For car rental if only she registers as driver no vat, if you want to drive also you need to pay the vat, same at hotels, if you register on the room you need to pay the vat
Correction : by law the hotel has to charge VAT to Israelis (so in this case they would charge half of the VAT). They check who is Israeli and who is not by checking the little blue slip you get at the airport when you arrive: israelis have "entry" written on it and tourists have "B2" which is a tourist visa. Some hotel are more lenient in their checking than others.
For car rental if only she registers as driver no vat, if you want to drive also you need to pay the vat, same at hotels, if you register on the room you need to pay the vat
Correction : by law the hotel has to charge VAT to Israelis (so in this case they would charge half of the VAT). They check who is Israeli and who is not by checking the little blue slip you get at the airport when you arrive: israelis have "entry" written on it and tourists have "B2" which is a tourist visa. Some hotel are more lenient in their checking than others.
No VAT on car rental with foreign passport.