Israel's technology sector has operated under a relatively permissive digital regulatory environment for years. That is changing. New digital services legislation, effective from early 2026, places direct compliance obligations on international technology companies that offer digital services to users in Israel – with meaningful penalties for those who delay.
Israel's updated digital services regulatory regime requires technology companies providing services to Israeli users to register with the relevant national authority, implement algorithmic accountability measures, and appoint a local representative before the compliance deadline. Companies exceeding defined user-volume thresholds must act by the dates specified below. Failure to comply risks enforcement action, service suspension orders, and software liability exposure under Israeli technology legislation.
This alert identifies which business categories fall within scope, outlines the threshold criteria, and sets out the immediate actions that international companies should take now.
What changed – the regulatory development and effective dates
Israel's Knesset (parliament) has adopted amendments to the country's digital services and data governance legislative regime. The changes modernise the existing legal system, drawing on global developments including AI Act compliance standards emerging from the EU.
The core obligations entered into force on 1 January 2026. A second tier of more granular requirements – covering algorithmic accountability, automated decision-making disclosures, and content moderation obligations – applies from 1 July 2026.
The Israeli Reshut HaDa'at – the national digital authority – has been granted expanded supervisory powers. It may issue binding guidance, conduct audits, and impose administrative sanctions directly on non-compliant providers, including those established outside Israel.
Key aspects of the new regime include the following changes to existing technology licensing and digital services rules:
- Mandatory registration of digital service providers exceeding defined user thresholds
- Local representative appointment for providers not established in Israel
- Algorithmic accountability obligations and transparency reporting duties
- Updated software liability provisions for automated services causing user harm
- Compliance certification requirements for high-risk digital service categories
For companies already navigating parallel obligations elsewhere, the Israeli regime draws conceptual parallels with the EU's Digital Services Act. However, it reflects Israel's own legislative priorities – including specific provisions for AI-enabled services and cross-border data flows that differ from the EU model in several respects.
To assess how these obligations interact with your existing AI Act compliance programme, contact us at info@ferrazwhitmore.com.
Who is affected – threshold criteria and business categories
The new rules apply to any provider of digital services that serves users located in Israel, regardless of where the provider is established. The extraterritorial reach is broad. A company incorporated in the United States, the EU, or anywhere else is caught if it directs services at Israeli users.
Category 1 – Large platforms: Providers with a significant user base in Israel fall into the highest obligation tier. These entities face full registration, algorithmic accountability reporting, and mandatory content moderation protocols from 1 January 2026.
Category 2 – Mid-size digital services: Providers exceeding a lower user-volume threshold but below the large-platform threshold must register and appoint a local representative. The algorithmic accountability and software liability provisions apply to this category from 1 July 2026.
Category 3 – High-risk AI and automated services: Regardless of user volume, providers of AI-driven services that make automated decisions affecting Israeli users – in credit. Employment screening. Alternatively, content recommendation – must comply with the AI-specific provisions by 1 July 2026. This category intersects directly with technology licensing requirements under Israeli law.
Providers of purely business-to-business software with no direct Israeli end-user interface currently fall outside the primary scope. However, specialist legal advice is needed to confirm this position, as the definitions of "digital service" and "user" in the legislation are drafted broadly.
Companies providing intellectual property-protected technology products in Israel should also review whether their licensing and distribution arrangements require adjustment under the new software liability provisions.
For a preliminary review of your exposure under Israel's new digital services regime, email info@ferrazwhitmore.com.
What to do now – immediate actions and compliance timeline
International companies should treat the 1 July 2026 deadline as the outer limit, not the target date. Registration processes, local representative appointments, and internal policy drafting each take time. Starting preparation in April 2026 is appropriate; starting in June is not.
The following five actions should be initiated without delay:
- Map your Israeli user base. Determine whether your service reaches Israeli users and, if so, at what volume. This establishes which obligation tier applies and whether registration is immediately required.
- Appoint a local representative. If your company is not established in Israel, identify and formally appoint a representative based in Israel. This person or entity will serve as the point of contact for the national digital authority.
- Audit your algorithmic processes. Review any automated decision-making tools that affect Israeli users. Document the logic, inputs, and outputs. Algorithmic accountability obligations require this documentation to be available to regulators on request.
- Update your terms of service and privacy disclosures. Israeli technology legislation now requires specific disclosure language regarding automated processing and user rights. Existing documentation drafted for other markets is unlikely to be sufficient.
- Review software liability exposure. Assess whether your service falls within the high-risk automated services category. If it does, obtain legal advice on the applicable software liability provisions before the July deadline.
Companies with existing operations in Israel should also review their current technology licensing arrangements. The new regime may affect the conditions under which licensed software can be deployed for Israeli end-users.
For advisory support across the full scope of AI and technology law in Israel, including registration, representative appointment, and algorithmic accountability compliance, our team is available to assist.
For parallel developments in the region, our alert on digital services regulation in the UAE addresses comparable obligations for technology companies operating across the Gulf.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising clients on AI and technology law, digital services regulation, and data protection across 46 jurisdictions. Our team includes practitioners with experience before technology regulators in Israel, the EU, and high-growth markets across Asia and the Middle East. Engaging a lawyer in Israel with cross-border technology experience is increasingly essential as regulatory regimes converge and extraterritorial obligations multiply. As an international law firm with a dedicated AI and technology practice, we advise international entrepreneurs, technology companies. Additionally. Institutional investors on digital services compliance, software liability. Additionally, technology licensing strategy across civil and common law systems. To discuss your obligations under Israel's new digital services regime, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.
Published: April 14, 2026 | Author: Anna Chen, Senior Associate, Asia-Pacific, Middle East & CIS
Anna Chen is a Senior Associate at Ferraz & Whitmore focusing on cross-border transactions, market entry, and dispute resolution across Asia-Pacific, Middle Eastern, and CIS jurisdictions. She supports international clients in navigating regulatory and commercial challenges in high-growth and emerging markets.