Since the 2003 reform Israel has taxed its residents on a personal basis, meaning on their income anywhere in the world. A foreign resident, by contrast, is taxable in Israel only on income produced here. The difference between the two statuses is not a difference of rates but of scope, which is why residence is often the only question genuinely in dispute in a file.

What follows sets out how residence is determined, what the day count presumptions do, and what emerges from the judgments that have decided the point.

The test: center of life

Section 1 of the Income Tax Ordinance defines an Israeli resident as an individual whose center of life is in Israel. The test has two layers.

The objective layer examines the whole body of family, economic and social connections. The Ordinance lists expressly, and not exhaustively: the location of the permanent home, the place of residence of the individual and the family, the usual place of occupation or permanent employment, the place of active and substantial economic interests, and the place of activity in organizations, associations and institutions.

The subjective layer examines where the individual himself regards his center of life as being. Intention alone is not sufficient, but it is relevant.

The two presumptions, and what they actually are

Alongside the substantive test the Ordinance sets out two quantitative presumptions:

Two points here are commonly misunderstood.

First, the presumptions are rebuttable, and in both directions: by the individual and by the assessing officer alike. Someone present for 200 days is not automatically a resident, and someone present for 40 days is not automatically a foreign resident. The presumption moves the starting point, not the outcome.

Second, part of a day counts as a whole day. The day of entry and the day of departure are both counted. In the Bar Refaeli matter an argument for discounting days because they were partial was expressly rejected. In borderline ranges that difference decides the case.

What the case law shows

The judgment in Gonen is the foundation. It held that residence is examined by the substantive center of life test rather than by a technical day count, and that the whole body of connections must be weighed. It also held that subjective intention is not sufficient without an actual change, and that where connections are split the answer tends towards the state the taxpayer left, so long as severance has not been proved.

A line of judgments since then allows the patterns to be identified.

What tends to decide against severance: a permanent home left in Israel; a spouse and children who remained here; continued business activity or management of assets in Israel; active bank accounts, insurance policies and credit cards; the absence of a clear permanent home in another state. In Amshikashvili it was held that a person who lived for many years around the world without establishing a center of life in any one place remained an Israeli resident, because the absence of an alternative center of life is not severance. In Sapir, despite prolonged residence in Singapore, severance was held not to have been proved against the connections that remained.

What tends to support severance: relocation of the permanent home and the family; transfer of most of the economic activity; disconnection from Israeli institutions and services; and a consistent pattern sustained over years. In Tzur, one of the few instances of successful severance, the appellant had a stable permanent home in the Congo, a family that had moved with him, and a genuine severance of economic activity, even though in certain years the day presumption was met.

The principal pattern is that severance of residence can succeed but demands strong, consistent and documented proof. Ambiguity works against the party asserting severance.

A procedural point worth knowing

In a decision of December 2024 in Tzach it was held that in an appeal where residence is the central dispute, the hearing should be split: residence is decided first, and only if the appellant is found to be an Israeli resident is the quantification of taxable income heard. The rationale is that the two questions differ in their witnesses, their evidence and the burden of proof, and that residence is a preliminary question, comparable to the relationship between liability and damage.

For anyone facing an assessment proceeding on the point, that is a practical rather than a theoretical distinction.

What to document, and when

Because the determination is factual, the quality of the documentation is usually what decides it. The following are worth collecting in real time rather than in retrospect:

A document produced in real time, by a third party, for a purpose unrelated to tax, is worth more than any later affidavit.

What may change

There has been an intention in recent years to amend the law and move to more mechanical tests, under which a number of days present would determine residence in certain cases without a full examination of the whole body of connections. The proposals were published for public comment and have not matured into legislation, and the binding legal position today is the one described above. Anyone contemplating a change of status would do well to follow the developments, but not to plan on the basis of a text that has not been enacted.

Where the office comes in

David Melnik Law Office advises individuals on tax residence: examining status before a change is made, building the evidential record, applying to the Tax Authority for certainty in advance, and representation in assessment proceedings.

Where to go next

Last updated: 28 August 2026

The above is a general survey only and does not constitute legal or tax advice. The law, the rates and the amounts change from time to time.