I am a trustee abroad and one of my beneficiaries now lives in Israel. Did I have to notify the Israel Tax Authority, and have I missed the deadline?

Professional trustees outside Israel tend to find out about this the hard way, usually when a beneficiary's Israeli accountant asks whether the trust has an Israeli file. It does not, because until recently there was no reason for it to have one. Amendment No. 272 changed the premise: Israel now wants to know that the trust exists and who stands behind it, independently of whether the trust owes anybody anything. The transitional deadline for trusts that were already running has come and gone, which makes this a remediation question for most trustees rather than a planning one.

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Detailed Answer

Amendment No. 272 to the Income Tax Ordinance, 5784-2024, was published on 7 April 2024, and its purpose was to bring Israel into line with the transparency standards of the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes. Two obligations matter to a trustee sitting abroad. The first is a notification duty: a trustee must file notice with the Israel Tax Authority on the creation of a trust within 90 days of its establishment, and must notify changes concerning the ultimate beneficial owners of the trust. The second is a reporting duty layered onto the existing machinery: a trustee required to file an annual return under Section 131 of the Ordinance must include in it the details of the individuals who are the ultimate beneficial owners, and that requirement applies to annual reports from the 2025 tax year onward. For trusts that were already in existence when the Amendment was published, the legislation gave a transitional route rather than an immediate deadline: a trustee of a trust established before 7 April 2024 had to file the notice within 120 days of 1 January 2026, which fixed the date at the end of April 2026. None of this changes the substantive taxation of trusts, which continues to sit in the trust chapter of the Ordinance and turns on connecting factors such as an Israeli-resident settlor or an Israeli-resident beneficiary. The point of the Amendment is visibility.

The position a foreign trustee typically finds himself in is this. The trust was settled years ago in Jersey, London or New York by a settlor with no Israeli connection at all. A beneficiary then made aliyah, or married an Israeli and moved, and the trust acquired an Israeli connecting factor that nobody in the trustee's office was watching for. The trustee has no Israeli tax file, no Israeli representative and no Hebrew, and the transitional deadline passed while the file sat quietly. The remedy is to regularise rather than to wait. An Israeli tax file has to be opened for the trust, the notice filed late with an explanation of the delay, and the Section 131 position for 2025 onward assessed and brought up to date. Filing late voluntarily is materially better received than being reached through the automatic exchange of information, which is precisely the channel the Amendment was designed to feed. Two practical warnings for trustees. Disclosing the ultimate beneficial owners means disclosing individuals, including discretionary objects who have never received a distribution and may not know the trust exists, and the trustee should think about how that sits with his duties under the governing law of the trust before he files. And no Israeli tax being due is not a defence to the notification duty; plenty of trusts in this position will file, disclose and pay nothing. As a working model, a family trust holding NIS 12,000,000 with a single Israeli-resident beneficiary should expect to spend in the region of NIS 15,000 to NIS 40,000 on opening the Israeli file, the late notice and a first properly prepared return, more where the trust holds operating assets or the beneficiary class is large. How the trust itself is taxed once it is on the register is a separate question, addressed in our answer on the Israeli tax treatment of a trust with beneficiaries abroad.

In Practice: Amendment No. 272 to the Income Tax Ordinance, 5784-2024, published on 7 April 2024, requires a trustee to notify the Israel Tax Authority of the creation of a trust within 90 days and to report changes in its ultimate beneficial owners. A trust established before 7 April 2024 had to file that notice within 120 days of 1 January 2026, so the deadline fell at the end of April 2026. From the 2025 tax year the trustee's annual return under Section 131 must identify the ultimate beneficial owners. The duty applies whether or not tax is payable, and regularising a missed notice on a modelled NIS 12,000,000 family trust typically costs NIS 15,000 to NIS 40,000 in Israeli professional fees.

When to Consult a Lawyer

• A beneficiary became Israeli resident and nobody reviewed the trust at the time. That is the single most common route into a missed deadline, and the first task is to date the connecting factor precisely, because it drives what should have been filed and when.
• The trust deed or the governing law restricts what you may disclose about discretionary objects. Israeli disclosure of ultimate beneficial owners and a trustee's confidentiality duties abroad can pull in different directions, and that conflict should be resolved with advice on both sides before the notice goes in.
• The trust holds Israeli assets as well as an Israeli beneficiary. Israeli real estate or shares in an Israeli company inside a foreign trust bring their own filing and withholding consequences on top of the notification duty, and they are easier to address in one exercise than in three.

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Speak With an Israeli Attorney

We date the Israeli connecting factor, open the trust's Israeli file, file the late notice with a properly framed explanation, and bring the Section 131 reporting up to date before the exchange of information does it for you.

Contact us for a confidential initial consultation.