-month clock and fixes the regime |
| Vesting | Date, quantity, FMV, Bank of Israel rate | Tax event under Section 3(i); basis evidence under 102 |
| Exercise | Date, price paid, FMV, FX rate | Basis, and the tax event under 3(i) |
| Sale | Date, proceeds, fees, FX rate, tax withheld | Capital gain computation and credit claims |
| Relocation | Residency dates and a workday log | Sourcing split and exit-tax apportionment |
If You Are a US Citizen
You are filing twice on the same facts, and the two systems disagree about timing on the Section 102 capital-gains track: the US generally taxes RSUs at vesting while Israel waits for the sale. That mismatch can strand foreign tax credits in the wrong year. Plan the credit ordering in advance rather than reconstructing it at filing. FBAR and Form 8938 cover the trustee and brokerage accounts, with penalties that dwarf the tax at stake. Our FBAR and 8938 guide and the US expat guide cover the coordination.
Annual Timeline
- January — request the trustee annual statement and confirm the prior year's events are complete.
- March — receive Form 106 from your employer and reconcile it to your own vesting log.
- April — US federal return due for US citizens; coordinate positions before filing either return.
- April to May — Israeli annual return due, subject to extension arrangements.
- Throughout — advance payments where no Israeli withholding exists.
Ten Failure Points
- Never reporting a Section 3(i) vest because no employer withheld it.
- Using the sale-date FX rate for a vesting-date income event.
- Failing to step up the cost basis after ordinary-income taxation, and paying twice.
- Selling Section 102 shares inside 24 months and not disclosing the recharacterisation.
- Omitting a foreign brokerage account from Form 1348.
- Claiming foreign tax credits without the underlying certificate.
- Losing the grant notice, and with it the proof of the regime.
- Treating the trustee statement as a filed return — it is not.
- Ignoring dividends on vested shares, which are separately taxable.
- Relocating without a workday log, then reconstructing one from memory.
If any of these describe your position for a prior year, voluntary correction is far cheaper than an assessment — see our note on voluntary disclosure.
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