Published: 29.06.2026
From 2025, profitability above 25% for a closely held company’s business activity may result in the relevant share of excess profitability being included in an active shareholder’s taxable income. The amount is taxed at the shareholder’s marginal tax rate.
According to the source, the rule directly affects active shareholders of closely held companies, including people involved in management or holding a significant ownership stake. Someone relocating to Israel to run such a business may need to account for part of the company’s excess profitability being added to personal taxable income, in addition to corporate taxation. It is mainly relevant to investors and entrepreneurs planning to manage a closely held company from Israel, rather than to ordinary employees.