Section 102: Israeli employee equity, explained
The trustee route, the holding period, and what a cross-border move does to the tax.
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Israeli tax on RSUs and options when you relocate
Your RSUs do not stay behind when you leave Israel. Legal counsel for holders of employee shares and options: from planning the sale before you move, through the trustee, to the tax refund after you leave.
RSU tax refund after leaving
Planning the sale before the move
Withholding exemption or reduction
Exit tax and tax treaties
If you leave Israel holding RSUs or Section 102 options, the shares do not simply move with you. Israel keeps taxing part of the gain after you leave, the Israeli trustee keeps withholding as if you never left, and your new country of residence wants its own share. Most of the decisions that set your final tax bill - when to sell, which lots, and in which tax year - are made before the flight.
I am an Israeli lawyer with a degree in accounting. I advise tech employees and families relocating from or returning to Israel with equity compensation: from initial planning, through the Israeli tax return and Form 1348, to the refund.
What I do
Israeli tax on RSUs and employee stock options
Tax simulation before you sell - which lots, when, and in which tax year
Timing your residency severance around vesting dates, the end of the 102 lock-up and the sale
Israeli exit tax (section 100A) on shares and options - computation, deferral and the Israel / abroad split
Refund of Israeli tax on RSUs sold after you leave, when the trustee withheld too much
Israeli withholding exemption or reduced-rate certificate for a foreign resident selling shares
Avoiding double tax with your new country of residence - foreign tax credits and tax treaties
Israeli tax returns for the year you leave and after, including Form 1348
Equity granted abroad, for returning residents and new olim
Legal opinions and representation before the Israel Tax Authority
The process
How it works
01
Map
Your grants, vesting dates and lock-up, the trustee, and your destination country
02
Plan
A simulation: selling before leaving versus after, which lots, and splitting across tax years
03
Execute
Coordination with the trustee, the Israeli return with Form 1348, and the refund claim
04
Represent
Answering the assessing officer on the split between Israel and abroad
What to know
Should I sell my RSUs before or after leaving Israel?
The short answer: there is no single answer. It depends on whether the Section 102 lock-up (24 months from grant and deposit with the trustee) has ended, how your new country of residence will tax a sale made after you arrive, and how the gain splits between employment income and capital gain. Selling before you leave is simpler and taxed in Israel only, so the double-tax risk is avoided. Delaying the sale can pay off in some cases, but it needs careful planning. Note: according to the Israel Tax Authority's position, leaving before the lock-up ends may also mean the Israeli share of the gain is taxed at the marginal rate.
Section 102: Israeli employee equity, explained →The trustee withheld 62% or is holding the money - what now?
The trustee must withhold tax, but it has no authority to decide your residency, so it usually keeps withholding as if you never left. On the employment-income part, once there is no Israeli payslip, it withholds at the top rate - sometimes including National Insurance and health tax - which is how you get to about 62%. Where the employer is waiting for a tax ruling on relocated employees, some trustees also hold the proceeds until the ruling is issued.
Withholding is not your final tax. Israeli tax is recalculated in the annual return (Form 1301) for the year of sale, along with Form 1348. This is where you claim back what was over-withheld.
What happens to RSUs that have not vested when I leave?
It depends first on your plan's terms: some employers stop vesting when employment ends, while a move within the same group usually keeps it going. If vesting continues, Israel taxes the employment-income part in proportion to your Israeli workdays during the vesting period, and the part relating to workdays abroad is not Israeli income.
Who handles RSUs when you leave Israel - an accountant, a tax advisor or a lawyer?
An individual Israeli return can be filed by a CPA, a tax advisor or a lawyer. The difference is what stands behind it: the split between Israel and abroad, the exit tax and your residency status are legal questions, and they decide how much tax you pay in each country.
I handle both sides under one roof - the legal analysis and planning, as well as the tax return, computations, and refund - so the position worked out in our consultation is the position filed. If you already have an accountant, I work alongside them.
About Tina Kaplan →A case from my practice
A tax refund of about ILS 490,000 - after the trustee withheld in full
The situation: A tech employee moved to the United States and sold their RSUs after becoming a foreign resident. The trustee withheld tax on the whole gain as if they had never left - about 62% on the employment-income part and about 28% on the capital-gain part.
What we did: We built a detailed file: exact calculations for each lot, documents and proof for every claim - including proof of the departure date and residency severance - and a reasoned return for the year of sale with a refund claim. We handled discussions with the Israel Tax Authority until the refund was approved and paid.
The result: A tax refund of about ILS 490,000.
Identifying details have been changed. Every case is assessed on its own facts.
A case from my practice
About ILS 1.5 million - with no Israeli withholding
The situation: A client resident in Germany was about to receive about ILS 1.5 million from selling shares in an exit deal. The shares were held by an Israeli trustee. Without advance approval, the trustee would have had to withhold Israeli tax - and the money would have been stuck with the Tax Authority until a refund, a year or more later.
What we did: We carried out a thorough legal review of every part of the deal, ran simulations of the tax alternatives, gathered the documents and evidence, and filed a reasoned application with the Israel Tax Authority. We saw it through until a withholding exemption certificate was issued - before the payment date.
The result: The full amount, about ILS 1.5 million, was paid to the client with no Israeli tax withheld.
Identifying details have been changed. Every case is assessed on its own facts.
A case from my practice
Planning before the move avoided tax on shares that could not yet be sold
The situation: A tech employee holding Section 102 options in a private company was planning a move to Canada. In Canada, converting employee options into shares is an immediate tax event: the whole difference between the share value and the exercise price is taxed as employment income, even for private-company shares that cannot be sold. In Israel, under the 102 track, tax applies only on sale - so the Canadian tax would have been due years before there was any money to pay it.
What we did: We reviewed the vesting schedule, the moving date and the tax rules in both countries, ran simulations of each alternative, and recommended converting the options into shares before the move - under the 102 track, the conversion itself is not a tax event in Israel.
The result: The conversion was done before the move, and no tax event arose in Canada. The client did not have to pay tax on shares that could not yet be sold.
Identifying details have been changed. Every case is assessed on its own facts.
"
RSU tax planning must start before you sell and before you move - afterwards, there is far less room to plan.
- Tina Kaplan, Adv. (LL.B., B.A. Accounting)
Frequently asked questions
Is there an Israeli exit tax on RSUs?
Yes. Under section 100A of the Income Tax Ordinance, your RSUs are treated as sold on the day before you stop being an Israeli resident. You do not have to pay at departure. If you defer, Israel taxes the share of the gain that accrued until you left, calculated on a time-based split at the time of sale. The choice is made when you leave and is hard to change later.
Can I get an exemption from the trustee's withholding in advance?
Each case is assessed on its own merits. Sometimes the right route is claiming a refund in the annual return, but in certain specific cases, an exemption or reduced withholding can be obtained in advance of payment - including for shares held by a trustee.
I already sold after leaving and paid tax in Israel - is it too late?
No. You can file a full annual return (Form 1301) for the year of sale and claim a refund after the fact. The condition is proving your residency severance, which includes submitting a reasoned, well-supported Form 1348. Without it, the Tax Authority will continue treating you as an Israeli resident and tax the whole gain.
