Kiryat Shmona petitions High Court to extend war compensation deadlines
Kiryat Shmona has petitioned the High Court of Justice to extend war compensation deadlines for local businesses, arguing that the state stopped recognizing losses while the city was still recovering from evacuation.
By Larissa Bell ·
The municipality of Kiryat Shmona has filed a petition with the High Court of Justice, requesting an extension of the time frame for war compensation for local businesses. The city argues that the state prematurely stopped recognizing financial losses while residents and businesses were still struggling to recover from the evacuation order.
In a decision issued on November 4, Justice Ruth Ronnen ordered the government and other respondents to submit a preliminary response by January 4, 2027. The ruling does not yet address the merits of the municipality's claims or grant any compensation.
The legal challenge targets the end of eligibility under the red track compensation scheme, which covers proven losses for qualifying border community businesses from March 1, 2025. It also contests the June 30, 2025 cutoff for additional temporary compensation arrangements. The municipality maintains that allowing residents to return did not restore the customer base, workforce, or income levels that businesses relied upon.
Prior to the court filing, the Tax Authority rejected the municipality's demand. In a letter dated September 24, Amir Dahan, director of the Tax Authority's Compensation Fund, stated that eligibility under the red track depended on specific legal conditions, such as a shutdown caused by military restrictions, rather than a formal declaration that the war had ended.
Kiryat Shmona is asking the court to require recognition of losses from October 7, 2023, until the government announces an end to the fighting, and at least through December 31, 2026. Alternatively, the city seeks a fresh examination of the cutoff dates and eligibility during later periods of military restrictions. The petition argues that authorities set a uniform end date without adequately examining the specific conditions in Kiryat Shmona, where businesses faced dispersed customers and renewed expenses before income recovered.
A point of particular dispute involves continued state-funded accommodation. The municipality cites a January 2025 government decision that allowed certain evacuees to remain in reception facilities until July 7, 2025. The city argues this undermines the earlier compensation cutoff. Dahan's response distinguished this by noting that continued hotel assistance did not extend the official evacuation period, as residents were permitted to return from March 1.
Economic data cited by the municipality illustrate the scale of initial damage and uneven recovery. A January 2026 report from the Knesset Research and Information Center recorded 1,242 active businesses in July and August 2023. This number fell to 881 in the same months of 2024 and recovered to 1,188 in 2025, still 4.3 percent below the prewar level.
Total turnover rose to NIS 860 million in July and August 2025, compared with NIS 778 million in 2023 and NIS 589 million in 2024. The report cautioned that citywide totals could mask deeper losses among small businesses. While the municipality acknowledges the rebound, it argues that aggregate turnover does not prove that individual businesses have fully recovered, especially after accounting for inflation and restarting costs.
Alongside extending the compensation period, the city seeks permission for businesses to supplement or amend claims for any additional recognized period, despite the passing of the filing deadline. It also wants the authorities to publish the full reasoning and factual basis for the disputed policy. The municipality stresses that it is challenging the general policy rather than asking the court to calculate compensation for individual businesses.
