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

In August 2013, the taxation of income within trusts underwent a huge reform, with a vast array of changes to the pre-existing law. The law came into effect as of 1st January 2014, but there are still a number of unresolved issues; particularly pertaining to foreign tax credits. The following posts will look at the types of trust set out in the tax law, and the various options for how the trust income is to be taxed in Israel. This post will deal with some background and defintions. So, what is a trust? Without going into the fine legal detail, a trust exists

Feel free to join the Tax in Israel Facebook group As part of the disclosures required in the tax return, anyone who is considered a controlling shareholder in a non-Israeli company must complete form 150, and attach it to the tax return. A controlling shareholder is someone who, directly or indirectly, owns at least 10% of the rights of the company (e.g. shares, voting rights etc.). Furthermore, in determining the percentage of ownership, the percentages owned by first-degree relatives are also taken into account. The purpose of the form is to inform the tax authority of the existence of the company, as well as the

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 2013 income. The deadline is Friday 26th 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.

In the USA, one of the most common ways of running a business or investment is via an LLC (Limited Liability Corportation). Such a vehicle has a number of advantages, but these are not our concern here. The tax treatment in the USA is that, although the LLC is a separate legal entity to the owner(s), the income generated is taxed directly in the hands of the shareholders. This is therefore similar in nature to the House Company and Family Company, but without the various restrictions imposed on Israel. The issue to be dealt with is that legally the LLC is a separate body. As

Feel free to join the Tax in Israel Facebook group In a previous post, we considered who was required to file a tax return. However, it could be that even if you are not required to do so, it will be on your interests – if you are due a refund. Any refund due to you is given back with the addition of interest (4% per annum) and linkage – all tax free. You can’t get anywhere near that in the banks these days, and even the most successful investments would be hard-pressed to give you such a favourable post-tax return! You are able to

Two interest articles have appeared in The Marker (Hebrew) over the last 24 hours. The first article discusses the fact that the Treasury has agreed to put into place measures necessary to ensure that Israel will be compliant with the OECD’s multilateral exchange of information agreement regarding bank account holders by 2018. The agreement, which also includes a number of other countries, essentially means that Israel will be transferring information about bank account holders who live outside Israel to each of the 50 or so countries, and in turn, Israel will receive similar information from each of those countries regarding Israelis holding such accounts. The second article

Feel free to join the Tax in Israel Facebook group In the previous post, we saw an example of how a company can, under certain circumstances, have its income treated as taxable in the hands of the shareholders. The one other example under Israeli law is the “house company”. In order to qualify as such a company, there are two conditions that must be met: 1. The company is owned and controlled by no more than 5 people. For these purposes, first-degree family members and business partners count as a single petson. 2. The company deals primarily in the property business. The type of property and

In regular circumstances, a company is treated as a seperate entity for tax purposes; in much the same way that it is treated separately for legal purposes. However, there is the option – under certain circumstances – for the income to be taxed directly in the hands of the shareholder. The first of these cases is the “Family Company,” the חברה משפחתית. There were fairly significant changes to these rules that came into effect as of 1st August 2013, and what follows are the new rules which apply to companies setting up after that date. A company can only be considered a Family Company