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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

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

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

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

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

We have previously discussed who is required to file a tax return in Israel – see here for more details. As part of the tax authority’s attempt to ensure that everyone pays their fair share of tax, a recent amendment to the tax law has added a further three situations which would require a person to file a tax return. These will come into effect for the 2016 tax filings: 1. Anyone who is a beneficiary of a trust (irrespective of whether distributions are received), provided that: They are aged 25 or above The value of the trust assets exceeds NIS 500,000 They are

One of the most frequent questions I receive from people is-Do I have to file a US tax return? In general, US citizens and green card holders are required to file US tax returns reporting their worldwide income if their income exceeds a certain threshold.  For example in tax year 2015 if you were single and under age 65 you would be required to file a return if your worldwide income exceeded $10,300.  Attached are pages 8-10 from the IRS instructions to form 1040 which detail the various filing thresholds for tax year 2015.  There are exceptions to this threshold- the most

When a US citizen who lives abroad passes away and their property is not being administered by an executor or administrator appointed, qualified and acting within the United States, obtaining a transfer certificate from the Internal Revenue Service (IRS) is necessary in order to transfer US source assets to the heirs if the value of the estate is less than $5,430,000 in 2015 and $5,450,000 in 2016(this threshold changes on a yearly basis). If the value of the estate is over this amount instead of obtaining a transfer certificate the taxpayer must file a form 706-United States Estate Tax Return. 

Please feel free to join the Facebook group linked to this blog – search for “Tax in Israel” As previously discussed, all employees are required to fill in form 101 for each place of employment, and give it to the person in charge of the salaries. Technically, this needs to be filled in on the 1st of January (for continuing jobs), but for practical reasons it’s sufficient to have it filled out 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

With the end of the tax year fast approaching, here are a few tips that may be relevant: If you haven’t already done so, make a claim for the Working Tax Grant(negative income tax) in respect of 2014 income. The deadline is Friday 25th December. If you are a business with inventory, take a count as close as possible near the year-end. The cost of each item should be listed alongside the quantities. Business owners should make top-up payments towards pension, Keren hishtalmut etc to take advantage of the tax breaks available. The same goes for salaried individuals who have private pension plans.

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