Client updates /  Tax

The recently published memorandum of law seeking to reinstate property tax could have a significant impact on dozens to hundreds of thousands of landowners in Israel. Although it is only a memorandum of law at this stage, it is advisable to understand the potential changes, whether they affect you, and how to prepare in advance to reduce exposures and avoid surprises.

On April 2, 2025, US President Donald Trump announced his intention to impose reciprocal tariffs of 10% on all goods imported into the United States, and higher “special reciprocal tariffs” on imports from several countries with whom the United States has a large trade deficit.

On July 1, 2025, a memorandum of law was published for public comments proposing an amendment to the Israeli Income Tax Ordinance’s definition of “Israeli resident” for tax purposes. The amendment proposes to replace the rebuttable presumption with irrebuttable conclusive presumptions about whether an individual is an Israeli resident or a foreign resident

A recent district court ruling broadened the interpretation of the statutory provisions governing exemptions from land appreciation tax and ruled that transfers of shares of a real estate association as a gift between siblings are exempt from capital gains tax even if the shares were not direct gifts from the parents but originated from land received as a gift from them. The court also prescribed several important procedural rules to improve the protection of taxpayers’ rights vis-à-vis the Israel Tax Authority (ITA).

Upon the launch of Operation Rising Lion last Friday, the Minister of Defense declared a special national state of emergency in conformity with the Civil Defense Law, 1951. On Sunday, the government extended the state of emergency until June 30, 2025.

Israeli tax ruling on the question: The Committee deliberated the North Mall appeal and ruled recently that a “partial cancellation” of a real estate sale transaction is, in fact, a new transaction subject to additional tax

In February 2025, the Israeli Tax Authority published an Income Tax Circular outlining the conditions and principles of the new Angels Law, focusing on the tax benefits granted to investors in early-stage companies that qualify as R&D companies.

As of 2025, an additional 2% surtax will be imposed specifically on taxable capital income (income from dividends, interest, capital gains from real estate sales and other capital sources) exceeding the maximum of ILS 721,560. This means that taxable capital income exceeding the maximum will now be subject to an inclusive surtax of 5%.

Under what circumstances will a court rule a transaction is an artificial transaction for tax purposes? In the case of Shalam Packaging Products Group, the district court rejected the tax assessor’s claims and ruled that the group’s restructuring was a legitimate business action and that the group did not execute the restructuring merely to reduce tax liabilities.

The purpose of the draft bill is to increase transparency in the Israeli tax system in order to avoid a negative assessment of the State of Israel by the Global Forum for Transparency and Exchange of Information, as well as to increase efforts to combat unreported capital.