Does Israel tax foreign income?

New immigrants and returning residents: foreign income exempt for 10 years. In one line: 10 years: 0% on foreign income · up to 50% on Israeli income.

Can I run an online business from Israel?

Effective tax about 45% with the cheapest legal set-up, which costs about USD 3,000 a year: foreign income exempt 10 years; work done in Israel taxed normally.

What is the catch in Israel?

Rules for reporting and the exemption were revised for 2026: .

Moving to Israel: tax, residence and real costs (2026)

Israel: 10 years: 0% on foreign income · up to 50% on Israeli income. The cheapest route to residence is law of Return only: about USD 0 in fees doing it yourself, with no investment, in about 1 months. Living costs about USD 2,650 a month for one person in Jerusalem, USD 1,800 in Beersheba, and around USD 1,700 on a bare-minimum budget.

Key facts

Tax in one line	10 years: 0% on foreign income · up to 50% on Israeli income
Foreign income	new immigrants and returning residents: foreign income exempt for 10 years
Gains · dividends	exempt on foreign assets for 10 years · exempt if foreign
Wealth · inheritance tax	none · none
Cheapest residence	Law of Return only
Money needed	About USD 0 in fees doing it yourself, with no investment
Time	about 1 months
Doable yourself?	Yes, with a checklist
Days you must spend there	183
Citizenship	on arrival for olim
Online business	45% effective, about USD 3,000 a year to run: foreign income exempt 10 years; work done in Israel taxed normally
Living (one person a month)	Jerusalem ~USD 2,650; bare minimum ~USD 1,700; family of four ~USD 5,500
Good for	tech start-ups, defence tech
Common set-up	olim status + foreign holdings

Pros and cons

Pros	Cons
10 years without tax on foreign income Start-up ecosystem	Only for those eligible under the Law of Return War risk High local taxes

Questions

How much does residence in Israel cost?: Law of Return only: about USD 0 in fees doing it yourself, with no investment, about 1 months.
Does Israel tax foreign income?: New immigrants and returning residents: foreign income exempt for 10 years. In one line: 10 years: 0% on foreign income · up to 50% on Israeli income.
What does it cost to live in Israel?: Living costs about USD 2,650 a month for one person in Jerusalem, USD 1,800 in Beersheba, and around USD 1,700 on a bare-minimum budget (based on livingcost.org, 2026).
Can I run an online business from Israel?: Effective tax about 45% with the cheapest legal set-up, which costs about USD 3,000 a year: foreign income exempt 10 years; work done in Israel taxed normally.
What is the catch in Israel?: Rules for reporting and the exemption were revised for 2026: .

Compare

United Arab Emirates (Dubai, Abu Dhabi): 0% on foreign income · 0% on local income · 0% on gains and dividends
Qatar: 0% on foreign income · 0% on local income
Bahrain: 0% on foreign income · 0% on local income
Oman: 0% today · 5% on high incomes from 2028
Saudi Arabia: 0% on foreign income · 0% on local income

Compare all 53 places with your own income and budget →

Sources

https://www.gov.il
Living costs: based on livingcost.org (livingcost.org, June 2026), rounded