One of the most crucial parts of an Aliyah plan is for employment after arriving in Israel. Arriving with a signed job contract in hand, however, is extremely unusual. One possibility to ease the transition to working in Israel is keeping your current job. While this continuity can provide a boost to both your bank account and your morale, there are important tax questions that must be addressed – and the ideal time to do this is before you move.
Israeli Income Tax and the 10-year exemption
Many prospective and current olim have heard of Israel’s 10-year tax exemption on foreign income. This law on the books dates back to 2007 and also applies to Israelis who have been non-residents of Israel for a minimum of 10 straight years. However, a misconception is that all foreign-sourced income is exempt from taxation. In fact, the 10-year exemption applies only to passive income (such as: interest, dividends, capital gains, rent income, or royalty income) and income earned while physically outside of Israel. Income earned while working for your “foreign” company from your home office in Israel is subject to Israeli income tax. [Read more…]