Israel offers some major tax incentives for foreign residents investing in Israel. Israel is the only country in the western world that offers extraordinary tax incentives to newcomers. In this clip adv (cpa) Eitan Asnafy provides some brief review of some of the most attractive Tax incentives Israel offers to foreign investors and newcomers
Israel offers some major tax incentives for foreign residents investing in Israel (i.e., Participation Exemption regime, investment in developing areas, and a general exemption from Capital Gains Tax when investing in Israeli companies).
Moreover, Israel is the only country in the western world that offers extraordinary tax incentives to newcomers.
The clip provides some brief review of some of the most attractive Tax incentives Israel offers to foreign investors in one hand, and to newcomers in the other.
_________________
Currently, in view of the international trend reducing tax – planning options worldwide, inter alia, by means of the information-sharing revolution and the war against tax shelters, it is definitely worth considering what Israel has to offer.
Israel is a one-of-a-kind phenomenon; it is a young country with a phenomenal development rate, some of the world’s top-notch human capital, and a stable regime that encourages capital investment.
Israel has made it its primary goal to encourage immigration, bring human capital back to Israel, and encourage investors of significant financial means to invest and reside in Israel. To achieve this, Israel offers extraordinary tax incentives of various measures to those who choose to invest in such manner.
Below are some examples of the tax incentives Israel offers:
- Anyone who immigrates to Israel or resettles therein after an extensive period of time is entitled to a full exemption from Israeli taxes on all of his foreign income – passive and even business income – for a period of ten full years.
- The exemption relates as well to the capital gain the new immigrant derives from the sale of assets (stocks, equipment, property etc.) within ten year of immigration.
- Moreover, the new immigrant is also entitled to an exemption from reporting income or such capital gain in Israel.
- The exemption also relates to income derived from a corporation whose affairs are controlled and managed by the new immigrant, although in Israel.
- Individuals considering immigration to Israel (Aliah) are entitled to extensive reduction of Real-Estate-Purchase Tax rate, when purchasing an apartment in Israel, as long as they actually immigrate to Israel within two years from the purchase day.
- In addition, newcomers to Israel are entitles to 0.5% Real-Estate-Purchase Tax rate (up to NIS 1,788,285 in asset value) when purchasing an apartment and a business real estate (the benefit may be used for only one apartment and one business real estate, as long as the purchases are made in a period commencing a year before actual immigration and ending seven years afterward).
- Foreign residents are entitled, under certain circumstances, to an exemption from Capital Gains Tax in Israel on the sale of securities in Israeli companies, both private and public.
- Israel applies an especially attractive incentive regime which encourages the establishment of factories in developmental areas. In the context of the incentives, the companies' tax rate may be a mere 7.5%.
- Participation exemption – Israel offers a participation exemption which under certain circumstances, a tax exemption is conferred to holding companies in Israel, enabling foreign-resident shareholders to benefit from the reduced rate of 5% on the dividends from Israeli holdings companies.
Israel has dozens of conventions with prominent countries across the world, including the U.S and Canada, in order to avoid double taxation. This fact, along with the incentives Israel offers under its internal laws, positions Israel as the primary and most attractive alternative for those who are considering settling or investing in Israel.
Eitan Asnafy Law Firm specializes in taxation, providing ongoing support to foreign residents and new immigrants in international investments, commercial law and litigation.
Adv. CPA Eitan Asnafy co-authored the treatise “International Taxation – The Law in Israel”, which is considered to be one of the most comprehensive treatises in the field of international taxation from the Israeli legal perspective.