In September 2026, between Rosh Hashanah and Yom Kippur, the Israeli accounting firm Fahn Kanne held a webinar on compensation for Operation Roaring Lion, the 2026 war with Iran and Hezbollah. CPA Amir Reshef of the firm's northern branch described what came up in three years of negotiations with the Israel Tax Authority over compensation claims, most of them in the "red track" for the Swords of Iron war. In that track a business proves its actual loss and every claim is negotiated individually. Reshef represents businesses against the Authority. What follows is his account of those talks, and the Authority has not published it as guidance.
Signals that stop a claim
According to Reshef, the burden of proof sits with the business in every track. It has to show that it suffered a loss and that the war caused it. The second question, causation, is the one officials spend the most time on.
He said the Authority gave its assessing officers and inspectors a list of signals that require a causation check. Turnover that was already falling before the war is one. Large swings in turnover over the years are another, as is a business that closed and never reopened. When one of them shows up, the officer halts the approval and asks the owner to prove the war caused the drop. "This came up endlessly," Reshef said of the past three years.
Owners who went abroad
The duty to mitigate comes from tort law. Someone claiming compensation has to show they did what they reasonably could to reduce the loss. Reshef gave the example of a designer, an architect or a fitness trainer who was evacuated from their town or could not work in the usual place. In his view, such a person is expected to try to work from somewhere else rather than wait for state money.
For claims from owners who left Israel for a long period during the war, Reshef said, Authority representatives wanted to reject the claim outright. Their argument was that an owner who left had given up the legal duty to mitigate. Quite a few such cases reached negotiation at his firm, and he called them complicated. In some of them, he said, there is a real problem.
The line he drew depends on the type of business. A restaurant, a café or a garage is tied to its location. When the area shuts down, it makes no difference where the owner is, because nobody opens a restaurant in Tel Aviv to cut the loss. A service provider who can work remotely is in a different position, and there the Authority looks closely. A consultant or designer who left the business location, whether for Eilat, Tiberias or London, will need to show what they did to keep working from there.
A business that never reopened
Another signal the Authority raises, according to Reshef, is a business that did not resume activity after the war. He stressed that this is not conclusive proof. The Authority's reasoning is that if the war alone caused the loss, the business should go back to work once it ends. When that does not happen, the discussion turns to what caused the shutdown: the war itself, especially heavy damage, a long recovery period, or something else. Reshef said he had also met owners who planned to close before the war began, and the war arrived in the middle.
A technical condition comes before all of this. The Authority wants to see an active VAT file, returns filed on time and taxes paid, whether or not there was a loss. Even before any negotiation, the compensation fund will not accept a claim when a VAT return is missing for the eligibility period or the base period.