Taxation of foreign income and the 10-year rule
Since 2003, Israel has joined the rest of the Western world in taxing its residents on their worldwide income. Israel has also signed a number of Double Taxation Treaties with other countries which set out various rules for which country can tax certain incomes and in what scenarios. The Double Tax Treaties override the local tax law, so you get the best of both worlds. This post will assume that a Double Tax Treaty is not in force, or that the income is taxable in Israel anyway. Of course, advice should be taken on taxation of the income in the country of
Mikdamot (tax payments on account) and the
Anyone receiving income from a salary knows that their employer will deduct tax at source, in accordance with the tax and Bituach Leumi laws (see also here). As such, the government gets regular tax revenues from employees; how often depends on the size of the employer. In a similar fashion, the government asks that advances be made towards your tax liability from your self-employment (or otherwise untaxed) income. These advances are known as mikdamot מקדמות. It is important to note that the mikdamot do not reflect the final taxes due; these will be finalised when you file your annual tax return. For anyone with a
Bookkeeping as a freelancer
As a freelancer, you are required to keep a set of records to keep track of your income and expenses. There are a number of professions that need to keep extra documents and records, and you should take advice from a professional to see if any of these apply to you. This post will set out the major requirements for most businesses. Larger businesses (based on both turnover and number of employees) have more stringent requirements. Again, specific advice should be taken in these situations. Income documents Any time you receive income, you are required to issue a receipt – קבלה. This will state
