Keren Hishtalmut, Kupat Gemel, pension gimel, Bituach Leumi and the army pension — how each is treated under Spanish tax law and the 1999 Israel-Spain Double Tax Treaty.
📅 May 2026✍️ Jacob Salama · Colegiado nº 11.294 ICAMálaga⏱ 12 min read
⚠️ Important disclaimer: This article is for general information only and does not constitute legal or tax advice. Israeli pension vehicles are complex instruments and the tax treatment in Spain depends on the specific facts of each case. Contact Jacob Salama for advice tailored to your situation before making any decisions.
Moving from Israel to Spain triggers one of the most technically complex questions in cross-border tax planning: what happens to my Israeli pension and savings vehicles? Spain has its own pension framework, which does not recognise the Israeli system. The AEAT applies Spanish domestic law — modified where necessary by the 1999 Spain-Israel Double Tax Treaty — to determine how each vehicle is taxed.
This guide addresses each major Israeli savings vehicle in turn, explains the relevant DTT articles, and highlights the planning opportunities that exist — particularly around timing of withdrawal and the Beckham Law regime.
The 1999 Spain-Israel Double Tax Treaty: Key Articles on Pensions
Spain and Israel signed their Convention for the Avoidance of Double Taxation on 30 November 1999 (BOE 10 June 2001). Two articles are central to pension taxation:
Article 18 — Pensions and Annuities
Article 18(1) provides that "pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State" — i.e., the state of residence. If you live in Spain, Spain taxes your Israeli private pension. Israel may not tax it (though it may withhold at source pending a refund application).
Article 18(2) covers annuities, which are taxable only in the state of residence. This affects income streams from certain Kupat Gemel arrangements structured as annuities.
Article 19 — Government Service Pensions
Article 19 carves out pensions arising from government service. Article 19(2) provides that pensions paid by Israel (or its political subdivisions) for services rendered to the Israeli state are taxable only in Israel — even if the recipient is a Spanish tax resident. This is the source-state rule for government pensions, and it is a critical distinction from Article 18.
Key distinction: Army pension (tzva'it), civil service pension, police pension, and similar Israeli government pensions → taxable only in Israel (Article 19). Private employer pensions, Kupat Gemel, Keren Hishtalmut, pension gimel from private employers → taxable in Spain (Article 18).
Israeli Savings & Pension Vehicles: One by One
Training Fund
Keren Hishtalmut (קרן השתלמות)
The Keren Hishtalmut is a mandatory savings vehicle in Israel, funded by employer and employee contributions over six years. In Israel, withdrawals after six years are tax-exempt — a significant benefit. In Spain, the position is fundamentally different.
Spain does not recognise the Keren Hishtalmut as a pension fund. The AEAT characterises it as a collective investment account or savings vehicle, not a pension. This means:
Accumulated gains on withdrawal are taxed as savings income (rendimientos del capital mobiliario) at 19% up to €6,000 / 21% €6,000–€50,000 / 23% €50,000–€200,000 / 27% above €200,000.
Employer contributions made while you are a Spanish tax resident may constitute employment income taxable at marginal IRPF rates (up to 47%).
The balance must be declared on Modelo 720 if it exceeds €50,000 (foreign accounts category, or foreign investment funds — professional advice on categorisation is essential).
There is no tax deferral in Spain equivalent to the Israeli six-year exemption.
⚠ Fully taxable in Spain — not recognised as pension
Provident Fund
Kupat Gemel (קופת גמל)
Kupat Gemel is a provident fund used for both retirement savings and shorter-term goals. There are two main tracks: the programmatic withdrawal track (which converts to monthly annuity payments from age 60) and the lump sum track.
Spain's treatment depends on how the Kupat Gemel is structured and paid out:
Annuity payments (monthly income track): Article 18(2) of the DTT may apply, making these taxable in Spain as pension/annuity income — included in general income base and taxed at progressive IRPF rates (19%–47%).
Lump sum withdrawal: Treated as savings income. The entire accumulated gain (not just the annual increment) is taxable in the year of withdrawal at savings rates (19%–27%). This can create a large one-year tax liability — timing and structuring are essential.
Employer contributions during Spanish residency: employment income, taxed at marginal rates.
⚠ Taxable in Spain — structure and timing determine rate
Pension Insurance
Pension Gimel / Bituach Menahalim (ביטוח מנהלים)
Pension Gimel (or Bituach Menahalim — executive insurance) is a pension insurance policy, typically taken by employers for senior employees. It combines life insurance, disability cover and pension savings.
