Transferring Large Sums From Israel to the US

A widower in Los Angeles spent four months getting his late father's Jerusalem savings account released to him as the sole heir. The succession order was in hand, the bank had accepted it, and NIS 1.9 million sat ready to move. He instructed the branch to wire it to his account in California and assumed the matter was closed. It was not. The bank held the transfer for six weeks while it worked out whether any part of the balance was taxable income and demanded documents he had no idea he needed.

Getting money out of Israel is rarely blocked by law. It is slowed by process. Israeli banks sit between two regulators that both want to see paperwork before a large sum leaves the country, and a US resident on the receiving end answers to a third. None of these systems talk to each other, and none of them will chase you. The burden of assembling the right certificates falls entirely on the person abroad, usually at the exact moment they are least able to walk into an Israeli branch.

If you are moving an inheritance specifically, it helps to read this alongside our guide on transferring inherited funds out of Israel, which covers the estate side of the same journey.

The First Question the Bank Asks: Is This Income?

Every large outbound transfer from Israel is sorted into one of two boxes, and everything that follows depends on which box the bank picks.

The first box is capital. Your own savings, a cleared inheritance, or the net proceeds of a property sale on which Israeli tax has already been settled. Capital leaving the country is not taxed again on the way out. The bank's concern here is not tax at all. It is proof that the money is what you say it is.

The second box is income. Rent from an Israeli apartment, dividends from an Israeli company, interest, or an as-yet-untaxed capital gain. When a bank pays Israeli-source income to someone living abroad, the law treats the bank as a collection point.

That distinction is where most non-residents get caught. They think of the whole balance as "my money," which it is, while the bank is legally required to ask whether Israel has already taken its share of any income component before letting it go.

In Practice: Under Section 170 of the Income Tax Ordinance 1961, an Israeli bank must withhold 25% at source from any payment of Israeli-source income to a foreign resident, on top of the general withholding duty in Section 164. To release accumulated rent of, say, NIS 80,000 to a US owner without that deduction, the owner files Form A/114 with the Israel Tax Authority (Rashut HaMisim); the assessing officer usually issues a reduced-rate or exemption certificate within 21 to 45 days of a complete filing.

Selling Israeli Property First? The Clearance Comes Before the Wire

If the sum you want to move is the proceeds of selling Israeli real estate, there is an extra gate, and it sits before the bank entirely.

An Israeli bank will not wire sale proceeds abroad until it sees that the capital gains position is resolved. The buyer's own lawyer will have insisted on the same clearance in order to register the transfer. This is the ishur mas shevach, the betterment-tax certificate.

Under the Real Estate Taxation Law 1963, betterment tax (mas shevach) on the real gain runs up to 25% for an individual seller, and the Land Appreciation Tax Office issues the clearance certificate only once that tax is paid or secured. For a non-resident, the linear apportionment rules and the loss of the residential exemption often make the Israeli tax higher than a local seller would pay, which is a separate planning point worth its own conversation before you sign a sale contract.

In Practice: On a NIS 2.4 million apartment sale, the seller files a self-assessment with the Real Estate Taxation Office (Misrad Mas Shevach) within 30 days of signing under the Real Estate Taxation Law 1963. The ishur releasing the funds for transfer commonly takes 30 to 60 days from filing, and the bank will not process an outbound wire of the proceeds without it. A US seller who has already booked a closing date on a US purchase can find the two timelines badly out of step.

The Anti-Money-Laundering Layer

Even when no tax is due, a large transfer meets a second Israeli gate: source of funds.

Since the Prohibition on Money Laundering Law 2000, Israeli banks have carried a personal reporting duty on unusual or large movements. In day-to-day practice this means that once a transfer crosses roughly USD 50,000, the compliance department, not the branch teller, decides whether it goes. They will ask for a documentary chain: the succession order or will execution order for an inheritance, the signed sale contract and clearance for property, or historic statements for old savings.

For someone living abroad this is the most frustrating stage, because the requests arrive by email in Hebrew, reference Israeli document types, and often come one at a time rather than as a single list. A non-resident who cannot produce, for example, an apostilled death certificate or a translated probate order can watch a fully lawful transfer stall for months.

