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July 2014

It is fairly common for people to invest overseas, be it in businesses or other assets (eg property, shares etc.). One of the most common ways to invest is to set up a company in the country of investment, owned by the foreign investors.The first issue that Israelis must consider when setting up a foreign company is the residency of the company. Any company incorporated in Israel is automatically considered Israeli-resident, but an overseas company can also be considered Israeli-resident if it is “controlled and managed” from Israel. The concept of “control and management” refers to the activities of the company

Feel free to join the Tax in Israel Facebook group As previously mentioned, tax files in Israel are joint between husband and wife. The question therefore arises as to how joint income is taxed.In this respect, the law differentiates between earned (eg salary, self-employment, pension) and passive income.Passive incomeIn general, passive income is treated as joint income and added to the earned income of the higher-earning spouse.However, with the exception of using the exemption for Israeli residential properties, any income arising from an asset owned by one spouse for at least one year prior to marriage or from an asset received by inheritance

Feel free to join the Tax in Israel Facebook group Over the last fortnight or so, the tax authority has sent out a number of letters to Israeli residents whom it suspects have not reported of the income that they are thought to receive – and hence not paid the relevant taxes. The head of the tax authority told a gathering at which a colleague was present that approximately 93,000 such letters were sent out. There seem to be two main possible lines of approach by the tax authority: (1) Those owning 3 apartments or more – it is an assumption that there will

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