Israel’s Ministry of Finance has recently published a draft bill to amend the definition of individual tax residency. The current qualitative “Center of Life Test” would be supplemented by conclusive presumptions based primarily on days spent in Israel.
Key proposals:
Israeli residency: Presumed if an individual spends at least 75 days in Israel in a tax year and has at least 183 weighted days over specified three-year periods, or spends at least 30 days with 140 weighted days plus a resident spouse.
Non-residency: Presumed if an individual spends 74 days or fewer annually with no more than 110 weighted days in each three-year period, or if both spouses spend 90 days or fewer annually with no more than 125 weighted days.
Weighted days calculation: Full count for days in the tax year, 1/3 per day in adjacent years, and 1/6 per day in the second adjacent years.
Residency commencement and termination: Defined, excluding visits of up to 21 days.
Reporting obligations: Existing mandatory reporting based on residency presumptions will be removed.
If passed, the changes will apply from the tax year following enactment, aiming to simplify residency rules while maintaining treaty relief options. Meir Linzen, Guy Katz, and Dr Yuval Navot from our Israeli member firm Herzog Fox & Neeman have published a detailed note on the bill, which can be read here.
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