Living in Israel as an Expat: Tel Aviv, Jerusalem and the Olim Benefits

Israel is an unusual case among expatriate destinations: for Jewish individuals eligible for Aliyah (immigration to Israel under the Law of Return), it offers one of the world's most generous tax incentive packages for new residents — a ten-year exemption from Israeli tax on foreign-sourced income and gains. This single provision has made Israel a serious consideration for globally mobile HNW individuals from the UK and elsewhere with qualifying Jewish heritage.

Beyond the tax dimension, Israel offers a dynamic, tech-forward economy, excellent healthcare, strong educational institutions, and a lifestyle that combines Mediterranean warmth with a highly international urban culture. The security environment is a real factor and cannot be treated as secondary to lifestyle considerations; it should be assessed honestly and individually.

Where to Live

Tel Aviv is Israel's economic and cultural capital. It is a genuinely cosmopolitan, secular, and vibrant city — the "Bubble", as Israelis affectionately call it. The seafront promenade, world-class restaurant scene, active tech-startup ecosystem (the "Startup Nation" narrative is real — Israel has one of the highest densities of tech companies and venture capital per capita globally), and a thriving arts and nightlife culture make it highly attractive to internationally mobile professionals. Premium neighbourhoods include Neve Tzedek, the Old North, Ramat Aviv, and the beachfront areas of Nof Yam.

Herzliya Pituah, north of Tel Aviv, is where many of the large multinationals and embassies are located and where a significant portion of Israel's English-speaking expatriate and returnee community lives. It offers a quieter, more suburban atmosphere with proximity to the beach.

Jerusalem is the capital and a uniquely historic city — sacred to three religions and administratively complex. It draws a different profile of resident: more religious, more politically conscious, and with a significant Anglo-Jewish community. The Rehavia, Baka, and German Colony neighbourhoods are pleasant and relatively cosmopolitan.

Ra'anana and Kfar Saba are suburban towns north of Tel Aviv with large Anglo-Israeli communities, excellent schools, and lower prices than central Tel Aviv. Popular with families making Aliyah from the UK, US, and South Africa.

Aliyah and the Law of Return

Israel's Law of Return grants every Jewish person, their spouse, children, and grandchildren the right to immigrate to Israel and receive citizenship. This is not a visa or residency permit — it is citizenship on arrival, with an Israeli passport typically issued within months.

The process is managed by the Jewish Agency for Israel and the Ministry of Interior. UK Jews need to provide documentation of Jewish heritage (usually birth certificates and community letters). The process is generally straightforward for those with clear lineage.

Non-Jewish foreign nationals can live and work in Israel but do not qualify for the Law of Return. They must apply for work visas, skilled worker permits, or investor visas through standard immigration channels — a slower and more restrictive process.

The Olim Tax Exemption

This is the provision that attracts serious HNW attention. Under Israeli tax law, a "new immigrant" (Oleh Chadash) or "returning resident" (Toshav Chozer) who has not been an Israeli resident for the preceding ten years qualifies for a complete exemption from Israeli income tax on all foreign-sourced income and capital gains for a period of ten years from the date of Aliyah.

This means:

• Dividends, interest, and capital gains from investments held outside Israel are exempt from Israeli tax for the full ten-year period.
• Foreign rental income is exempt.
• Foreign pension income and employment income from overseas employers are generally exempt.
• Crucially, there is no requirement to report foreign income to the Israeli tax authorities during this period.

The exemption does not apply to Israeli-sourced income, which is taxed at normal Israeli rates (up to 47% for high earners, plus National Insurance levies).

For UK nationals making Aliyah, the UK–Israel double tax treaty remains relevant: UK-source income (e.g. UK rental income, UK dividends) may still be subject to UK tax if the individual remains UK tax-resident or has not cleanly broken UK tax residency. The interaction between UK statutory residence test provisions and the Israeli exemption requires specialist cross-border tax advice.

Important: The ten-year exemption is a genuine and legally established provision, but it is subject to conditions and has been the subject of ongoing legislative discussion in Israel. Rules and their application can change. Always take qualified Israeli and UK tax advice before making relocation decisions on the basis of this exemption.

Healthcare: Kupat Holim

Israel operates a national health insurance system under the National Health Insurance Law. All Israeli citizens and permanent residents are entitled to register with one of four not-for-profit health funds (Kupot Holim): Clalit, Maccabi, Meuhedet, or Leumit.

