Israel has recently introduced key updates to VAT and customs rules, effective from 2026. Two new VAT reportable positions have been added for 2025, covering input VAT on real estate repurposed for leasing and VAT liability on construction services provided to local authorities in exchange for waived payments.
Under the “Invoice Israel” reform, the threshold for requiring an allocation number on tax invoices for input VAT deductions is lowered from NIS 20,000 to NIS 10,000 from January 1, and further to NIS 5,000 from June 1. Additionally, the personal import tax exemption has doubled from USD 75 to USD 150, excluding tobacco, alcohol, and certain other goods, though ongoing legislative review may affect this change.
Dvora Haimov, Mordechai Fogel, Rotem Dahan and Iris Weinberger from our Israeli member firm Herzog Fox & Neeman have published a more detailed overview of the updates here.