In Spain, this is treated as a life insurance contract with a savings element. Upon retirement and drawdown:
Monthly pension payments received in Spain are treated as pension income under Article 18 of the DTT — taxable in Spain at general IRPF rates.
The savings element (rescate) is taxed as capital income from life insurance (rendimientos del capital mobiliario), with a special calculation applying temporal reduction coefficients.
Modelo 720: the policy must be declared if surrender value exceeds €50,000 (foreign life insurance category).
⚠ Taxable in Spain — pension portion at progressive IRPF rates
Social Security
Bituach Leumi (ביטוח לאומי) — Old-Age Pension
The Bituach Leumi old-age pension is the Israeli state social security pension. Its DTT treatment depends on characterisation:
If the payment relates to private-sector employment, it falls under Article 18 → taxable in Spain.
If the payment relates to Israeli government employment (civil servants, army, etc.), Article 19 may apply → taxable only in Israel.
The general old-age pension (not linked to government service) is typically treated as an Article 18 payment — taxable in Spain as residence state.
✓ Article 19 if from government service → taxable only in Israel⚠ Article 18 if private sector → taxable in Spain
Military Pension
Gimal Tzva'it / Army Pension (גמלת צבא)
The Israeli army pension (paid by the Israeli Defence Ministry) is a classic government service pension. Article 19(2) of the DTT is unambiguous: pensions paid by Israel in respect of services rendered to Israel are taxable only in Israel, even if the recipient has become a Spanish tax resident.
This is one of the clearest and most taxpayer-favourable provisions in the treaty for Israeli recipients in Spain. The Israeli army pension should not be included in the Spanish IRPF tax base. However, it must still be disclosed on your Spanish tax return (Modelo 100) as exempt foreign income for informational purposes — and it counts towards determining the applicable marginal rate on other income (progresividad exenta).
✓ Taxable ONLY in Israel under Article 19 — not in Spain
Summary Comparison Table
Vehicle
DTT Article
Taxed in Spain?
Rate in Spain
Modelo 720
Keren Hishtalmut
Art. 18 / domestic
Yes — savings account
19–27% (savings)
Yes (>€50k)
Kupat Gemel (lump sum)
Art. 18
Yes — savings income
19–27% (savings)
Yes (>€50k)
Kupat Gemel (annuity)
Art. 18(2)
Yes — pension income
19–47% (general)
Yes (>€50k)
Pension Gimel / Bituach Menahalim
Art. 18
Yes — pension income
19–47% (general)
Yes (>€50k)
Bituach Leumi (private sector)
Art. 18
Yes
19–47% (general)
N/A (income stream)
Army / Civil Service Pension
Art. 19
No — taxed in Israel only
0% in Spain
N/A (exempt income)
The Beckham Law Window: A Critical Planning Opportunity
The Beckham Law (Art. 93 LIRPF — Régimen especial de impatriados) taxes Spanish residents as non-residents for their first six years. One of its key features is that foreign-source income is generally not taxable in Spain under the Beckham regime — only Spanish-source income is included in the tax base.
This creates a significant planning opportunity for Israelis who move to Spain under the Beckham Law:
Israeli pension income received during the Beckham period may fall outside the Spanish tax base entirely, provided it qualifies as foreign-source income.
Keren Hishtalmut and Kupat Gemel withdrawals made during the Beckham period may similarly be excluded — though the position is not entirely settled and depends on how the income is characterised.
Timing withdrawals to fall within the Beckham period is a strategy worth analysing carefully before and after arrival.
⚠️ Beckham Law caveat: The regime excludes Modelo 720 filing obligations — but if and when you exit the Beckham Law and become a standard IRPF taxpayer, you must assess your Modelo 720 position for the first year of standard residency. Israeli pension accounts not yet declared may need to be reported. This transition is a critical compliance moment.
