We have previously discussed who is required to file a tax return in Israel – see here for more details.
As part of the tax authority’s attempt to ensure that everyone pays their fair share of tax, a recent amendment to the tax law has added a further three situations which would require a person to file a tax return. These will come into effect for the 2016 tax filings:
1. Anyone who is a beneficiary of a trust (irrespective of whether distributions are received), provided that:
- They are aged 25 or above
- The value of the trust assets exceeds NIS 500,000
- They are aware that they are beneficiary (it may be fairly difficult to prove otherwise)
See here for the definition of a beneficiary of a trust.
2. We have previously discussed who is a resident. As mentioned, residency in Israel is based on a “centre of life” test, but there are also two tests based on number of days spent in Israel which are assumed to mean Israeli residency – although they can be argued against. Anyone meeting the day test, yet still claiming non-residency must file a tax return in Israel – explaining why they are not considered resident, as well as giving a report of their non-Israeli income that they are ostensibly arguing is exempt from Israeli taxation.
3. Anyone who has, over a 12 month period, transferred a sum of NIS 500,000 or more out of Israel. Seemingly, this includes transfers to a personal account abroad. The logic would seem to be that perhaps the Israeli is purchasing an asset abroad, and must therefore report any subsequent income. The rules say that a tax return is also required in the tax year following the transfer.
Needless to say that these criteria are in addition to the existing criteria for who is required to file a tax return.
Contact me today to discuss your personal circumstances, and to understand your personal requirements to file an Israeli tax return.