In 2023, more Israelis left the country for extended periods and did not return, the Central Bureau of Statistics (CBS) reported the last week of September. Most of those who left were men, predominantly single, and between the ages of 25 and 44.
Who qualifies as a resident?
An Israeli resident is defined as someone whose “center of life” is in Israel. This is determined based on various criteria, including place of residence, occupation, family, and income. A person who no longer meets the criteria for residency will not be entitled to benefits from the NII, such as allowances.
If someone living abroad wants to return to Israel, they will need to re-establish their eligibility for national insurance and health fund services. In certain cases, there is a waiting period of several months, or even up to six months, before being able to reinstate eligibility.
Income tax on foreign income
As long as an individual is considered a resident of Israel, they are liable to pay taxes on their income, even if they are residing abroad. To stop tax liability in Israel, one must prove to the Tax Authority that they are no longer an Israeli resident, according to the “center of life” test mentioned above.
Returning resident
Israelis who have lived abroad for six years or more are considered returning residents and may be eligible for various benefits, such as tax relief on foreign income, discounts on personal imports, and other benefits from the Aliyah and Integration Ministry.
Those who have lived abroad for at least ten consecutive years may qualify for “long-term returning resident” status, entitling them to additional tax benefits, primarily concerning the reporting of income and assets from abroad.
Bank accounts for Israelis abroad
Israeli residents who emigrate abroad can continue to maintain a bank account in Israel and manage it remotely, provided they have access through online services, apps, or bank representatives abroad. Some banks may require customers to update their residency information. In certain cases, the bank may request documents verifying residency status or the move abroad, and there may be tax implications, such as international tax reporting.
Mortgage payments
Anyone with a mortgage in Israel is required to continue making monthly payments even if they live abroad. Mortgage payments can be made from an Israeli bank account or through international transfers from a foreign bank account.
Taxation on rental income from Israeli property
If, while living abroad, an Israeli resident rents out their property, they must report the rental income to the tax authorities in Israel and, in some cases, to the tax authorities in their new country of residence.
Remote work as an employee
It is important to have a clear agreement with the employer regarding remote work conditions, especially if the work is being performed in a foreign country.
Remote work as a freelancer
Freelancers working remotely can provide services to clients in Israel or abroad. They must manage their business regularly while maintaining communication with authorities, such as the Tax Authority, VAT, and National Insurance. Like salaried employees, a freelancer who is still considered a resident of Israel must pay Israeli taxes on their worldwide income and report all income to the Tax Authority, even if it comes from abroad.
National Insurance
An employee is still required to continue paying National Insurance premiums in Israel as long as they are considered an Israeli resident. If they lose their Israeli residency, they may need to pay National Insurance in the country where they reside and update their residency status with the Israeli authorities.
