Client updates /  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.

The Supreme Court noted that, by its nature, the essence of a brokerage transaction is joining two parties into one transaction. Therefore, treating the transaction as providing a service to each party separately—a foreign resident and an Israeli resident—does not reflect the true economic essence of the service.

As a rule, employers in Israel that provide company cars for their employees’ use must attribute income to those employees in accordance with the imputed value of the use of the car prescribed in the Income Tax Regulations. Moreover, even if the car was in the employee’s possession for only part of the month, employers must attribute income to the employees for the full imputed value of the use of the car. However, the Israel Tax Authority has issued new special instructions because of the Swords of Iron War.

For the first time, the Israel Tax Authority has announced its position regarding investments via SAFEs. It determined that, under particular circumstances, the investment is to be considered an advance on a share investment account.

In order to promote the technology and biomedical industries and to restore the Israeli stock exchange to its position as an efficient and attractive arena for capital raising to companies, an ad hoc committee was formed to analyze feasible tax incentives.

In a bold step, the Haifa District Court rejected the Israel Tax Authority’s position on a company’s repurchasing of shares, and in effect split with a ruling of the Tel Aviv District Court, who considered a similar issue several years ago.

A hedge fund is an entity comprised of several investors seeking to invest in financial assets to achieve a common profit, where the execution of the investment may change from one fund to another, in accordance with the investment strategies put in place by the fund manager.