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Can a taxpayer arrange to pay an Israeli tax debt in installments?

Yes. The Israel Tax Authority routinely agrees a payment arrangement (hesder tashlumim) for assessed income tax, VAT and property tax debts, negotiated with the collection department at the relevant assessing office rather than in court. Interest and consumer price index linkage under Section 187 of the Income Tax Ordinance keep running on the outstanding balance for the whole term. There is no statutory right to installments, so the officer may require a down payment, a guarantee or a lien. While payments are made on time, collection steps under the Taxes (Collection) Ordinance 1929 are normally held in abeyance.

What makes an Israeli tax debt different from an ordinary commercial debt is that the Authority does not need to sue. The Taxes (Collection) Ordinance lets a collection officer issue a demand and then attach bank accounts, garnish salary, register a charge over property and seize movables administratively, without a judgment and without the Execution Office. That is the leverage behind every payment arrangement. The officer weighs the size of the debt, the taxpayer’s declared means, whether returns have been filed, and whether earlier arrangements were kept. Missing an installment usually revives the whole balance and the attachment powers with it.

Non-residents are caught by this more often than they expect, typically through unreported rental income or a betterment tax assessment left unpaid after a property sale. The liability does not lapse because you left the country, and it can surface years later as a blocked bank transfer or a registration refused at the Land Registry. Put the arrangement in writing, confirm expressly that existing attachments are lifted or suspended, and appoint an Israeli representative to receive notices so a default is not triggered by post you never saw. If the underlying assessment itself is wrong, object within the statutory window instead of paying by installments. See our guide to late tax filing penalties in Israel.

⚖ In Practice
  • Governing law: Taxes (Collection) Ordinance 1929; Section 187, Income Tax Ordinance [New Version] 5721-1961
  • Competent authority: collection department (Machleket Gviya) at the relevant assessing office (Pkid Shuma), Israel Tax Authority
  • Cost of the delay: the arrears carry consumer price index linkage plus 4% annual interest on the unpaid balance (2026)
  • Timeline: arrangements are commonly approved for 12 to 24 months; longer terms usually require security such as a lien or bank guarantee
  • On default: the full balance becomes immediately collectable and bank attachments can be issued administratively, with no court order needed

From the full guide: Late Tax Filing Penalties in Israel: Fines, Interest, and How to Fix a Missed Return

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Get a Free Consultation with Adv. Eli ShimonyPrepared under the direction of Adv. Eli Shimony, Eli Shimony Law Office · Editorial policy

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