At the very last minute, the tax authority announced today that they are extending the deadlines for the short or anonymous disclosures within the Voluntary Disclosure scheme. You can read more here. At present, the revised deadline has yet to be announced, although my best guess is that it will be until either 30th June 2016 or 31st December 2016 (which is the deadline for the “regular” disclosure route). The announcement also gives the statistics regarding the claims that have been made over the past year, since the scheme was first announced. Over 3,000 claims have been made, “koshering” over NIS 10.3 billion. Of

An Israeli Resident Trust is a trust that doesn’t meet any of the other definitions of trust types, described in the previous posts. As such, it includes situations whereby: The settlor was Israeli resident when the trust was settled and remains so, and there is at least one Israeli resident beneficiary in the year in question. There are Israeli resident beneficiaries, but the settlor – who was not Israeli resident – has passed away. Such a trust is deemed to be Israeli resident for taxation purposes, and the trust income – as a whole – is fully taxable. The taxation options

A testamentary trust is one whereby the trust comes into existence as a result of the will of an Isrseli resident upon the death of the settlor. Such a trust is taxed based on the residence of the beneficiaries. If none of the beneficiaries are Israeli resident, the trust is deemed non-resident and hence exempt from Israeli taxation on income earned outside ISRAEL. If however, there is one beneficiary who is an Isrseli resident, the entire trust is taxable. A noticeable exception will apply if the Isrseli resident beneficiaries are all within their ten-year exemption period – assuming of course that all income

The Israeli Resident Beneficiary Trust This is any trust whereby the settlor is a non-resident of Israel and has been since settling the trust. Furthermore, at least one beneficiary is an Israeli resident in the current tax year. If there is a family relationship between the settlor and beneficiaries, the trust is deemed a Relative Trust (see here for more details). If not, the trust is a regular Israeli Resident Beneficiary Trust. The taxation is treated in the same way as for a regular Israeli Resident Trust (see here for more). Foreign Beneficiary Trust This is the opposite situation. The settlor is an Israeli resident, but the beneficiaries are not.

The default position (except for the Family Trust, as mentioned here) is that the trust itself is liable to pay the taxes on the trust income. It is the trustee who is required to file the tax returns and who is responsible for ensuring that the taxes are actually paid. The rates of tax applicable are the highest rates applicable to individuals, i.e. 48% plus the 2% surtax for total taxable incomes above NIS 811,560 (2014). That being said, the tax rate is also limited on certain passive incomes in the same way as for an individual, e.g. 25% on most interest, dividends

Last night, the accountant world of Israel got together to review the Voluntary Disclosure procedure after the first eight months of the new system being in place. The facility was announced back in September, and you can read more about it here. Let’s not forget that the main carrot being dangled by the tax authority is immunity from prosecution. That peace of mind is no small thing – the last thing anyone wants is the tax authority to knock on their door in the middle of the night (or any other time for that matter). At the same time, the primary goal of the

The biggest change in the 2014 amendments to the trust taxation law relate to these types of trust. This is a trust whereby all of the settlors are not – and have never been since inception of the trust – Israeli resident, but at least one of the beneficiaries is Israeli resident. Further, there is a family relation between settlors and beneficiaries. The cases are clear where the relationship is that of spouse or (grand)parent. Where the relationship is of other first degree relations, the tax authority must be satisfied that the trust has been set up in good faith and that

This post is a similar post from last year, with the required amendments etc. pertinent to the 2014 tax year. The current deadline for filing your 2014 tax return is 31st May 2015 (but this is likely to be extended by a month). The Tax Law states that every Israeli resident is required to file a tax return every year, and doing so late results in hefty penalties (in excess of NIS 1,000 for each month between the official deadline and the actual filing). That being said, a supplementary ruling to the law grants exemptions from filing if you (and your spouse – assume this the

This was previously known as Negative Income Tax – מס הכנסה שלילי. A number of years ago, the government introduced a scheme designed to help workers earning very little. This grant, based on average monthly earnings in the previous tax year, was initially available only to those living in certain parts of the country. Who is eligible? You must meet the following criteria: 1. Be aged 55+ or aged between 23 and 54 and have at least one child. 2. You, together with your spouse, own no more than a 50% stake in any land or property (worldwide) that is not your residence. 3. Your average

Feel free to join the Tax in Israel Facebook group The trust laws relate to the revocability of the trust. This can affect which type of tax rules apply to a particular trust (see here for the introduction to trust taxation). This post will consider what makes a trust revocable or irrevocable from the point of view of the Israeli tax law. In subsequent posts we will see how and when this becomes relevant. A trust is considered irrevocable if it is not a revocable trust. The following is a list of situations whereby a trust is considered revocable. Only one of these situations need to apply for