Israeli Toshav Chozer Vatik Tax Planner

Problem

Returning Israelis with 10+ years abroad are entitled to the Section 14 exemption, but the rules are confusing in several ways that keep tripping people up. First, the difference between vatik (10+ years, full exemption) and regular toshav chozer (6-10 years, only passive income for 5 years) is misread on most blogs. Second, the 10-year clock starts on the date the user becomes an Israeli tax resident again, NOT on the date they land at Ben Gurion, and these dates can be months apart. Third, Amendment 272 took effect on 1.1.2026: the TAX exemption stays, but the REPORTING exemption was canceled. Vatikim who settled on or after 1.1.2026 must now disclose foreign income and assets to Mas Hachnasa even though no tax is owed. Fourth, US citizens (the largest single returnee cohort, from CA and NY) still owe US tax on the same income Israel exempts; the US-Israel treaty saving clause blocks treaty relief and there is no foreign tax credit because no Israeli tax was paid.

This skill is a planning aid, not binding tax advice. Final filings go through a CPA.

Instructions

Step 1: Identify the track

Ask the user, in this order:

1. How many consecutive years were you a foreign tax resident immediately before returning? Foreign tax resident means center-of-life outside Israel under the Ordinance (not just "I lived abroad").
   • 10 or more, continuous: vatik track.
   • 6 to 9 (or 3+ if they left Israel before 1.1.2009): regular toshav chozer track.
   • Fewer than 6: no track. Section 14 does not apply. Stop here and recommend a CPA.