The basic health basket covers a comprehensive range of services. Complementary (Mushlam) insurance, available from the health funds and private insurers, covers private hospital rooms, specialist choice, dental, and additional procedures. The quality of Israeli healthcare is high by international standards — Israel has strong outcomes in oncology, cardiology, and reconstructive medicine, among others.

Major hospitals include Sheba Medical Center at Tel Hashomer (one of the Middle East's leading hospitals by international ranking), Hadassah in Jerusalem, Ichilov (Sourasky) in Tel Aviv, and Rambam in Haifa.

Private medical insurance from international insurers is worth carrying for those with frequent international travel, for access to the full range of private specialists, and for medical evacuation coverage.

International Schooling

Israel has several international schools primarily serving the expatriate and Anglo-Israeli community:

• The Anglican International School Jerusalem (AISJ): British-curriculum, primary and secondary.
• The American International School in Israel (AISI): Herzliya Pituah, American curriculum, IB.
• Walworth Barbour American International School in Israel (AIS): Ra'anana, US-accredited.
• Various Anglo-Israeli frameworks: A number of schools in Ra'anana and Herzliya serve the large UK-origin Olim community with strong English-medium education alongside the Hebrew national curriculum.

Israeli state schools are free and of variable quality; ulpan (intensive Hebrew language instruction) is available to Olim and is strongly recommended for integration.

Property and Housing Market

The Israeli housing market is expensive and has appreciated sharply over the past decade. Tel Aviv is one of the most expensive cities in the world for residential property. A three-bedroom apartment in central Tel Aviv can cost ILS 5,000,000–12,000,000+ to purchase; rentals in desirable areas run ILS 12,000–25,000/month.

Olim are entitled to purchase property in Israel with no additional restrictions (foreign nationals face some purchasing limitations). Mortgage financing is available to Olim through Israeli banks, though documentation requirements are stringent. Property purchases attract purchase tax (mas rechisha) at rates depending on the property value and whether it is a primary or secondary residence. VAT is not charged on residential resales but applies to new developer sales.

Cost of Living

Israel has a high cost of living — particularly in Tel Aviv. Groceries, imported goods, and restaurants are expensive. Some categories — notably fresh produce, shawarma, and coffee — are more affordable than London; others (European wine, electronics, new cars) are notably more expensive.

• Rent: ILS 10,000–25,000/month for a good three-bedroom in Tel Aviv or Herzliya.
• Car: imported vehicles attract high duties; cars are expensive relative to UK prices.
• Healthcare: basic Kupat Holim deductibles are modest; private supplementary add-ons are reasonable.
• Eating out: budget ILS 150–350 for a dinner for two at a mid-range Tel Aviv restaurant.

Security Context

The security situation in Israel is material and must be assessed honestly. Israel has experienced periodic conflict — the October 2023 Hamas attack and subsequent Gaza war, rocket threats from multiple directions, and regional instability. Most of everyday life in Tel Aviv, Herzliya, and other civilian centres continues normally during most periods; shelter infrastructure, early warning systems (the Iron Dome and its successors), and years of civilian preparedness mean that Israeli society has adapted to security risks in ways that can surprise new arrivals.

Individuals need to make their own informed assessment of the security environment — and of the implications for family wellbeing, international travel freedom, and emergency preparedness — before committing to Israeli residency. The situation evolves; current FCDO travel advice should be consulted before and after making any decision.

Practical Tips

• Language: Hebrew is the official language; English is widely spoken in business, tech, and urban contexts. Learning Hebrew is important for integration and managing bureaucracy.
• Shabbat: from Friday sundown to Saturday night, much of the public sector and many businesses are closed. Tel Aviv is largely secular and functions; Jerusalem is more observant.
• Driving: Israel drives on the right (the opposite of the UK, so UK arrivals must adjust; Israeli driving culture is also assertive). International licence is accepted for an initial period; exchange to an Israeli licence is required after residency.
• Mobile phone: local SIM cards are inexpensive; coverage is excellent.

How Global Investments Can Help

Global Investments works with UK-based HNW individuals considering Aliyah and Israeli residency. We can introduce you to specialist cross-border tax advisers experienced with the Olim exemption and the UK-Israel treaty, connect you with Herzliya and Tel Aviv property advisers, and help you think through the financial and logistical aspects of relocation as part of your broader wealth strategy. Contact our team for a confidential conversation.