Who Owes Under Israel’s New Multiple Property Tax?
As part of the 2017-18 budget, the government introduced a new tax on the owners of multiple residential properties, which took effect on January 1, 2017. The tax is levied on the value of the properties, irrespective of their use or rental status/income. It should also be noted that this tax is being administered by the Land Tax Authority, rather than the Income Tax authority. We set out below the basic details of the rules in an FAQ format. Our FAQ below covers the basic details and is based on the law, as well as the guidance provided by
Who Needs to File a 2016 Israeli Tax Return?
Israeli tax law states that every Israeli resident or household is required to file a tax return every year in a timely way, whether or not taxes are due. The current deadline for filing your 2016 tax return is May 31, 2017 (it may be extended by a month); a late filing may result in hefty monthly penalties. But a supplement to the law grants exemptions from filing if you meet certain criteria; the exemptions are mostly focused on people who will not have to pay additional taxes. Special Circumstances and Who Must File There are, however, households which will be required to
New US-Israel Tax Interactions for 2017
If you or your children are U.S. citizens, investors in the United States, or otherwise interacting with U.S. business interests, changes are upon us! Here is a brief summary of some important things to note for the upcoming year. Kids and Taxes Bituach Leumi Savings Plan Children who are Israeli citizens will begin to receive money in the amount of 50 NIS from Bituach Leumi (national insurance) on a monthly basis. Parents may choose to match this amount, as well as choose where it should be deposited – a savings account or a mutual fund (kupat gemel). The kupat gemel requires burdensome
10 Changes to Israeli Tax Law for 2017
Approved by the Knesset just before the new tax year, here are 10 changes to Israeli tax law for 2017 and beyond. It’s important to note that some of these rules have not yet been fully clarified, but we will be keeping track of any changes to come. Self-Employment and Profit Sharing Most self-employed people will be required to contribute to pension funds (kupot gemel). Precise details and potential sanctions for not participating will be forthcoming. We intend to follow up with more information as it becomes available. As an incentive, the tax breaks for paying into a Keren Hishtalmut have
How to Complete Your Form 101 for Israeli Employers
Employees must complete a new Form 101 each year. Each year, all employees are required to complete Form 101 for each place of employment and give it to the person in charge of the salaries. Technically, this needs to be filled out on January 1 (for continuing jobs). For practical reasons, however, it is sufficient to complete it before the January salary is processed. If your employer doesn’t give you one, you can download a blank form from the tax office here. Below is a short guide to filling in the form for the 2017 tax year. Section א Employer’s details: This section will be completed
Features of the US-Israel Tax treaty
One of the countries with which Israel has signed a treaty on the subject of Double Taxation is the USA. There are some very interesting features affecting those who live in Israel and whom are also US citizens, green card holders, and US (tax) residents (known collectively as US persons). By way of introduction, US persons are subject to US taxation on their worldwide income regardless of where they live in the world. Most other countries in the world would only tax their residents to such an extent, rather than their citizens. The treaty contains sections that relate to different forms of
Taxation of trusts – clarification from tax authority
A few weeks ago, the tax authority published a circular regarding the taxation of trusts, expanding on some of the definitions and rules set down in the revised laws as of 1.1.2014 – and including some important clarifications regarding some of the tax issues that had been raised. The entire thing is over 50 pages, so if you’re bored, take a look at the original here. Here are some of the clarifications given: We discussed in a previous post the issue of tax being paid on trust income by different taxpayers. The circular clarifies that, in almost all cases, the tax paid to a foreign
Voluntary Disclosure – practical issues
The currently VD procedure was announced nearly two years ago, and is set to expire at the end of December 2016. The two sub-routes (anonymous/short) have both also been extended to the same deadline. After nearly two years, the first cases have been settled, and more in the process of being settled. So, what lessons are being learned, and what should you be aware of when entering the process? The below items are based on personal experiences, as well as those of colleagues and acquaintances in the field. The initial investigation stage can take anywhere between 1-6 months. Rejections are normally
Corporate taxation
A common way to operate a business worldwide is by creating a corporation. This is a separate legal entity to the owners (called shareholders), but is recognized worldwide. Corporations are often referred to as companies, and the two terms will be used interchangeably. One of the major advantages of a corporation is that, except in the case of negligence on the part of the owners, the liability of the company is limited to the amounts of money that the owners invested into the company. This is where the concept of a “limited” company comes from. In Israel, all limited companies are
The 10-year itch
Did you move to Israel in 2007? If so, this is for you! In mid-2008, as part of the country’s 60th birthday celebrations, the government introduced legislation to encourage people to move to Israel and for Israelis living abroad to “come home”. Backdating the legislation to those who first became resident in Israel for tax purposes (see more here) from 1st January 2007, anyone meeting the definition of a First Time Resident (i.e. oleh chadash) or Veteran Returning Resident (those who were non-resident in Israel for at least 10 years before returning [5 years if returning in 2007-2009]) were given an exemption from both
