The EU has given the green light for Google to complete its $32 billion acquisition of Israeli cybersecurity company Wiz - the biggest-ever acquisition of an Israeli company. The deal provides a huge cash windfall for the company’s founders, employees and the Israel Tax Authority.
Most of the company’s major investors are foreigners - venture capital funds with a combined stake in Wiz of 48%, and because of this, most investors and partners in these funds are exempt from tax - if they have obtained the appropriate permits from the Tax Authority, with only the Israeli partners liable for tax. Most of the shares - 52% - are in Israeli hands - the founders, the employees (only about 20% of whom are Israelis) and Israeli funds Cerca and Cyberstarts, and for them the tax situation is more complex.
How much tax will the founders pay?
Estimates are that each of the four founders, who are Israeli residents - Assaf Rappaport, Yinon Costica, Roy Reznik and Ami Luttwak - hold slightly less than 10% of the company's shares, and because of this they are expected to bring in about $3 billion each before tax. As each of their stakes is less than 10%, each of them will pay capital-gains tax of 25% and an additional tax of 5%, for 30% total tax. Consequently, each of the founders should pay about $900 million in taxes for a combined $3.6 billion or NIS 11 billion.
How much tax will the employees pay?
Wiz has about 2,500 employees, about 20% in Israel. Assuming that most are compensated as part of an options arrangement under Track 102, they will pay tax on the difference between the exercise price of the options and the increase in value after remuneration - 25% capital-gains tax and a further 3% tax. If the amount exceeds the NIS 720,000 threshold, or they are considered special shareholders who also benefit from dividend and interest payments, the additional tax will increase to 5%.
According to estimates, all the company's employees will share a phenomenal $2.5 billion, or theoretically about $1 million per employee on average. Only about 500 Israeli resident employees will pay taxes to the state, so on average the tax could total $150-200 million, or NIS 460-620 million.
How much tax will the investors pay?
The most complex tax situation is faced by investors - a large group of foreign venture capital funds, as well as some Israeli ones, in which foreign and Israeli partners will each pay tax at completely different rates. Most of the investors in the company are foreign venture capital funds such as Index, which will receive $3.5 billion for the deal, Sequoia, which will receive $3.2 billion, and Insight with $2.9 billion. Almost all of the $15 billion that will be transferred to the foreign investors will not be taxed, as long as each of the funds has reached a special pre-ruling agreement with the Tax Authority.
The exceptions are the managing partners in the funds (GP), that is, the investment managers in them, who will be taxed according to their residency. Non-Israeli managing partners will be fully exempt, while Israeli managing partners, such as Gili Raanan at Cyberstarts, will pay tax, but according to the percentage of Israeli investors in these funds.
"The higher the proportion of foreign investors in the fund, the lower the tax payment for the managing partner - closer to 25% before additional tax," says Adv. Racheli Guz-Lavi, Director of the Tax Department and Amit Pollak Matalon (APM.) managing partner.
"The higher the proportion of Israeli investors in the fund, the closer the tax payment for the Israeli partner may be to 47% before an additional tax of 5%. The tax on Israeli general partners will be imposed on the carry fee, i.e. on the capital they will bring in as a result of the distribution of the exit proceeds allocated to all partners in the fund, after transferring the bulk of the profit (80%) to the fund investors, i.e. the limited investors."
In other words, an Israeli partner in a fund of 10 partners that receives compensation of $1 billion, will receive $20 million, and from this amount will pay tax that ranges from 25%-47% depending on the nature of the investors in the fund. However, the amount is not expected to be divided among the partners so quickly, since venture capital funds only distribute the success fee at the end of the fund's term. However, Guz-Lavi believes that due to the size of the deal, funds may advance the distribution of funds to the limited investors and the success fee to the partners.
When will the money be deposited in bank accounts?
Although the Google Waze deal has been approved by the EU and is the removal of the main stumbling block, Google still needs to wait for approvals in Israel, Turkey, South Africa and probably also in the UK. But it does not seem that they are likely to object after the approvals from the US and Europe and even if they do, Google will be able to impose sanctions against them.
So the final closing of the deal should take place in mid-March, when Google will be able to immediately transfer the proceeds to the founders and investors. However, employees with options (in track 102) who have not had two years since their allocation date will be required to apply to the Tax Authority to receive a ruling for a forced sale so that their tax rate will remain liquid.
Adv. Guz-Lavi says, "In such a scenario, the agreement with the Tax Authority may lead to the remuneration remaining in trust until the end of the two-year period from the date the options were allocated."
When will the billions enter the state coffers?
The overall tax collected may reach as much as NIS 12 billion, and assuming the consideration is not subject to various conditions, the money will enter the state coffers no later than 30 days from the date of closing the deal, that is, around mid-April.
Published by Globes, Israel business news - en.globes.co.il - on February 11, 2026.
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