Section 1 of the Law of Return 5710-1950 (“the Law“) grants all Jews the right to emigrate to Israel and gain Israeli citizenship, so long as the individual has not acted against the Jewish people, is not a danger to public health or national security and does not have a criminal conviction which may endanger the general public’s safety.

Under section 4A of the Law, this entitlement extends to the children and grandchildren of a Jew who would be entitled under Section 1 of the Law (and their respective spouses), with the exception of a Jew who voluntarily converted to another faith.

A Jew is defined as someone born Jewish or who converted to Judaism. 

All qualifying new immigrants who emigrate under the Law of Return are entitled to receive various measures of support from the State of Israel including:

1. A non-means tested cash payment upon arrival in Israel;
2. 6 months’ financial support for new immigrants who cannot find employment due to: illness, being a carer, pregnant women, those approaching pension age (women 55-60 and men 60-65), single parents or due to disability;
3. Child day-care subsidies;
4. Special disability allowance; 
5. Special grants for those in severe financial hardship;
6. Special grants for professional athletes/sportsmen/women/trainers;
7. Special grants for those who have immigrated following emergency evacuations;
8. Special pension entitlement;
9. Car purchase tax discount;
10. Import tax discount;
11. Entitlement to extra income tax points;
12. Property purchase tax discount;
13. Municipal tax discount;
14. Medical provider (HMO) discounted premium;
15. 500 hours of free Hebrew classes;
16. Full grant covering course fees for an undergraduate degree (those under 27) or postgraduate degree (those under 30) in Israel.

In addition, Amendment 168 to the Income Tax Ordinance [New Version] 5721-1961, which was effective 1 January 2007, grants “New Immigrants” (oleh chadash) and “Veteran Returning Residents” (toshav chozer vatik) (Israeli citizens who have lived abroad for at least 10 years) entitlement to a 10 year tax exemption on reporting and paying tax in Israel on all passive non-Israeli sourced income and capital gains, even if the foreign assets are acquired after immigrating to Israel. 

Automatic entitlement to the 10 year tax exemption is subject to fulfilment of certain criteria, including but not limited to, not spending more than 90 days in Israel in each of the 10 years before emigrating. The criteria are set out in full in the Israel Tax Authority (“ITA“) Circular 2/2013 published 13 January 2013. 

There is no requirement to register for the 10 year tax exemption with the ITA.  Generally speaking, the 10 year tax exemption commences when a person has a permanent home in Israel or receives his Certificate of Immigration on arrival in Israel.

It should be noted that being classified as a New Immigrant or Veteran Returning Resident by the Israeli Ministry of Interior does not necessarily mean that the same classification will be applied by the ITA when determining entitlement to the 10 year tax exemption.

Circular 2/2013 establishes an application process designed specifically for people with a history of visiting Israel, to enable applicants to be granted statuses of New Immigrant or Veteran Returning Resident by the ITA in relation to their tax residency, so that they will be entitled to the 10 year tax holiday from the date of immigration. 

The Circular divides applicants into two groups:

1. Applicants with low ‘centre of life’ ties to Israel (category 1); and
2. Applicants with high ‘centre of life’ ties to Israel (category 2).

If an applicant meets all the relevant criteria (as set out below), he will fall into the category 1 and is able to complete the “Green Channel” application form to be granted New Immigrant or Veteran Returning Resident status by the ITA and thus entitled to the 10 year tax holiday from the date he arrived in Israel. 

If the applicant does not meet the relevant criteria, he will fall into category 2 and will need an individual ruling from the ITA to confirm entitlement. 

To fall into category 1, applicants must meet either criteria ‘A’ or criteria ‘B’ in full:

Set of criteria A

• In each year of the 10 years before arriving in Israel the applicant did not spend more than 90 days in Israel (in total); AND
• In each year of the 10 years before arriving in Israel the applicant’s spouse and/or minor children did not spend more than 90 days in Israel (in total); AND
• Neither the applicant nor the applicant’s spouse received state benefits from Israel Social Security in any of the 10 years before arriving in Israel; AND
• Neither the applicant nor the applicant’s spouse nor the applicant’s minor children received medical treatment from an Israeli HMO or hospital through national health insurance in any of the 10 years before arriving in Israel; AND
• The applicant’s spouse was not deemed an Israeli Resident in the 10 years before the applicant arrived in Israel; AND
• No criminal or other proceedings have been commenced by the Israel Tax Authority in relation to the applicant; AND
• The applicant was not deemed an Israeli tax resident through a tax assessment in the 10 years before the applicant arrived in Israel.

OR

Set of criteria B

• In any 8 of the 10 years before arriving in Israel the applicant did not spend more than 60 days in Israel (in each of those 8 years) and the applicant’s spouse did not spend more than 90 days in Israel (in each of those 8 years); AND
• In the other 2 of the 10 years before arriving in Israel the applicant did not spend more than 183 days in Israel (in total) in each year; AND
• In the year immediately before arriving in Israel the applicant did not spend more than 60 days in Israel (in total) and the applicant’s spouse did not spend more than 90 days in Israel (in total); AND

• Neither the applicant nor the applicant’s spouse received state benefits from Israel Social Security in any of the 10 years before arriving in Israel; AND
• Neither the applicant nor the applicant’s spouse nor the applicant’s minor children received medical treatment from an Israeli HMO or hospital through national health insurance in any of the 10 years before arriving in Israel; AND
• The applicant’s spouse was not deemed an Israeli Resident in the 10 years before the applicant arrived in Israel; AND
• No criminal or other proceedings have been commenced by the Israel Tax Authority in relation to the applicant; AND
• The applicant was not deemed an Israeli tax resident through a tax assessment in the 10 years before the applicant arrived in Israel.