Do I need to file in 2026 even if tax due is zero?

Yes. Under the 2026 framework, reporting may remain mandatory even when no Israeli tax is due.

Why are non-US ETFs risky for US persons?

Many non-US ETFs may be classified as PFIC, which can trigger heavier US tax and reporting obligations.

IBKR Tax.

Practical tax guidance for Olim investors in Israel.

IBKR Tax Guide

IBKR Tax Guide for Olim

This guide covers Israeli tax rules for investing through Interactive Brokers: the 10-year exemption, post-exemption rates, Toshav Hozer, PFIC traps, and the mandatory 2026 reporting reform.

Personalization

Are you a U.S. Citizen / Green Card Holder?

What is IBKR?

Interactive Brokers (IBKR) is a global brokerage platform that lets you buy and manage stocks, ETFs, bonds, and other assets from one account. Many Olim use it to centralize an international portfolio.

IBKR is an investment broker (not a traditional retail bank).
It provides multi-market access, often with competitive pricing.
For Olim, tax compliance quality is as important as portfolio performance.

10-year tax exemption — Section 14 of the Income Tax Ordinance

Israeli law — Section 14 of the Income Tax Ordinance (amended 2007)

The 2007 reform created one of the world's most generous tax exemptions for new immigrants. For 10 years from the date of Aliyah, an Oleh Hadash is exempt from Israeli tax on virtually all foreign-source income.

Who qualifies and for how long?

Oleh Hadash

10 years

Any new immigrant. The year of Aliyah counts as year 1.

Toshav Hozer Vatik

10 years

Israeli resident who lived abroad for more than 10 consecutive years.

Toshav Hozer Ragil

5 years

Israeli resident who lived abroad for 6–10 years.

✅ What is exempt (foreign-source income)

Dividends from foreign companies
Interest from foreign accounts or bonds
Capital gains on foreign assets (stocks, ETFs, crypto, foreign real estate)
Foreign pension income
Income from a foreign business activity (if performed outside Israel)
Rental income from foreign real estate

❌ What remains taxable

Israeli-source income (salary in Israel, dividends from Israeli companies…)
Capital gains on Israeli assets
Professional income earned in Israel
Rental income from Israeli real estate

The reporting exemption (not just tax) also applies during the period — but this changes in 2026.
The start date is your official Oleh / Toshav Hozer status date.
Careful archiving of IBKR statements remains essential even during the exemption period.

Toshav Hozer — returning Israeli residents

A Toshav Hozer is an Israeli citizen who lived abroad for a significant period and returns to Israel. Depending on how long they were away, their tax benefits differ.

Toshav Hozer Vatik (10+ years abroad): 10-year exemption on foreign income — same as Oleh Hadash.
Toshav Hozer Ragil (6–10 years abroad): 5-year exemption on foreign income.
Less than 6 years abroad: no specific tax benefit.
The return date to Israel marks the start of the benefit period.
Documentation of foreign residency (lease, bank statements, visas) is important to establish eligibility.

After the exemption period — applicable tax rates

At the end of the 10-year (or 5-year) period, foreign-source income becomes fully taxable in Israel at the following rates:

Type	Taux	Note
Capital gains on securities	25%	30% if >10% shareholder
Foreign dividends	25%	30% if >10% shareholder
Interest (bonds, accounts)	15–25%	Depends on asset type
Employment income (top bracket)	50%	+ possible social contributions
Foreign rental income	15% (flat)	Or marginal rate with expense deduction

Non-US profile (French/European citizen)

During the benefit period: IBKR foreign income is generally exempt from Israeli tax.
From 2026: filing remains mandatory even if tax due is $0.
Review treaty implications between Israel and your prior tax country.
Maintain annual reporting files: currency, dividends, gains, withholding tax.
Check whether your country of origin taxes foreign income regardless of residency.

2026 reform: ITA reporting is now mandatory

Starting January 1, 2026, the reporting exemption is removed for Olim. Even when tax due is $0, filing is still required with the Israel Tax Authority (ITA — רשות המסים).

"No tax due" no longer means "no filing required".
Timely and accurate reporting is now central for all Olim in their exemption period.
Missing or incomplete filings may trigger penalties and information requests.
This affects all Olim still within their exemption window in 2026.

IBKR documents for Israeli tax filing

IBKR generates several reports useful for Israeli tax filing. Here is what to download each year:

Annual Activity Statement (PDF/CSV) — full year summary.
Dividends Report — list of all dividends received by ticker and currency.
Realized & Unrealized Gains — history of realized gains and losses.
Interest Report — interest received on bonds or cash balances.
Tax Forms (1099 for US profiles) — official tax form for your profile.
Convert all amounts to NIS using the Bank of Israel rate (boi.org.il) for each transaction date.

Essential glossary

ITA

Israel Tax Authority — רשות המסים.

IRS

U.S. Internal Revenue Service.

PFIC

Passive Foreign Investment Company — U.S. classification applied to many non-US funds, often with unfavorable tax treatment.

Form 8621

IRS filing often associated with PFIC holdings.

FBAR/FATCA

U.S. foreign account and asset reporting regimes.

Toshav Hozer

Returning Israeli resident — may qualify for tax benefits depending on years spent abroad.

Foreign-source income

Income generated outside Israel (dividends, interest, gains, rent, pensions...).

Section 14

Article of the Israeli Income Tax Ordinance that establishes the 10-year exemption.

Common mistakes to avoid

Assuming the 10-year benefit removes all filing obligations — no longer true from 2026.
Forgetting the exemption only covers foreign-source income — Israeli income is always taxable.
Not documenting the Aliyah or return date (Toshav Hozer) to establish eligibility.
Not keeping IBKR annual reports and FX conversion evidence.
Buying non-US ETFs under a US profile without PFIC review.
Failing to report foreign dividends after the exemption period ends.

Documents to prepare before filing

Monthly IBKR statements + Annual Activity Statement.
Dividend/interest/gains breakdown by ticker and currency.
Tax identity evidence (Teudat Oleh, Aliyah date, residency position).
Withholding tax evidence and foreign tax paid records.
NIS exchange rates for each transaction date.
Toshav Hozer eligibility proof if applicable (foreign residency documentation).

Practical scenarios

Case A: Non-US, within 10-year window, US equity portfolio

IBKR dividends and gains are exempt from Israeli tax. But from 2026, you must file a return with the ITA even when tax due is zero.

Case B: Non-US, 10-year period ended

All foreign income becomes taxable in Israel. Capital gains and dividends at 25%. Plan ahead — anticipate this transition from year 8 or 9.

Case C: U.S. citizen with EU ETFs on IBKR

High PFIC risk. Even with good investment performance, US tax treatment may become unfavorable with heavy reporting (Form 8621). Prefer US-domiciled ETFs.

Case D: Toshav Hozer Vatik (returned after 10+ years abroad)

Same benefit as Oleh Hadash: 10-year exemption on foreign income. Document your time abroad carefully to establish Vatik status.

FAQ — IBKR & Olim taxation

Yes. From January 1, 2026, filing is mandatory even when tax due is $0. The tax exemption no longer removes the reporting obligation.

Disclaimer: OlimAid provides educational information regarding Israeli taxation. We are not licensed tax advisors or CPAs. Tax laws, specifically the 2026 reforms, are complex. This is not official advice. Always consult with a qualified professional before filing reports with the ITA or IRS.