Israeli Pension Accounts and Modelo 720
Modelo 720 is Spain's annual declaration of foreign assets exceeding €50,000 per category. Israeli pension and savings vehicles fall into the following categories:
Bank accounts (Keren Hishtalmut held in bank): Category 1 (cuentas bancarias en el extranjero)
Investment funds / provident funds (Kupat Gemel, pension gimel as fund): Category 2 (valores, derechos, acciones y participaciones en entidades)
Insurance policies with surrender value (Bituach Menahalim): Category 3 (seguros de vida o invalidez y rentas temporales o vitalicias)
Failure to declare results in fines of €10,000 per item (minimum), plus potential regularisation penalties. Following the CJEU ruling in C-788/19 (Commission v Spain, February 2022), the most disproportionate penalties were revised — but the obligation to declare remains and is actively enforced.
Your Israeli Pension Situation Is Unique
The interaction between Spanish IRPF, the 1999 DTT and your specific Israeli savings vehicles requires bespoke analysis. The decisions you make — particularly around timing of withdrawals and the Beckham Law — can have a material impact on your tax liability. Jacob Salama advises Israelis moving to Spain on exactly these questions.
Before moving from Israel to Spain, work through this checklist with your adviser:
Inventory all Israeli savings vehicles — type, current value, vesting/maturity dates, employer/employee split, planned withdrawal age.
Identify which article of the DTT applies to each vehicle. Government service pensions (Article 19) and private pensions/savings (Article 18) require different treatment.
Assess Beckham Law eligibility — if you qualify, model the tax cost of withdrawals inside vs outside the Beckham period.
Consider pre-departure crystallisation — withdrawing or vesting Israeli savings before becoming a Spanish tax resident may be advantageous if the Israeli tax is lower than the expected Spanish tax.
Plan Modelo 720 compliance from day one — know which accounts exceed €50,000 and in which category they fall.
Address Israeli withholding tax — Israel may withhold tax on pension payments even when Article 18/19 allocates taxing rights to Spain. Apply for exemption from the Israeli Tax Authority where applicable.
Model the transition out of Beckham Law — year six is a key planning moment. Know the value of your Israeli accounts at that point and prepare for the Modelo 720 first-filing obligation.
Frequently Asked Questions
Yes, in almost all cases. Spain does not recognise Keren Hishtalmut as a pension vehicle — it is treated as a savings or investment account. Accumulated gains are taxable on withdrawal at savings income rates (19–27%). The fund must also be declared on Modelo 720 if it exceeds €50,000. Unlike Israel, there is no six-year tax-exempt withdrawal rule in Spain.
Article 18 of the 1999 Spain-Israel Double Tax Treaty. Under Article 18, private pension income is taxable exclusively in the state of residence — so if you live in Spain, Spain taxes your Israeli private pension. Israel may still withhold tax at source, and you would need to claim a credit in Spain or apply to the Israeli Tax Authority for exemption from withholding.
No — under Article 19(2) of the DTT, pensions paid by Israel in respect of services rendered to the Israeli state (army, civil service, police) are taxable only in Israel, even if you are a Spanish tax resident. You must still declare it on your Spanish return as exempt foreign income, and it may affect the applicable marginal rate on your other Spanish income.
Yes. Keren Hishtalmut, Kupat Gemel, pension gimel and other Israeli savings/investment vehicles must be declared on Modelo 720 if the balance in each category exceeds €50,000 on 31 December. The first declaration is mandatory; subsequent filings are required only if values change by more than €20,000 or an account is closed/opened. Under the Beckham Law, Modelo 720 is not required — but you must file it when you exit the Beckham regime.
Potentially yes. If you are still an Israeli tax resident and have not yet become a Spanish tax resident, withdrawals are subject to Israeli — not Spanish — tax. For many pension and savings vehicles, Israeli tax on withdrawal is lower (or zero, in the case of Keren Hishtalmut after six years). Strategic pre-departure crystallisation is one of the most impactful planning tools available. This requires careful coordination of the exact date you become a Spanish tax resident and your planned withdrawal timeline.
Yes, potentially significantly. Under the Beckham Law, foreign-source income is generally excluded from the Spanish tax base. Israeli pension income received during the Beckham period (up to 6 years) may not be taxable in Spain. However, this depends on how the specific income is characterised and the position is not entirely settled for all vehicle types. Professional advice is essential before relying on this exclusion.
⚠️ Disclaimer: This article is for general information only and does not constitute legal or tax advice. The tax treatment of Israeli pension vehicles in Spain is complex and depends on the specific facts of each case, the terms of the relevant vehicles, and the applicable provisions of the 1999 Spain-Israel Double Tax Treaty. Rates, thresholds and treaty provisions are subject to change. Contact Jacob Salama for advice specific to your situation.
