🇮🇱 Tax29 Dec 2025
Israel enacts a 15% domestic minimum tax for large groups from 2026
Israel's Knesset approved Pillar Two legislation on 29 December 2025, published on 31 December and in force from 1 January 2026. It introduces a qualified domestic minimum top-up tax so that Israeli entities of multinational groups with consolidated revenue of at least EUR 750 million in two of the previous four years pay at least 15%. Israel is not adopting the income inclusion or undertaxed profits rules for now.
The law follows several years of consultation, including on protecting research and development tax benefits under the global minimum tax rules.
What changed
- A qualified domestic minimum top-up tax applies from 1 January 2026.
- It covers Israeli entities of multinational groups with revenue of at least EUR 750 million in at least two of the four previous years.
- Where their effective rate is below 15%, they pay the difference as top-up tax.
- The income inclusion rule and undertaxed profits rule are not being enacted for now.
Who is affected
Israeli subsidiaries of large groups, including technology companies using preferred enterprise regimes, and their tax teams.