Last March cybersecurity company Wiz signed a deal to be acquired by Google for $32 billion in the biggest-ever acquisition of an Israeli company. At this stage, the deal is still being discussed by antitrust regulators in Europe and Australia, after being approved by regulators in the US.
There has also arisen a dispute in Israel between Wiz and the Israel Tax Authority over the payment of tax on the company’s intellectual property. While Wiz claims that its intellectual property is in the US, and therefore the tax payment on it in Israel is reduced, the Tax Authority is examining the issue of whether the intellectual property was transferred from Israel to the US.
According to the Tax Authority, part of Wiz’s cybersecurity product, a software system designed to monitor and secure customers' cloud environments, was developed in Israel and most of the company's cybersecurity engineers and managers are mostly Israeli. Wiz reportedly has about 1,800 employees - over a third of whom are in Israel. The Tax Authority claims that a large part of the intellectual property can be considered Israeli.
The dispute stems, among other things, from the fact that Wiz was founded in the US and registered its intellectual property in the US, even though some of it was developed in Tel Aviv. The Tax Authority sought to examine the fact that a significant portion of Wiz’s value can be attributed to the intellectual property, which at least in part left Israel for the US.
Billions of dollars at least
Only in November 2025, eight months after the giant deal was announced, did the Tax Authority issue a memo clarifying the issue of the acquisition of intellectual property by a tech giant (a company that earns over $10 billion a year). According to the Tax Authority, the minimum threshold for the value of intellectual property at the time of its transfer from Israel to the US after an acquisition should be 85% of the company's value and liabilities, net of cash. From this amount the tax rate can be derived in accordance with the conditions of the memo, such as the fact that the acquired company is defined as a preferred technology enterprise.
According to this formula, the value of Wiz's intellectual property is $26 billion at most, and from this amount the tax rate derived from the Capital Investment Encouragement Law can be derived - usually 23% on the value of the intellectual property, with large companies often receiving tax discounts. As reported in "Globes," Google pays a corporate tax rate of 16% on its development center in Tel Aviv. According to this calculation, the Tax Authority may ask Google to pay a transfer tax of at least $4 billion, but the parties believe they will be able to reach an agreement.
If the Tax Authority accepts the decision that the Wiz-Google deal is within the new memo outline, the tech giant will receive certainty regarding the tax rate it will be charged for operating Wiz over the next seven years.
What happened in the past?
The Tax Authority has previously demanded retroactive tax payments for what it interpreted as a transfer of intellectual property from Israel to the US, contrary to the position of the companies that took part in the transactions. Thus, Microsoft has been hauled twice in Israel’s courts. In one acquisition, that of Jitco, the court ruled that it must pay the state NIS 100 million; and in another, that of the acquisition of Hexadite, the court ruled that incentives given to employees should also be recognized as part of the consideration for the intellectual property and the tax on the interest on the transfer of funds between the development centers and the company's parent branch in the US, but exempted the buyer from recognizing the value of the consideration for the intellectual property.
In addition, between 2009 and 2017, the US software company HPE and the Tax Authority negotiated the payment of taxes on the giant's $4.5 billion acquisition of Mercury. During those years, HPE ultimately paid NIS 3.1 billion, nearly 70% of the original tax assessment.
Similarly, between 2013 and 2014, Google paid NIS 1.3 billion to transfer the intellectual property of the Waze navigation app to the US, after an exit of only $1.1 billion. In other cases, the state also failed in its efforts, such as the case when it asked Broadcom to pay NIS 150 million for the acquisition of the Israeli company Dune.
"When the Tax Authority examines the taxation of an Israeli company incorporated in the US, it does not only look at the tax rate, but also at the question of where the intellectual property was created and accumulated," explains Adv. Racheli Guz-Lavi CPA, head of the tax department and managing partner at the APM law firm. "Even if the company was incorporated in the US and registered the intellectual property there, the Tax Authority may examine issues such as where the main development took place, the identity and location of the officials, and whether there was a transfer of assets and activity from Israel abroad."
"Not addressing the issue"
The final approval for the deal to go ahead is expected on February 10, when the EU will publish its decision on approving the Google-Wiz deal. The Australian regulator also announced this week that it will make a decision on the matter. According to experts, after the US regulator's approval, its counterparts from Europe and Australia are not expected to oppose the US position.
The Tax Authority stated: "Due to the obligation of confidentiality in tax laws, we do not address issues that are under discussion between the Tax Authority and specific companies." Wiz did not respond to this report.
Published by Globes, Israel business news - en.globes.co.il - on January 12, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.