Can a non-resident claim Israeli tax credit points (nekudot zikui)?

A non-resident who starts receiving an Israeli pension, or is paid for work done in Israel, often notices the tax withheld looks steep compared with what an Israeli colleague pays on the same amount. The usual reason is credit points. Israeli residents get them; non-residents, as a rule, do not, and that single difference explains a lot of the extra tax.

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Detailed Explanation

Israel reduces income tax through credit points (nekudot zikui), a personal allowance mechanism built into the Income Tax Ordinance 1961. Each point is a fixed shekel amount that comes straight off the tax bill, and a resident receives a baseline number of points, with more added for circumstances like children or a recent immigrant status. Because the points are subtracted from tax rather than from income, they are worth the same to a cleaner and a lawyer, and they lift a slice of low and middle income out of tax entirely. They are, in short, a resident's allowance.

That residency link is the crux of the answer. The credit-point provisions are framed as a benefit for Israeli residents, so a non-resident earning Israeli-source income is assessed and withheld upon without them. The practical effect shows up wherever a non-resident touches the Israeli tax net: an Israeli company paying director's fees, an employer paying for work physically done in Israel, or a pension fund paying a former Israeli worker abroad will apply Israeli tax without the personal points an Israeli would enjoy, which is why the withholding rate feels high. The general framework for how non-residents are taxed on Israeli income is set out in our guide to Israeli income tax for non-residents.

There are narrow exceptions, and they should not be over-read. Certain categories of lawfully employed foreign workers have been granted a limited number of credit points by regulation over the years, reflecting policy toward specific sectors rather than a general rule for non-residents. And the position flips entirely on aliyah: a new immigrant (oleh) is not only a resident but receives additional credit points for the first years after arrival, on top of the standard resident points, as part of the absorption benefits. So the honest framing is that credit points are something you gain by becoming Israeli, whether as a returning resident or an oleh, not something a foreign taxpayer claims from abroad.

Where the points are unavailable, the tool that actually protects a non-resident from being overtaxed is the treaty network, not the domestic allowance. If your country has a double-taxation treaty with Israel, it may cap the Israeli tax on a pension, dividend, or interest, or give your home country the primary right to tax, and you claim that relief through the treaty rather than by asking for Israeli credit points. Reading the two together matters: a non-resident who assumes they can knock Israeli tax down with resident-style credits will be disappointed, whereas one who applies the correct treaty rate often pays materially less.

In Practice: Credit points (nekudot zikui) under the Income Tax Ordinance 1961 are a residency-based allowance administered by the Israel Tax Authority (Rashut HaMisim), with each point worth on the order of NIS 2,900 a year, and a plain non-resident is assessed without them. An oleh, by contrast, receives extra points for roughly the first three and a half years after aliyah. A non-resident who has had Israeli tax over-withheld reclaims it by filing for the tax year, with refunds typically processed within a few months of a complete return.

Key Considerations

• Credit points are a residency benefit, so a non-resident earning Israeli-source income is generally taxed without them.
• The absence of points is a common reason Israeli withholding on a non-resident's pension, salary, or fees looks high.
• Limited exceptions exist for certain lawfully employed foreign workers, but there is no general non-resident entitlement.
• An oleh gains extra credit points on aliyah, on top of standard resident points, as part of absorption benefits.
• Where points are unavailable, a tax treaty is usually the effective way to reduce Israeli tax and avoid double taxation.

When to Consult a Lawyer

This question typically requires professional legal advice when:

• Israeli tax withheld on your pension, salary, or director's fees looks high and you want to know whether relief is available.
• You may qualify for a treaty rate that reduces the Israeli tax more than any credit point would.
• You are planning aliyah and want the oleh credit points and other benefits factored into your tax position.

A qualified Israeli attorney should check whether a treaty rate or a refund claim applies before you accept Israeli withholding as final.

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Speak With an Israeli Attorney

We review how your Israeli-source income is being taxed, confirm whether credit points or a treaty rate applies, and file to recover Israeli tax that has been over-withheld on a non-resident's pension, salary, or fees.

Contact us for a confidential initial consultation.