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Here’s the scenario.  You have just made Aliya and you are trying to get yourself settled.  The last thing you want to think about are taxes.  However…I am now living in Israel and I want to be compliant with my new country’s tax rules.  I know what I was required to do “back home.”  What do I need to do in my new home? Under Israeli law, all Israeli residents or households are required to file an annual income tax return.  However, as with every rule, there are exceptions. Exemptions are granted to certain groups of taxpayers, usually when there is

Larry Stern, CPA (US) Here’s the scenario.  You have just made Aliya and you are trying to get yourself settled.  The last thing you want to think about are taxes.  However…I am now living in Israel and I want to be compliant with my new country’s tax rules.  I know what I was required to do “back home.”  What do I need to do in my new home? Under Israeli law, all Israeli residents or households are required to file an annual income tax return.  However, as with every rule, there are exceptions. Exemptions are granted to certain groups of taxpayers, usually when

The Israel Tax Authority in February published a circular draft clarifying the classification of income from residential units. The circular explains the considerations according to which the income from residential units should be considered income from business, rather than passive income (private income entitling the landlord to potentially lower tax rates). Based on the current draft:Leasing 10 or more residential units constitutes a fully taxable business according to the Tax Authority, with tax rates up to 45-50 percent Individuals leasing 5-9 residential units will have to convince the Israel Tax Authority that they should be granted the passive income rates, after

Written: CPA Larry Stern & Liat Gruss The Israel Tax Authority recently announced that bitcoin and other cryptocurrencies would be taxed as a capital asset, not a currency. Israel had been considering the measure since 2013. The decision, announced in a circular on Feb. 19, means that cryptocurrencies are subject to capital gains tax for individual investors, and marginal rate taxation for those considered to be running businesses of cryptocurrency trading. Individuals who are mining or trading in cryptocurrencies, will be required to account for VAT (currently 17%), as per any standard business. This announcement comes as many Israeli banks have attempted to

Are you required to file a 2017 Israeli tax return? Israeli tax law states that every Israeli resident or household is required to file a 2017 Israeli tax return, whether or not taxes are owed. The current deadline for filing your 2017 tax return is May 31, 2018; a late filing may result in hefty monthly penalties. However, a supplement to the law grants exemptions from filing if you meet certain criteria; exemptions are mostly focused on people who will not have to pay additional taxes.Who Must File and Special Circumstances Here is a list of households that must file Israeli tax

Every year, each employee is required to complete a Form 101 for each place of employment and return it to the person in charge of salaries. Although this form should technically be filled out on January 1 (for continuing jobs), on a practical level 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 101 from the tax office here. Below is a short guide to filling in Form 101 for the 2018 tax year.Section א Employer’s details: This section will be completed by the employer.Section ב Employee Details: Including teudat zehut number,

With the end of the tax year fast approaching, here are a few action items that may be relevant.For Individuals If you haven’t already done so, make a claim for the Working Tax Grant (negative income tax) in respect of 2016 income. The deadline is December 29. If you pay Bituach Leumi without using a standing order, pay by the end of the year to receive the deduction for tax purposes. Those paying on standing order will have the January payment included in the 2017 certificate. Make donations to recognized charities (section 46), and ensure the receipt is dated 2017. Start collecting information for “short” tax returns, if

In the new year, Israel’s governmental authorities will be implementing automatic trades of tax information with other countries, known as the Common Reporting Standard (CRS). In anticipation, the Israeli Tax Authority is offering taxpayers the opportunity to voluntarily disclose previously unreported assets and income. In exchange for volunteering this information and paying the proper owed taxes on the income, people will be able to avoid prosecution for tax evasion. The disclosure facility is available until the end of 2019. The Israeli government successfully recovered NIS 3 billion in unpaid tax revenue during the last period for voluntary disclosure, which ran from

Kahlon’s plan removes the import duty on children’s clothing, cellular phones and shoes. Finance Minister Moshe Kahlon introduced a new tax plan for working parents in 2017. The plan, passed on May 10, 2017, by the Knesset, is intended to increase the net income for families. The plan takes effect retroactively to January 1, 2017. A major portion of the plan is additional tax credits for working parents. Other elements include subsidies for after-school education frameworks, higher income supplements for low-income earners, and import tax cuts on children’s clothes, shoes and cellular phones.Credits for Young Children Under the new plan, tax credit points for parents will

The Working Tax Grant eligibility criteria include additional benefits for parents with children. The Employment Grant Program (previously named “negative income tax” or “working tax grant”) is intended to encourage participation in the workforce for low income earners, to increase the disposable income of those employed at the lower income brackets and to reduce income inequality. In April 2017, eligibility for the grant was expanded by Finance Minister Moshe Kahlon. All figures regarding criteria and grant amounts are based on the last published results. Revised figures are expected in July 2017.Who Is Eligible? The law applies to any salaried employee