The practical answer is to front-load the documents. Assemble the full source-of-funds file before you request the wire, not after the bank asks.

The US Side: Reporting, Not Usually Tax

Here is the good news for the receiving end. In the ordinary case, a US resident owes no US income tax simply for receiving an inheritance or moving their own money home. The United States does not tax the receipt of a foreign bequest.

What it does demand is disclosure, and the penalties for silence are steep even though no tax is owed.

If you receive more than USD 100,000 in a year as a gift or bequest from a non-US individual or a foreign estate, you report it on Form 3520. The form is informational. But a late or missing Form 3520 carries a penalty of 5% of the amount per month, up to 25% of the entire gift, which is a punishing figure for a filing that generates no tax. Our Q&A on reporting an Israeli inheritance to the IRS walks through the mechanics.

Two more US filings sit nearby. While your money is still in an Israeli account, that account feeds your annual FBAR (FinCEN Form 114) if your aggregate foreign accounts top USD 10,000 at any point, and possibly Form 8938 under FATCA at higher thresholds. Once the funds land in your US bank, they drop out of the foreign-account reporting entirely.

Common Mistake: Wiring proceeds into a US account and assuming that because no US tax is due, nothing needs filing. A retiree who received NIS 900,000 from a parent's Israeli estate and skipped Form 3520 faced a proposed penalty of tens of thousands of dollars, calculated at 5% per month, despite owing zero income tax on the inheritance itself. The IRS learns of large inbound wires independently, so the safer path is to file the informational return on time and keep the estate documents.

Choosing How the Money Actually Travels

Once the legal gates are cleared, the transfer method still costs real money, and the default bank route is rarely the cheapest.

A direct SWIFT wire from an Israeli bank is simple but layered with charges: a fixed transfer fee, a foreign-exchange spread built into the shekel-to-dollar rate, and sometimes a correspondent-bank fee deducted mid-route. On a large sum the exchange spread dwarfs the fixed fee. A spread of even 0.7% on NIS 2 million is over NIS 14,000, quietly lost inside a rate that looks like a courtesy.

Regulated foreign-exchange transfer houses licensed by the Capital Markets Authority often quote a tighter spread than a bank branch, though they apply their own source-of-funds checks and may not accept every non-resident. For a one-time seven-figure move it is worth getting the bank's all-in rate in writing and comparing it against one licensed alternative before you commit.

Doing It All From Abroad

None of this requires you to fly to Israel, provided you set up representation properly at the start.

A notarized and apostilled power of attorney lets an Israeli lawyer or accountant file the withholding forms, obtain the tax clearance, respond to the compliance department in Hebrew, and instruct the bank. Many Israeli banks now complete the final transfer mandate for an existing non-resident client by secure video identification, which removes the last reason to travel. The coordination point that people underestimate is time zones and language: an email from a Tel Aviv compliance officer sent at 4pm Israel time lands in the middle of the night in California, and a one-day delay in replying can push a transfer past a month-end batch.

Practical Checklist

• Decide early whether the money is capital or income, because the two follow different clearance paths
• For property proceeds, file the mas shevach self-assessment within 30 days of signing and budget 30 to 60 days for the ishur
• For rent, dividends, or interest, apply for a reduced-withholding or exemption certificate on Form A/114 before instructing the wire
• Assemble the full source-of-funds file (succession order, sale contract, historic statements) with apostilles and Hebrew translations before you ask the bank to transfer
• Sign a power of attorney so an Israeli lawyer can manage the tax and compliance steps without you flying in
• On the US side, file Form 3520 if a foreign bequest or gift exceeds USD 100,000, and keep your Israeli account on the FBAR until it is emptied
• Get the bank's all-in exchange rate in writing and compare it to a licensed transfer house before committing a large sum

Speak With an Israeli Attorney

Moving a large sum out of Israel is less about the wire and more about clearing the tax and compliance gates that sit in front of it, and those gates are far easier to open before a US closing date or a family deadline forces your hand. An Israeli attorney can obtain the tax clearance, assemble the source-of-funds documentation the bank will demand, and coordinate the timing with your US advisor so nothing stalls at month-end.

Contact us for a confidential initial consultation.