Court ruling10/18/2026

Tribunal Orders Israel Tax Authority to Pay Compensation to the “Galei Kinneret” Hotel

The Appeals Committee for Compensation for Indirect Damage to Businesses accepted the appeal filed by Israel Canada Kinneret Hotels, which owns and operates the Galei Kinneret Hotel in Tiberias. It ruled that the Israel Tax Authority was not authorized to replace the calculation prescribed by law with its own calculation method.

Key facts

•Appellant: Israel Canada Kinneret Hotels
•Body: Appeals Committee for Compensation for Indirect Damage to Businesses
•Damage period: November–December 2023
•Compensation sought: approximately NIS 700,000
•Legal costs: NIS 10,000
•The case number and date of the decision are not specified in the source

Reason for the Dispute

After the outbreak of the “Swords of Iron” War, the company ceased its regular tourism operations and, under an agreement with the Ministry of Tourism, accommodated residents evacuated from border areas at the hotel. In May 2024, it sought approximately NIS 700,000 for indirect damage incurred in November–December 2023, under the “qualifying expenses” compensation track.

Two Different Calculations

According to the company’s VAT reports, its turnover during the period for which compensation was sought declined by 25.5%—above the minimum threshold of 25% established by law. The Israel Tax Authority conducted its own recalculation, excluding some receipts and adding revenue from later reports. Consequently, the Authority determined that the decline was 23%, rejected the payment application, and subsequently also rejected the company’s objection.

The Appeals Committee’s Decision

The Appeals Committee, chaired by attorney Tamar Steiner and with the participation of accountant Baruch Baruchi, accepted the appeal in full. The Israel Tax Authority was ordered to pay the full compensation sought—approximately NIS 700,000—as well as NIS 10,000 in legal costs. The case number and date of the decision are not specified in the source.

The Legal Basis

The Appeals Committee clarified that the “green track” is based on a simple and rapid formula that uses the taxpayer’s VAT reports. As long as those reports have not been rejected or amended in accordance with the procedure prescribed by law, they are deemed valid, and the Authority may not replace them with an individualized alternative calculation. The tribunal also noted that deviating from the uniform formula creates distortions, undermines equality among business owners, and contradicts the law’s budgetary and distributive purpose.

The Connection Between the Damage and the War

An analysis of the hotel’s turnover in 2022–2024 unequivocally showed, according to the Appeals Committee’s conclusion, a significant decline in revenue and a direct causal connection between that decline and the outbreak of the war. It was therefore determined that the refusal, which was based on a recalculation not grounded in law, was unreasonable and exceeded the Israel Tax Authority’s authority.

What this means for you

For business owners in Israel, the decision confirms that when calculating compensation under this track, the Israel Tax Authority must rely on VAT reports and the formula established by law. An arbitrary individualized recalculation is not permitted as long as the reports have not been rejected or amended through the prescribed procedure. The decision may have practical significance for other companies whose applications were rejected because official data were similarly replaced with an alternative calculation.

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