Tax Refunds for Previous Years — How Many Years Can You Actually Claim?

Who Is This Guide For?

If you are a self-employed individual, an exempt business owner or licensed business owner, an employee who had duplicate tax withholdings, or a company owner who failed to file an annual report on time — you likely have money waiting for a refund. The same applies to new immigrants, workers abroad, and companies new to Israeli tax reporting.

The question we hear frequently is simple: How many years back can you file a tax refund request? The answer is not entirely straightforward, as it depends on the type of refund, your status, and what exactly happened in those years.

In this guide, we will cover the laws, the process, and the pitfalls you should avoid. In short: there is a time window you cannot afford to miss, and the sooner you arrange your affairs, the easier and more economical it becomes.

What Exactly is a Tax Refund, and Who is it Relevant to?

A tax refund is money that the Tax Authority is obligated to return to you because you overpaid during a certain period. This happens when mandatory deductions (income tax, national insurance, pension fund) are too high, or when you have expenses that reduced your taxable income.

For example: an employee who received a payslip with an incorrect tax withholding rate, or a self-employed person who filed an annual report and discovered they are entitled to tax benefits they did not receive in previous years. Also, a business owner who deposited personal capital and is entitled to a tax refund for expenses that were not previously recognized.

The important point: a tax refund is not something that happens automatically. You must submit a request, and such a request must be submitted within a specific time window.

Tax Refund 6 Years — What Exactly Is This Limitation?

In Israel, you can submit a refund request for tax up to 6 years back from the end of the tax year in which you were entitled to the refund. This does not mean 6 years from today — it depends on when the original return was filed or when the error was discovered.

For example: if you are an employee and double tax was deducted from you in 2020, you can submit a refund request until the end of 2026 (6 years from the end of 2020). If you are self-employed and filed an annual report for 2021 with an error, you have until the end of 2027 to file a correction.

This limitation exists to protect the Tax Authority from requests many years later, but it also protects you — it establishes a clear framework within which you can operate.

But that is not the whole story. There are cases where you can submit a request even after this window has closed. This happens when there is a material error by the Tax Authority itself, or when there is a change in court precedent. In any case, this is not something you should rely on.

How to File a Tax Refund — Step by Step

If you think you are entitled to a refund, here is the process:

1. Determine exactly what the refund is for. Is it a double deduction? An unrecognized expense? An advance payment that wasn't needed? To file a claim, you need to be precise about what happened.
2. Gather documents. Payslips, statements, invoices, payment evidence. If you are self-employed, make sure your books are up to date.
3. File a claim or amend your report. If it is an error in a previous report, you file an amended report (usually an amended annual report or a refund request form). If it is a double deduction, you can file a request directly with the Tax Authority.
4. Wait for review. The Tax Authority reviews your request and may ask for additional documents. It typically takes several months to a year.
5. Receive a refund or settlement. If you are correct, you receive the money. Sometimes there is a settlement — a tax or penalty you need to pay first.

It sounds simple, but in practice it can be complicated. You need to know which form to file, how to document expenses, and what to do if the Tax Authority denies your request.

What You Need to Know About Tax and Reporting in the Context of Refunds

When discussing tax refunds, it is important to understand several basic principles:

Interest and Index Adjustment. If you receive a tax refund, the Tax Authority typically pays you interest on your money. It is not substantial, but it is something. Subject to certain conditions, there may also be an index adjustment.

Annual Reports and Amendments. If your error is in an annual report that you have already filed, you cannot simply submit a new report. You must file an official amended report, and even that has time limitations. If it was many years ago, you may need to apply for an exceptional amendment — and that requires strong justification.

Exempt and Authorized Business Operators. If you are an exempt business operator, you do not report VAT, but you can still file a request for a tax refund if too much was withheld from you. An authorized business operator is required to report VAT, and there too a refund may be available — both for VAT and for income tax.

Employees and Double Withholding. This is one of the most common cases. If you worked for two employers in the same year, or if you worked as both an employee and self-employed in the same year, you may have had double income tax withheld. This does not correct automatically — you need to file a request.

Common Mistakes and How to Avoid Them

Based on our years of experience, we have seen several recurring patterns:

• Waiting too long. People think they have unlimited time. In reality, there is a 6-year limit, and it is strict. If you miss it, it is usually over.
• Filing a request without documents. The Tax Authority will not take your word for it. You need invoices, pay slips, employer notices, anything that proves your claim.
• Confusing types of refunds. An income tax refund is not the same as a VAT refund. If you report VAT, you need to understand which type of refund you are entitled to.
• Fear of the Tax Authority. Some people think that if they file a refund request, the Tax Authority will audit them more thoroughly. Usually, this does not happen — a refund request is a normal thing.
• Not updating your address. If your address with the Tax Authority is incorrect, you may have problems receiving your refund. Always make sure your address is up to date.
• Working with accountants who are not up to date. If you work with someone who is not familiar with the new laws, you may miss opportunities or submit incorrect requests.

When Should You Consult with an Accountant or Tax Advisor?

If your situation is straightforward — you're a salaried employee who received a double deduction, and all your documents are in order — you can submit a request yourself. However, in all other cases, it's advisable to consult:

If it involves a business or a company. Improper bookkeeping, unsubmitted annual reports, or reporting errors — this is too complex to do yourself. We see cases where a business owner failed to submit an annual report for years and is entitled to a substantial refund — but it needs to be done the right way.

If you have multiple sources of income. Self-employment and freelancing, a business abroad, income from dividends — this complicates reporting, and it's easy to miss deductions or entitlements.

If this isn't happening for the first time. If your request has already been denied, or if the Tax Authority has requested additional documents, it's worth getting professional help.

If you are abroad or a new immigrant. International taxation is a world of its own. If you work abroad and also pay taxes in Israel, or if you're a new immigrant unsure of your entitlements, this requires specialized knowledge.

In short: if there's any doubt, it's worth consulting. An initial consultation meeting costs nothing, and from it you can understand exactly what the next steps are.

Real-World Examples — What Happened to Our Clients

A self-employed person who opened a business in 2019. He didn't submit annual reports for 2019 and 2020 because he thought they were too small. In 2024, when he decided to expand, he discovered he was entitled to a substantial refund from those years. He filed amended reports and received the money within a few months. Without help, he would have missed the deadline.

A salaried employee who worked for two employers. In 2022, she changed jobs and also started self-employment. Both employers deducted tax at low rates because they thought she worked for them alone. At year-end, she filed an annual report and discovered she needed to pay back taxes. But when we calculated it properly, we found she was entitled to a refund because the deductions were incorrect. Correct reporting resulted in a substantial refund.

A limited company that deposited equity capital. The company owners deposited capital in 2020 to support the company during the coronavirus crisis. In subsequent years, they discovered they were entitled to a tax refund for expenses related to that capital. They weren't aware of this, and their reports didn't capture it either. In amending the reports, they received a substantial refund.