Our firm has vast experience in providing private clients and commercial organizations with full legal support on all areas of international taxation for their business activities, aiming to minimize taxation liabilities. In this framework, we provide professional consultancy and professional opinions on issues relating to international taxation planning, international transactions, international tax treaties, voluntary disclosure, relocation, and additional related matters.
As the activities of private individuals, organizations and Israeli companies become increasingly global, greater attention is required to planning the optimal tax structure for their relevant business model. Accurate, effective advice on aspects of Israeli and international taxation are vital while taking into account transfer prices, withholding tax, VAT, and tax treaties designed to prevent payment of double taxation on investments and business activities outside Israel.
Numerous developments have taken place in recent years in relation to international taxation, among them closer monitoring and supervision by international organizations on international business activities by individuals and companies, and the flow of funds between countries. The CRS (Common Reporting Standard) Agreement is designed to enable financial entities, including banks, insurance companies and investment houses, to transfer and share information about business activities conducted through them. In this manner, international entities prevent tax evasion. FATCA (Foreign Accounts Tax Compliance Act) is also designed to allow tax authorities in Israel and the USA to transfer information between them about bank accounts belonging to their citizens who manage accounts in the other country. Clearly there is great importance to international taxation planning, which will help companies and investors reduce exposure to problematic areas and minimize their tax liability.
Current International Taxation
In the past, Israel operated in accordance with the territorial taxation policy, whereby each entity was taxed only on the sources of income known in that country regardless of whether the entity was a local resident or foreign resident.
However, the tax reform which entered into force in 2003, imposes tax liability on all income, whether it originates locally or abroad. An Israeli resident is now required to pay tax on an international basis.
International Taxation - The Residency Test
Taxation is determined according to the residency test, in which the Tax Authority decides where one’s life is centered. The Tax Authority reaches its conclusion by examining the individual’s family relationships, social and economic aspects, actual place of residence and work, bank accounts, and more. For all intents and purposes, if the examinee lives in Israel for more than half of the year, the individual will most likely be declared a local resident.
And what about companies or commercial organizations?
The status of companies and commercial organizations of various scopes is also reviewed by the Tax Authority and generally determined in accordance with two main points:
Where is the organization registered, and where does the majority of its activities take place?
Does the majority of its ongoing management activities take place in Israel or abroad?
International Tax Treaties
Countries have entered into international tax treaties in an effort to avoid double taxation payment. Israel is signed on some 50 tax treaties, including with the European Union countries, USA, Australia, and many others. The treaties are designed to prevent the collection of tax twice on the same source of income. However, most of these treaties do contain a transfer of information policy. Despite efforts to prevent doubled taxation, the Israeli Tax Authority supervises incomes from other countries as it aims to prevent and/or other taxation offenses.
Our International Taxation Department’s Services
Our firm employs accountants and attorneys with expertise in international taxation. Some have previously worked for the Tax Authorities and specialize in all areas of international tax planning. Our law firm holds the knowledge and ability to structure an international tax plan based on international tax treaties, which will grant the client with tax advantages such that the company or organization which will generate the revenues and conduct the activity will be situated in countries in which that tax rate is low, if not negligible, while reducing exposure to other tax concerns and issues. Additionally, our firm provides consultancy, legal and professional support and international tax planning assistance to individuals, including returning residents and new immigrants.
Expert International Taxation Attorneys and Accountants
Our firm provides professional support and counsel on all issues of international taxation to companies and individuals. The firm’s lawyers and accountants have vast and extensive experience in developing practical strategies for reducing tax exposure for clients wishing to conduct cross-border business.
We provide international tax consultancy services in the following areas:
Planning the tax aspects of international transactions
Setting up international tax structures
Providing professional opinions regarding the residency test
Receiving necessary authorizations from the Tax Authority including advance permits (pre-ruling)
Oversight on assessment procedures related to the Tax Authority and courts of law
Planning and advising on tax options for real estate investments abroad
Consultancy related to employees on issues of immigration and relocation
Consultancy related to tax benefits for new immigrants and returning residents
Oversight on voluntary disclosure procedures for individuals