Client updates / Tax

The treaty for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income between the government of Israel and the government of the Republic of Serbia is expected to take effect on January 1, 2020.

The Minister of Finance signed in December 2019 the order bringing the double taxation treaty into effect on January 1, 2020.

The sanction-free voluntary disclosure procedure will come to a close at the end of 2019. Provided the Israel Tax Authority and the State Attorney’s Office decide not to extend this procedure, this may be the last opportunity to declare and report true income, and accordingly pay true taxes, without the disclosure being subject to criminal sanctions.

The Tel Aviv District Court handed down a decision a few days ago rejecting the Israel Tax Authority’s (ITA) position on the conveyance of real estate properties to trusts. This decision dramatically changes the taxation of trusts in Israel.

A precedential judgment was handed down on option plans for employees in respect of section 102 of the Income Tax Ordinance. The court ruled that when a tax assessor is notified of the allocation of options in accordance with section 102 and fails to respond within 90 days, the plan is approved and the assessor cannot later claim that this is not so, except in very exceptional cases.

A double taxation treaty was signed between Israel and Australia in the end of March 2019, after years of prolonged negotiations, expectations, and wonder about the obstacles.

The Law for Reducing the Use of Cash, which is scheduled to come into effect on January 1, 2019, will have a significant impact on the real-estate sector.

Recently, the Israel Tax Authority published a circular discussing business restructuring in multinational groups.

A new circular by the Israel Tax Authority determines the terms for granting options to employees when the vesting of such options is contingent upon performance milestones or the occurrence of an IPO or exit event.

Israeli signed the The Multilateral Instrument (MLI) Treaty, which will come into effect on January 1, 2019. The treaty will affect both Israeli and international corporations operating in Israel and overseas.

The Israel Tax Authority (ITA) recently launched an application that allows anyone who previously executed a real-estate transaction to check whether he or she has a credit balance in respect of an overpayment of betterment tax or purchase tax.

The Israeli Supreme Court recently ruled a judgment on the matter of high-tech companies Kontera Technologies Ltd. and Finisar Israel Ltd. The facts underlying this judgment are relevant to many technology and startup companies in Israel engaged in R&D services with their foreign parent companies, and which their revenue is being calculated using a Cost-Plus method.

Recently, after initial approval by the Finance Committee, the Knesset has passed a temporary order to the Income Tax Law with regards to deduction of issue expenses. According to the law, the expenses related to issuing the shares of companies and partnership participation units on the Tel Aviv Stock Exchange (TASE) will now be recognized as expenses for tax purposes. 

The Israel Tax Authority (ITA) recently published a draft circular for public comment on the issue of classifying residential rent income. The ITA states that, according to its reasoning, income from the leasing of 10 or more apartments should be deemed business income.

A number of changes in the taxation of residential apartment sales will come into effect on January 2018.

The Israel Tax Authority published a draft circular today about a sale of rights in a corporation when a portion of the consideration is paid to the seller at a future date.

New court decision on transfer pricing taxation may shift structuring of M&A transactions from shares to assets.

The Israel Tax Authority (“ITA”) is promoting legislation that will require foreign companies not subject to the Israeli tax regime today to report and even pay tax in Israel.

The Israel Tax Authority published a draft  circular on taxation of virtual currencies (bitcoins and the like). According to the Draft, the ITA’s position is that virtual currencies should be deemed “assets” and not as currency or foreign currency or even as financial instruments.

The new law prescribes that, as of January 1, 2017, every taxpayer must pay tax annually (January through December) for every residential apartment that he owns in excess of two apartments, at the sum defined pursuant to the provisions of the law. The taxpayer will be allowed to choose which of his apartments he deems to be his first two apartments, and which shall be taxable under this law.