How French Owners Collected Netanya Rent Without an Israeli Bank

Result: NIS 61,200 of withheld rent released and direct collection restored through a licensed Israeli payment account opened entirely from France · Timeline: 11 weeks from instruction to the first rent received · Challenge: Bank closed a non-resident account and would only reopen it in branch · Authority: Israel Securities Authority (Rashut Niyarot Erech) · Financial Impact: NIS 61,200 released, NIS 81,600 a year now collected directly, Israeli tax settled at NIS 8,160

Background

They are in their seventies, they live outside Lyon, and they bought the Netanya flat in 2016 with the proceeds of a French apartment sale. Three rooms, fourth floor, a tenant who has been in place since 2021 and pays NIS 6,800 a month. The couple opened an Israeli bank account during the purchase trip, which is the ordinary way it is done, and used it for nine years without incident. Neither of them speaks Hebrew. Neither had been back since 2022, when her hip surgery ended the twice yearly visits.

In late 2025 the bank wrote to the Lyon address. The account was being reviewed as part of an exercise on dormant non-resident accounts, updated identification documents were required, and the customer was invited to attend a branch. They posted certified copies. The bank replied that identification had to be completed in person. Three months later the account was closed and the balance was held to their order. Two other Israeli banks declined to open a replacement without a branch visit. By the time the file reached us their managing agent was holding nine months of rent, NIS 61,200, in his own client account, the arnona (municipal property tax) was NIS 4,300 in arrears, the vaad bayit (building committee) had stopped accepting promises, and a plumber who had repaired a leak in the bathroom riser was chasing an unpaid invoice from March.

The Challenge

Nothing about their case was legally difficult. It was structurally difficult, which is worse, because there is no authority to appeal to when a bank simply declines. A branch has wide discretion over whom it onboards, a review of non-resident accounts is a commercial decision made in a compliance department, and a couple in their seventies who cannot fly are not going to satisfy an in-person identification requirement by insisting on it.

What had changed, and what the couple's Israeli accountant had not picked up, is that a bank branch is no longer the only regulated place to hold shekels. Israel licenses payment companies under the Regulation of Payment Services and Payment Initiation Law 5783-2023, supervised by the Israel Securities Authority rather than by the Supervisor of Banks at the Bank of Israel. On 13 February 2025 that regulator published a directive on discharging anti-money-laundering identification obligations through online identification technology. It permits video conference technology and visual identification technology in place of a physical meeting, and it expressly covers identification of a service recipient who is not an Israeli resident, subject to increased controls. That last provision is a deliberate regulatory choice rather than an oversight, and it is the first time a mainstream Israeli financial regulator has written a non-resident remote onboarding route into a directive instead of leaving it to each institution's appetite.

The second problem was quieter and would have cost them more. Nine months of uncollected rent had not made the income disappear for Israeli tax purposes, and the French side had its own reporting exposure waiting the moment any new account was opened. Solving the collection problem without solving both of those would simply have moved the trouble.

In Practice: The Israel Securities Authority directive of 13 February 2025 permits a licensed payment company to identify a customer by video conference technology or visual identification technology instead of a physical meeting, and expressly covers a service recipient who is not an Israeli resident, subject to increased controls, a documented money-laundering risk assessment and an internal policy. Payment companies are licensed under the Regulation of Payment Services and Payment Initiation Law 5783-2023. Onboarding typically runs one to three weeks from application to a funded account, against two to six months for a non-resident bank account, and there is no deposit protection of the kind a bank carries. Price is not the deciding factor: from July 2027 the Supervisor of Banks caps a bank's current account basket at NIS 10 per month for 100 transactions, with foreign transfer commissions and the currency spread outside the cap.

What We Did

We checked the provider before we checked anything else. The licence is what brings the directive and its protections with it, so we confirmed the company's entry on the Securities Authority's register and read its published terms on client money before recommending it. The sector has grown quickly and not every business calling itself a payment provider in Israel holds the licence.

