Israeli court cases regarding food, pensions and national insurance - opinion

The following is a brief round-up on notable court decisions on tax matters.

Calculating taxes (photo credit: INGIMAGE)
Calculating taxes
(photo credit: INGIMAGE)

There have been some notable court decisions on tax matters recently. The following is a brief round-up.

Per-diem meal allowances

Israeli tax regulations allow deductions from income up to certain limits for amounts spent on meals by travelers to and from Israel. In the case of foreign athletes, that amount is currently NIS 340 per day for up to 36 months. Recently, the Lod District Court ruled the deduction is not an automatic entitlement, even though the relevant regulations don’t require receipts to be submitted to the Israel Tax Authority (ITA) (Hapoel Nir Ramat Hasharon vs. Kfar Saba Assessing Officer). 

The ITA conducted a tax audit at a football club and did not receive requested supporting documentation for such meal deductions. The ITA said this was uncooperative and the amounts were too big to be light refreshments, even if the football involved intense bodily effort.

The court ruled that receipts were not essential so long as money was spent on meals. The ITA might make do with a declaration from the athlete or their employer or other athletes that the amounts were indeed spent, or documents from previous years or partial documentation in orderly calculations regarding days present in Israel.

Illustrative photo of Israeli money (credit: MARC ISRAEL SELLEM)Illustrative photo of Israeli money (credit: MARC ISRAEL SELLEM)

Separate regulations allow other foreign residents in Israel a similar deduction of up to NIS 360 per day for amounts spent on food for up to 12 months. They must earn at least NIS 13,600 per month. And Israeli residents relocated abroad are allowed per diem deductions for “other expenses” of $88-$183.

It seems all such per diem allowances may be queried by the ITA, even though no receipts are required.

Pension exemption must be granted

Until 2011, up to 35% of Israeli pensions were exempt within certain limits if certain conditions were met. Then an amendment allowed an additional exemption of 8.5% in 2012-2015, 14% in 2016-2019, 17% in 2020-2024 and 32% in 2025 onward. But the ITA issued instructions to the pension funds to withhold tax at source on the exempt amounts unless the taxpayer obtained specific approval for the exemption from the ITA. Many pensioners didn’t do so and the ITA received many millions of shekels in tax on the exempt amounts.

That was until a class action was launched and the ITA caved in. On April 27, 2022, the Central Lod District Court approved an agreed compromise (Shabtai vs. ITA, Class Action 37086-03) in which the ITA issued a new circular merely requiring pensioners to sign a form confirming eligibility to the exemption going forward. The ITA also committed to writing and phoning pensioners entitled to a tax refund of excess tax withheld in past years.

The court criticized the ITA for taxing pensioners without authority and said, “Income which the legislature determined is exempt from tax may not be taxed. Recognizing a proprietary right obliges one to deal with exempt income with care and not to block realization of the exemption when there is no need and no justification” (Para. 74, page 33).


This class action decision will be of interest to immigrants. They often experience resistance from the ITA when claiming a refund of excess Israeli tax withheld from salaries after traveling abroad on business during their first 10 years’ residence in Israel.

Social security treaties have limitations

The Israeli National Insurance Institute (NII) won a case against Lufthansa, the German airline, which apparently did not withhold national insurance from the salaries of two Israeli resident employees.

The airline took the matter initially to a national insurance tribunal, which ruled that full exemption applied under the Israel-Germany social security treaty.

The NII appealed to the Labor Court (Decision 8105-01-18 handed down January 30, 1922), which overturned the tribunal result. The court ruled that the employees were subject to national insurance contributions because they were Israeli residents working in Israel. Another question was whether the treaty could be invoked against health tax.

Health tax is a separate extra levy dating back to 1994 and collected by the NII. The Labor Court ruled that health tax was not in existence when the Israel-Germany Social Security treaty was introduced in 1975 and the treaty still does not prevent health tax liability.


Israel has social security (“totalization”) treaties with 14 countries.

As always, consult experienced tax advisors in each country at an early stage in specific cases. [email protected] The writer is a certified public accountant and tax specialist at Harris Horoviz Consulting & Tax Ltd.