The Tel-Aviv Regional Labor Court has ruled that a person cannot change their mind about whether they are Israeli resident for the purposes of Israeli social security (Bituach Leumi, National Insurance).  As a result, the individual had to pay Israeli social security arrears spanning 2016-2020 and potentially US social security as well. (Chaim Zeev Lerner case reportedly of 12.2.25).

Main facts:

The individual travelled to the US in September 2016 and mainly stayed there until his return to Israel in October 2022. While he was in the US, his parents apparently paid Israeli social security for him. When he found out, he requested to be classified as non-resident of Israel and claimed a refund of all Israeli social security paid while he was away.

He filed an Israeli social security residency questionnaire in July 2021 saying he was in the US to study.

He later said he became a Rabbi in the US in 2019.

The Israeli National Insurance Institute (NII) rejected his rejected his refund request.

Court Judgment:

The Court rejected the individual’s claim and had some strong remarks:

“The Claimant is an Israeli citizen and is presumed to be an Israeli resident until determined otherwise and is therefore liable to pay Israeli social security contributions. The “insured” individual is supposed to notify the National Insurance Institute of his status. As he didn’t do so, he can only blame himself. ”

The Court noted according to Israeli case law there must be a clearcut break in Israeli residency. The individual didn’t notify the NII of his intention to emigrate and settle down abroad, and only claimed this retrospectively for the purpose of these legal proceedings.

The Court said that  the claimant did not provide any evidence at all that he had no intention of returning to Israel.

Instead, he kept on paying social security contributions and his parents gave no testimony in Court that they paid the social security not him. Moreover, the social security form asked what was the reason for staying abroad and gave a number of alternative options (emigration, studies, work etc) and the Claimant chose to fill in “Studies” throughout the relevant period. In that time, the Claimant enjoyed Israeli social security cover and the fact he didn’t need the cover does not give him the right to claim a refund.

The Claimant’s declaration that he travelled abroad to study committed him to that declaration.

The fact that he returned to live in Israel in 2022 showed the Court (with hindsight) that the Claimant had no intention of settling abroad

Comments:

Beware of what you write on Israeli social security forms, you will be held to it. In this case, travel abroad to study was taken to mean the individual remained an Israeli resident for social security purposes.

In addition, it seems possible that US social security was also payable, meaning double social security payments (and cover) were applicable.

The Israeli National Insurance Institute (NII) generally applies a center of living test. This case shows that studies abroad do not change an Israeli center of living.

The NII states on its website that an Israeli resident is someone (https://govforms.gov.il/mw/forms/[email protected]?gbxid=0) whose center of living is abroad and any absence from Israel is temporary. The NII typically looks at a 5 year period, but not necessarily as this case indicates.

If an Israeli resident individual works abroad for a foreign employer e.g. on relocation, Israeli social security contributions are payable at rates of up to 12.17% unless a social security treaty provides otherwise. Unfortunately, there is no social security agreement between Israel and the US.  The NII website admits that residency is not defined in the National Insurance law, so the NII interprets case law. Unfortunately, the NII website does not say which case law.

How to cancel Israeli Residency Status:

To cancel Israeli residency for NII purposes online, see: https://govforms.gov.il/mw/forms/[email protected]?gbxid=0. This is best done sooner rather than later.

Income Tax Side:

It should be noted that residency for Israeli social security purposes is not the same as residency for income tax purposes. The Income tax Ordinance gives examples of residency and provides foreign tax credits to help overcome double income taxation. There is also much case law. Social security/national insurance is tougher and double payments in two (or more) countries are possible.

To sum up:

Claiming a social security refund is no easy matter, nor is going to court to press the refund claim.

Beware of double social security it can be tougher than income tax. And beware of what you write on forms.

If you are relocating to a country that has a social security treaty with Israel (e.g. UK), check what relief is available – possibly no Israeli social security for a period, but  the “health tax” (Mas Briut) component is still due. Consider paying the “minimum” social security of NIS 250 per month (in 2025) to help assure health cover etc. during any trips to Israel.

If you are relocating to a country that has no social security treaty with Israel (e.g. US, Ireland), beware of double security and consider sooner whether to register as non-Israeli resident for social security purposes – see above. Non-residency for income tax purposes is fact driven and takes 4-5 years.

Specialist advice should be obtained in each country before any relocation abroad

Next Steps:

Please contact us to discuss any of the above matters further, or any other matter.

As always, consult experienced legal and tax advisors in each country at an early stage in specific cases.

[email protected]

© Leon Harris 22.4.2025