Overseas companies, part 3 – the Foreign Professional Company
Another type of company that the Israeli tax office doesn’t like is one where a profession is carried out abroad, and the profits are not directly taxed in Israel. As such, the tax law sets out rules for a Foreign Professional Company (FPC). These rules were revised for 2014, and below are the new rules. What is an FPC? In order to be an FPC, the foreign company must meet the following criteria: (1) Be owned by fewer than 5 people. For these purposes, members of the same family or business partners count as a single person. (2) At least 75% of the ownership
Overseas companies, part 2 – the Controlled Foreign Company
Feel free to join the Tax in Israel Facebook group One of the suspected tax planning methods that the Israeli government doesn’t like is for those investing overseas to form a company on a tax haven to hold the investments. The thinking would be to hold the investments within the company without withdrawing any funds, and thereby not pay any Israeli tax on the income until funds are needed. As such, the tax law includes a section on Controlled Foreign Companies (CFC), whereby the Israeli shareholders are deemed to have received a dividend based on their share of the profits of the company, even if
