Shnat Histaglut

What Is Shnat Histaglut?

Shnat Histaglut (שנת הסתגלות), translated as the “year of acclimatization,” is a special one-year period granted by the Israeli government to individuals making Aliyah. This period helps new immigrants adjust to their new life in Israel.

From a tax perspective, this year provides a temporary exemption from Israeli tax reporting and taxation on foreign income. While it does not include an exemption from Israeli taxes on income earned in Israel, it gives Olim a significant cushion as they settle in.

How Does Shnat Histaglut Work?

When a person makes Aliyah, they are eligible for a one-year period during which they are not considered Israeli tax residents. That means the Israeli Tax Authority* does not tax or require reporting on foreign-sourced income during this year.

Here are the main benefits during this acclimatization year:

• No Israeli tax liability on foreign income, such as salaries, investment earnings, or capital gains earned abroad.
• No requirement to file Israeli tax reports regarding foreign income or foreign assets. 

This period is separate from the 10-year tax holiday that applies to some types of foreign income for new immigrants. The two benefits can overlap and create a favorable tax environment for new residents.

Keep in mind, however, that U.S. citizens are still subject to U.S. tax reporting and obligations, so you’ll need to remain compliant with the IRS even during Shnat Histaglut.

Who Is Eligible for Shnat Histaglut?

Eligibility is based on your immigration status and the timing of your arrival in Israel.

To qualify, you must:

• Be recognized as an Oleh Chadash (new immigrant), Toshav Chozer (returning resident), and Toshavim Chozrim Vatikim (veteran returning resident).
• Have recently arrived in Israel with the intent to reside long-term or permanently. 

The acclimatization year begins the moment you arrive in Israel, so you need to plan your financial affairs beforehand. 

At the end of the 12-month period, you will become a full Israeli tax resident, and your global income may then be subject to Israeli tax (unless exempt under other provisions).

How to Apply for Shnat Histaglut?

To qualify for the benefits of Shnat Histaglut, you need to request this status through the Ministry of Aliyah and Integration.

Here’s how the application process works:

• Apply online via the official government portal**, within 90 days of receiving your immigration status.
• Submit a copy of your Israeli ID card (Teudat Zehut). You can also upload other relevant documents, if needed. 

Once submitted, you’ll receive an automatic confirmation that your form was sent. It’s important to note that you can only submit the form once.