Israel and HMRC have both taxed the same income. Can I make the two tax authorities sort it out between them?

There is a route, and it is older and duller than most people expect. Every one of Israel's roughly sixty income tax treaties contains a mutual agreement procedure article, which lets a resident of either state ask the two competent authorities to resolve taxation that does not match the treaty. Israel Tax Authority Circular 1/2023, published on 12 February 2023, is the Israeli procedure manual for it. The file is handled by the MAP unit within the ITA's international taxation department, deliberately separated from the assessing officer whose assessment created the problem, and requests reach it at MAP@taxes.gov.il.

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Detailed Answer

The mechanism is government-to-government, and that shapes everything about how you use it. A UK resident normally presents the case to HMRC as their own competent authority, and HMRC then approaches Israel; you are not a party to the negotiation that follows and you have no right to sit in it. What you supply is the file: who you are, the years in dispute, the transaction, the position each authority has taken and the evidence for why the Israeli charge conflicts with the convention. Timing is the trap. Israel's treaties, following the OECD model, generally require the case to be presented within three years of the first notification of the action resulting in the taxation complained of, and that clock runs from the assessment or withholding that started it, not from the day you gave up arguing with the assessing officer. Since Israel signed the multilateral instrument, the modern expectation is that competent authorities aim to close MAP cases within about 24 months, and Israel's performance is measured against that benchmark in the BEPS Action 14 peer review process.

Filing a MAP request does not park your Israeli deadlines, and non-residents lose money on that misunderstanding more often than on anything else in this area. The 30-day objection window under Section 150(a) of the Income Tax Ordinance [New Version] 5721-1961 keeps running, and if you let the Israeli assessment become final while waiting for the competent authorities, you may find the Israeli side has nothing left to concede. The practical sequence is to file the domestic objection to preserve the position, described in our answer on objecting to an Israeli tax assessment as a non-resident, and to open the MAP in parallel. Collection is a separate question again: an Israeli tax debt does not automatically freeze because a MAP is pending, so if the amount is large the point to negotiate early is a payment arrangement or security rather than an argument about the merits. Where the underlying dispute is which country you were resident in at all, the treaty tiebreaker usually has to be settled first, and that is covered in our answer on the treaty tiebreaker for dual residents of Israel.

In Practice: Income Tax Circular 1/2023, issued by the Israel Tax Authority (Rashut HaMisim) on 12 February 2023, governs mutual agreement procedure requests, which are handled by the MAP unit in the international taxation department at MAP@taxes.gov.il and kept separate from the assessing officer. Israel's treaties typically allow 3 years from the first notification of the taxing action to present the case, while the domestic objection deadline under Section 150(a) of the Income Tax Ordinance 5721-1961 stays at 30 days and must be met independently. The OECD benchmark for closing a MAP case is 24 months. On a disputed Israeli charge of, say, NIS 400,000 on management fees also taxed in the UK, professional costs of running a MAP through to agreement commonly fall between NIS 40,000 and NIS 120,000, which is why the procedure is worth opening on six-figure exposures and rarely on smaller ones.

When to Consult a Lawyer

• The three-year treaty window is close to expiring and you have been negotiating with the Israeli assessing officer rather than presenting the case to a competent authority.
• The dispute is a transfer pricing adjustment on payments between a UK parent and an Israeli subsidiary, where a one-sided Israeli adjustment leaves the group economically double taxed until the UK gives a corresponding adjustment.
• Israel is enforcing collection while the MAP is open, and you need an arrangement with the collection department that does not amount to accepting the assessment.

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Speak With an Israeli Attorney

An Israeli attorney can build the MAP file on the Israeli evidence, keep the Section 150 objection alive alongside it, and deal with the ITA's collection department while the competent authorities talk.

Contact us for a confidential initial consultation.