Buying a New Car with Olim Benefits

Kniyat Rechev Im Z'chuyot קניית רכב עם זכויות

Olim - עולים - new immigrants, are eligible to purchase new cars in Israel at a reduced tax rate within three years after making Aliyah as part of their Zechuyot - זכויות - Aliyah benefits.

 The Cost of a New Car for Olim is Calculated as Follows

50% Meches – מכס – Customs Tax, on all vehicles + 18% VAT (Value Added Tax). 

Sample calculation:

• If the car is worth: 100,000 NIS
• Meches on the car: 100,000 NIS x 50% = 50,000 NIS
• Car value + Meches = 150,000 NIS
• VAT payment: 150,000 x 18% = 27,000 NIS
• Total tax payment: 50,000 NIS + 27,000 NIS = 77,000 NIS

Steps to Buy a New Car with Zechuyot

Find a car dealer

• Find a car dealer and visit their dealership to choose the vehicle you want.

Negotiate with the dealer

• Negotiate with the dealer directly to potentially receive additional discounts, free upgrades, or extras.
• Prepare the following documents to present to the dealer:
  • Copy of your Teudat Oleh – תעודת עולה – New Immigrants Aliyah booklet.
  • Copy of your Israeli Rishyon Nehiga – רישיון נהיגה – Driver’s License obtained by converting a foreign driver’s license.
  • Original driver’s license from your country of origin (issued at least three months prior to your entry to Israel). Keep a copy for yourself.
  • Copy of your foreign passport with Aliyah visa.
  • Copy of your Teudat Zehut – תעודת זהות – Israeli ID card.

Meches – מכס – Customs Authority

• The car dealer will send all the required documentation to Meches and within 10 days to three weeks, your car should be released to you with the reduced tax benefit.
• Note: During your first year after Aliyah, you can purchase a vehicle without an Israeli driver’s license, but you must commit to converting your license within that year. Failure to convert your license within the first year will require you to pay back the reduced taxes. After converting it, you must present your Israeli license to Meches as proof.

Buying a Hybrid / Electric Vehicle (EV) Car

Buying a Second Hand Car "Passport to Passport" with Zechuyot

Specific Restriction

• When buying a new car with Zechuyot, there is a restriction on the car which allows only the purchaser and his/her spouse to drive the vehicle for 4 years from the purchase date. Olim who want to sell their car within four years of purchase without incurring penalties can do so by selling it to another Oleh who still has their Zechuyot to purchase a car with reduced taxes. This is called selling or buying a car “Passport to Passport”.

Meches – מכס – Customs Authority

• The seller and buyer must visit the local office of Meches to determine the car’s final value and any outstanding taxes owed.

• Note: When purchasing a second-hand car privately, you cannot use your Oleh benefits. However, you can still use your benefits to purchase an additional new car or a passport-to-passport car within three years of Aliyah. The buyer must present a valid Israeli driver’s license and their Teudat Oleh. A new four-year restriction on selling the car will begin from the day it is listed under the buyer’s name.

• If you buy a car without your Zechuyot, you need to go with the seller and the Rishyon Rechev – רשיון רכב – Car registration certificate, to any Snif Doar – סניף דואר – Post Office branch, and pay 235 NIS or to your Eizor Ishi – אזור אישי – personal profile on the Misrad Hatachbura website, and pay 222 NIS to transfer ownership. Sometimes the seller may split the fee with you.

General Restrictions

• As noted above, selling the car within four years of purchase requires paying back the tax reduction received at the time of purchase. After four years, this restriction is automatically lifted.
• To calculate or pay off the remaining taxes before the four-year mark, fill out an online form here or email yim@taxes.gov.il. After paying the taxes, the restriction will be lifted.
• Make sure to receive confirmation that the restriction has been lifted before transferring ownership of the car or allowing other family members to drive it.
• Only the person who used their Zechuyot to purchase the car and their spouse are allowed to drive the car.
• Children of Olim who wish to drive a car purchased with Zechuyot must have the same address as their parents on the Sefach (ספח), Information attachment, of their Teudat Zehut. Written permission from Meches is required. To obtain permission, the child must go to the nearest Meches office with a written request, a copy of their driver’s license, a written request from the car’s owner (parent), their Teudat Zehut, and the car’s registration certificate. The approval is granted for one year and can be extended.
• For a general overview of Zechuyot for Olim, click here.