Car Import and Tax Reduction for New Olim

in Israel (2025 Update)

Overview

When a person makes Aliyah, Israel offers a variety of customs and tax benefits to help ease their integration. Among the most significant are the vehicle import benefits. These allow new Olim to import or purchase a car at a reduced tax rate, helping offset Israel’s normally high car prices.

However, while the benefit can save tens of thousands of shekels, it’s not a full exemption — you still pay import duty and VAT, just at a reduced rate. Understanding how these taxes are calculated and what conditions apply is essential before making a decision.

Who Qualifies and When

To qualify, you must be a **new Oleh **(new immigrant) who has received official Aliyah status. You generally have **up to three years from your date of Aliyah **to import a car or buy one locally using your benefits.

Extensions may apply in special cases such as military service, full-time study, or extended stays abroad.

The imported car must be for **personal use only **— not for resale or commercial import.

Driver’s License Requirements

You must hold a foreign driver’s license issued at least three months before your Aliyah date. Within one year of arrival, you’ll also need to convert it to an Israeli driver’s license.

This ensures that the benefit is granted only to legitimate drivers, not to family members or dealers importing cars for others.

Vehicle Eligibility

ï           **New cars **are easiest to import under the benefit.

ï           **Used cars **may also qualify but are subject to depreciation and must meet Israeli safety and emissions standards.

ï           In most cases, the car must be **less than four years old **at the time of import.

ï           Cars that are too old, fail safety standards, or don’t meet emissions regulations may be denied entry.

Resale and Transfer Restrictions

The car must remain registered to you for a minimum period, typically five years.

Selling or transferring it before that time will usually require you to **repay the tax benefits **(known as the “tax differential”).

In some cases, you can sell to another Oleh with the same rights under “passport-to-passport” rules.

The 2025 Tax Structure (with 18% VAT)

Taxes You Pay

**1.        Import Duty (Meches) **– New Olim pay **around 50% less **than the regular rate.

Since most vehicles normally face about 83% purchase/import tax, Olim typically pay about

41.5%.

**2.        VAT (Ma’am) **– The **current VAT rate is 18% **and applies **after **the import duty is added to the vehicle’s base value.

**3.        Other Fees **– Small charges for port handling, shipping insurance, inspection, registration, and documentation.

Example: Importing a ₪100,000 Car

Even with the tax reduction, the total cost still ends up around 67% higher than the car’s base value, but this is much better than the 100%+ markup faced by regular Israeli residents.

Conditions to Keep the Benefit

1.        The car must be imported or purchased within **three years **of your Aliyah date.
2.        You must have a **valid foreign license **issued at least three months before Aliyah.
3.        You must **convert to an Israeli license **within one year.
4.        You must **keep the car for several years **before selling it, or pay the tax difference.
5.        The car must be for your personal use only.

6.        The vehicle must meet all Israeli road and emission standards.

Common Pitfalls and Tips

ï           **Delays **in shipping or paperwork can cause you to lose eligibility.

ï           **Customs disputes **are common — the authorities can raise the assessed value, increasing your taxes.

ï           **Shipping costs and insurance **add significantly to the total.

ï           **Imported models **may have trouble finding spare parts or service in Israel.

ï           **Selling early **(within five years) can trigger a tax clawback.

ï           For inexpensive cars, the hassle and risk may outweigh the savings.

For most Olim, importing a car only makes sense if the vehicle is high-end or rare, or if it holds significant sentimental value. Otherwise, buying a car locally — even at a higher sticker price — is often simpler and safer.

Key Changes in 2025

ï           VAT increased to 18%, raising the overall cost of import.

ï           Ongoing **customs reforms **are changing how purchase tax is calculated for indirect importers.

ï           **Stricter oversight **on import agents and documentation, to prevent misuse of personal import benefits.

Step-by-Step Checklist

1.        Confirm you are within your three-year Aliyah benefit window.
2.        Ensure your **foreign license **meets the pre-Aliyah requirement.
3.        Choose a car that complies with Israeli vehicle standards.
4.        Collect all purchase and shipping documents.
5.        Use an **experienced customs agent **for import.
6.        Pay reduced import duty and VAT at customs.
7.        Register and insure the car in Israel.
8.        Keep it for at least five years before resale.

Final Summary

New Olim receive a **substantial tax discount **on car imports, typically paying about **two-thirds the total tax **of a regular Israeli buyer. However, it’s not tax-free — expect to pay around **65–75% **extra on the car’s value once all fees are included.

Because of the bureaucracy, cost, and resale restrictions, importing is usually worthwhile only for

expensive or unique cars. For most people, **buying locally **is simpler, faster, and safer.

Updated on: 01/02/2026