Then we built the source of funds file, in advance, and this is the part that decides these applications. The directive requires increased controls for a non-resident, which in practice means the compliance team wants to know where the money came from before the video call rather than after it. We assembled the 2016 purchase contract for the Netanya flat, the nesach tabu (Land Registry extract) showing their names on the title, the French acte de vente for the Lyon apartment that funded the purchase, the notaire's completion statement, the tenancy agreement, the managing agent's statement of the withheld rent, and their French tax notices for the last two years. The French documents carried apostilles issued by their notary, which the French notarial chambers have provided free of charge since 1 May 2025, and Hebrew translations certified by an Israeli notary at NIS 251 for the first 100 words and NIS 197 for each further 100.

The video session took 40 minutes and was held from their kitchen table at 11:00 French time. Both passports were shown to the camera and read by the provider's identification technology, the questions on source of funds were answered from the file we had already lodged, and the account was approved six days later. Eleven weeks after they instructed us, the first rent arrived.

Payments out took longer to arrange than payments in, which surprised them. The Netanya municipality's direct debit mandate for arnona wanted an Israeli bank account, not a payment account, so we cleared the NIS 4,300 of arrears by transfer and set the ongoing charge as a scheduled outgoing payment instead. The vaad bayit accepted transfers without comment. The plumber was paid the same week. The tenant now pays into the payment account directly, and the managing agent's role has shrunk back to what the couple are actually paying him for, which is the flat rather than their banking.

Finally we regularised both tax sides. In Israel the couple elected the 10 per cent track on gross residential rent, which suits owners with low expenses and no interest in filing a full return. In France the new account had to be declared with their income tax return, because a payment account is an account for that purpose in exactly the way a bank account is, and providers do not always say so at onboarding. For readers whose starting point is still the branch, our guide on how a non-resident opens an Israeli bank account sets out what a bank will and will not accept.

In Practice: Under Section 122 of the Income Tax Ordinance 1961 an individual may pay a flat 10 per cent on gross residential rent with no deduction for expenses or depreciation, and payment is made to the Israel Tax Authority (Rashut HaMisim) by 30 January following the tax year. There is no automatic assessment, so the landlord must initiate it. On NIS 81,600 of annual rent the charge is NIS 8,160. On the French side, Article 1649 A of the Code Général des Impôts requires a French tax resident to declare every foreign account on form 3916 with the annual return, and the fixed penalty under Article 1736 IV is EUR 1,500 per undeclared account per year, applied for each year left undeclared.

The Outcome

The agent released NIS 61,200 three days after the account was funded, having refused for months to wire it to France because of the cost and his own compliance nerves. Rent of NIS 81,600 a year now arrives directly. The Israeli tax under the Section 122 track came to NIS 8,160 for the year, paid by the January deadline, and the French return declared the payment account on form 3916 in its first year, which closed a penalty exposure that would have run at EUR 1,500 for each undeclared year had it been left.

The couple should be clear about what they have, and so should any reader in the same position. A payment account lets them receive rent, hold a balance and pay Israeli suppliers. It is not a bank account. There is no overdraft, no mortgage, no securities account and no deposit insurance, and if they ever sell the flat, the Land Registry chain and the buyer's lawyer will expect a bank account in the seller's name for the proceeds. That conversation is on the file for whenever they decide to sell. The complaint route is different too. A refusal or a failure by a licensed payment company runs to the Securities Authority, not to the Supervisor of Banks, and the arguments are not the same ones a bank customer makes.

Key Takeaways

What this case illustrates for non-residents in similar situations:

1. A bank's closure of a long standing non-resident account is a commercial decision, not a legal one, and arguing with it rarely works. Since 13 February 2025 the regulated alternative is a licensed payment company that may identify you by video from your own home.
2. Confirm the provider holds a payment services licence and appears on the Israel Securities Authority's register. The licence is what makes the directive, and its protections, apply to your account at all.
3. Prepare the source of funds file before the video session, not in response to a question. Increased controls for non-residents mean more documentation than a branch would have asked for, and a prepared file is the difference between six days and six weeks.
4. Do not let rent sit with a managing agent. An agent holding NIS 61,200 of your money in his client account is a risk you did not agree to take, and the income is taxable in Israel whether it reaches you or not.
5. Match the account to the job. Receiving rent, paying arnona and settling a plumber's invoice suit a payment account. A sale, a mortgage, or anything that touches the Land Registry chain still needs a bank.

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Facing a Similar Situation?

If an Israeli bank has closed or refused your account and a property is generating income you cannot reach, the route that works now is different from the one that worked two years ago.

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