Calculate Israeli dividend income after withholding tax. Regular shareholders pay 25%, substantial shareholders (10%+) pay 30%. Enter annual dividend and invested amount to see net income and yield.
Enter your annual dividend income and select your shareholder type to calculate Israeli dividend withholding tax and net dividend after tax.
Net dividend income
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Gross dividends
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Withholding tax
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Net dividends
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Effective yield on invested amount
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How Israeli dividend withholding tax works
When an Israeli company pays a dividend, it withholds tax at source before distributing the net amount to shareholders. The company remits the withheld tax directly to the Israel Tax Authority (ITA). For individual resident shareholders, this withholding is generally a final tax, meaning no further income tax is due on the dividend and it does not need to be reported as income unless the taxpayer has other reasons to file. The paying company is legally required to provide each shareholder with a tax certificate (Teudat Nikhui) confirming the gross dividend paid and the tax withheld, which is used for any tax return or foreign tax credit claims.
The 10% substantial shareholder threshold in practice
The distinction between 25% and 30% matters most for founders, early investors, and employees with large equity grants. If you hold 10% or more of any company (individually or through related parties), all dividends from that company are taxed at 30%, not 25%. The 5 percentage point difference becomes significant at larger dividend amounts. For example, on a 500,000 ILS dividend, the additional tax at 30% versus 25% is 25,000 ILS. Monitoring your ownership percentage relative to the 10% threshold, particularly as companies issue new shares (diluting existing holders), is important for shareholders near the boundary.
Effective yield calculation and what it means
The effective yield shown is the net annual dividend divided by the total invested amount. For example, a 50,000 ILS gross dividend on a 500,000 ILS investment gives a gross yield of 10%. After 25% withholding tax, the net dividend is 37,500 ILS and the net yield is 7.5%. This net yield is what actually reaches your bank account and is the appropriate figure for comparing dividend income to other after-tax alternatives such as bank deposit interest or bond returns. A 4% Pikadon rate with 25% tax gives a 3% net yield, which is lower than a 7.5% net dividend yield on the same capital, though the dividend involves equity risk that the Pikadon does not.
Frequently asked questions
What is the dividend withholding tax rate in Israel in 2025?
In Israel, dividends paid by Israeli companies to individual shareholders are subject to withholding tax at source. The standard rate is 25% for regular shareholders (holding less than 10% of the company). For substantial shareholders (Baal Shlitta Makbil) who hold 10% or more of any of the company’s shares or voting rights at any point during the 12 months before payment, the rate is 30%. These rates are applied by the paying company, which withholds the tax and remits it directly to the Israel Tax Authority. The net dividend is paid to the shareholder without any further income tax obligation for most resident individuals.
Are dividends from Israeli companies taxed differently for non-residents?
Non-resident individuals and foreign companies typically face a withholding tax on dividends from Israeli companies at 25% or 30%, subject to reduction under applicable tax treaties. Israel has tax treaties with over 50 countries including the United States, UK, Germany, Netherlands, and France. Treaty rates for dividends vary between 5% and 15% for qualifying shareholders. Non-residents should submit the appropriate forms to the paying company to apply the treaty rate. Absent a treaty, the domestic rate applies. The company’s obligation to withhold at the domestic rate remains until the shareholder provides treaty documentation.
What is a substantial shareholder (Baal Shlitta) for Israeli dividend tax purposes?
Under Israeli tax law, a substantial shareholder (Baal Shlitta Makbil or simply Baal Shlitta) is an individual who holds, directly or indirectly, alone or together with a relative, 10% or more of any of the following in a company: shares, voting rights, rights to profits, rights to appoint directors, or rights to liquidation proceeds. The 10% threshold is checked at the time of the dividend payment and also during the 12 months preceding it. If you crossed the 10% threshold at any point in that 12-month window, the 30% rate applies to the entire dividend received, even if you have sold down below 10% by the payment date.
Can I get a tax credit in Israel for foreign dividends already withheld abroad?
Yes. If you receive dividends from a foreign company and foreign withholding tax has been deducted at source, you can generally claim a foreign tax credit in Israel against your Israeli dividend tax liability. The credit is limited to the Israeli tax otherwise payable on that income, so you cannot create a refund. If the foreign rate is lower than the Israeli rate (e.g. 15% US treaty rate vs 25% Israeli rate), you pay the difference (10%) to Israel. If the foreign rate equals or exceeds the Israeli rate, no further Israeli tax is due on that specific dividend. Documentation of the foreign tax paid is required to claim the credit on your Israeli tax return.