Israel Mandates Digital Asset Reporting Starting 2027

The Israel Tax Authority (ITA) will require all capital declarations to be submitted through its online portal beginning January 1, 2027. This change eliminates the existing option to file in paper format. Taxpayers and their advisers must upload supporting documentation, such as purchase invoices, individually for each asset or liability listed in the declaration.

A capital declaration, known locally as hatsharat hon, is a comprehensive listing of an individual’s personal assets and liabilities. The ITA uses this document to identify potential unreported income by comparing changes in net capital over time. It does not tax the assets themselves but serves as a verification tool. The agency typically demands these declarations from individuals with established tax files roughly every five to six years.

Business owners and holders of 10% or more of a company’s shares generally maintain tax files, as do beneficiaries of trusts. Most employees do not have tax files because their income tax is withheld at source. However, employees earning more than NIS 721,560 in 2025 are required to open a tax file and file annual returns. The ITA focuses on the delta between consecutive declarations to assess whether reported income accounts for increases in net worth.

New regulations also affect recent immigrants. Olim who established residence in Israel before 2026 remain exempt from disclosing foreign assets, reporting only Israeli holdings if requested. Those establishing residence on or after January 1, 2026, must provide full disclosure of both domestic and foreign assets. This shift aligns new immigrant reporting requirements with those of long-term residents.

The digital filing process introduces specific operational constraints. Taxpayers have 120 days to file a requested declaration, though extensions are possible. The online system may stall if supporting documentation for an item is missing. Tax officials expect purchase invoices for items costing NIS 3,000 or more. Assets must be listed at original cost rather than current market value. For example, a home purchased for NIS 2 million must be listed at that price, even if its current market value is higher. If purchase invoices for household items are unavailable, taxpayers may request a survey from their insurance company to document values.

Postal delays can complicate the timeline, as the 120-day period begins upon receipt of the demand. Taxpayers should record the date they receive the request and apply for an extension if necessary. The ITA expects meticulous attention to detail, as insufficient documentation, such as personal notes replacing formal invoices, may prompt immediate inquiries from tax officials.