Treaty detail
United States - Israel tax treaty
A practical treaty page built around the official treaty text, key withholding categories, permanent-establishment rules, and article-level summaries.
Signed
1975-11-20
Effective
1995-01-01
Articles seeded
6
Withholding snapshot
Dividends
Individual rate: 25% · Corporate rate: 12.5%
The Israel treaty uses non-standard dividend rates. The 12.5 percent corporate rate generally depends on direct ownership of at least 10 percent of the voting stock during a qualifying period and additional conditions related to the source of corporate income. Article-level review is required.
Interest
Rate: 17.5%
The treaty applies a 17.5 percent general rate on interest, with reduced 10 percent treatment for certain bank and financial-institution interest categories. Article-level review is required.
Royalties
Rate: 15%
The treaty applies a 15 percent rate to industrial royalties and 10 percent to copyright and film royalties under the 1980 and 1993 protocols, with definitions that require careful article-level review.
Permanent establishment
Construction threshold: more than 12 months under the consolidated treaty
Dependent-agent analysis remains important where a person habitually concludes contracts on behalf of the enterprise under the treaty wording as modified by the 1980 and 1993 protocols.
Other treaty flags
The Israel treaty generally allocates private pensions to the residence state. The protocol history means that current pension treatment should be confirmed against the consolidated treaty text rather than the original 1975 articles alone.
Seeded article summaries
Article 4
Residence
Defines treaty residence under the 1975 treaty framework as amended by the 1980 and 1993 protocols.
Residence under the Israel treaty is complicated by the layered protocol history. The 1980 and 1993 protocols modified multiple operative provisions, so residence analysis must reference the consolidated treaty rather than the original 1975 text alone.
Article 5
Permanent Establishment
Sets the business-presence threshold for source-country taxation.
The Israel treaty includes specific PE rules that reflect the layered protocol structure. Dependent-agent and construction-project rules should be applied with reference to the consolidated treaty text.
Article 7
Business Profits
Generally reserves business profits to the residence state absent a permanent establishment in the other state.
This is the operating-rule article once the PE analysis is complete. The Israel treaty applies the standard residence-state principle for business profits, subject to the layered protocol framework.
Article 10
Dividends
Applies non-standard reduced source-country withholding rates for qualifying dividends.
The Israel dividend article is unusual in U.S. treaty practice because it uses higher headline rates than most U.S. treaties. The 25 percent individual and 12.5 percent corporate rates reflect the older 1975 framework as modified by the 1980 and 1993 protocols.
Article 11
Interest
Applies a 17.5 percent general rate on source-country interest, with reduced rates for certain categories.
Interest under the Israel treaty is subject to higher withholding rates than under most modern U.S. treaties. The 17.5 percent general rate is reduced to 10 percent for certain bank and financial-institution interest, subject to article-level review.
Article 12
Royalties
Applies tiered source-country withholding rates depending on the type of royalty.
The Israel royalty article applies a 15 percent rate to industrial royalties and 10 percent to copyright and film royalties under the protocols. The definitions require careful article-level review, especially for software and mixed-IP payments.
Official text
Other treaties involving these jurisdictions
Computed from the cross-reference graph. Links open the related entity on this site.
This entry cites
- TreatyUS–GB treaty
- TreatyUS–CA treaty
- TreatyUS–DE treaty
- TreatyUS–FR treaty
- TreatyUS–JP treaty
- TreatyUS–NL treaty
- TreatyUS–AU treaty
- TreatyUS–KR treaty
Primary sources
- Israel treaty documents pageVerified 2026-05-20
- Official U.S.-Israel treaty PDFVerified 2026-05-20
- IRS Tax Treaty Table 1Verified 2026-05-20
Important disclaimer
This library is for general tax education only. Always verify filing obligations, due dates, and tax consequences against the cited primary source or with a qualified tax professional.