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19.03.2017
Tax break package for new immigrants and returning residents
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Tax break package for new immigrants and returning
residents
The main benefits for new immigrants and returning residents who became citizens since
January 1st 2007 and onwards are as follows:
• 10 years exemption from tax paying on foreign-source income (i.e., income
derived outside of Israel).
• 10 years exemption from declaring on foreign-source income which are
exempted.
• 10 years exclusion from definition as an Israeli company resident - for a company
established abroad and owned by an “Oleh” or a “Senior Returning Resident”.
• Option to be considered a foreign resident for taxation purposes, for one year
from arrival.
• 3.5 years of entitlement to tax credit, with options of extension.
Who is entitled to the tax benefits?
• “Oleh” - New immigrant.
• “Senior Returning Resident” - Individuals who returned to Israel after they
lived continuously outside of Israel, and returned to Israel not sooner than 10
years after having ceased to be a resident of Israel. Those individuals will be
considered as “Oleh”.
• One-time measure - Individuals who returned to Israel during the years 2007–
2009 are considered as “Senior Returning Resident” even if lived continuously
outside of Israel for at least 5 years (instead of 10 years).
Income entitled to tax benefits:
• Passive income - 10 year exemption on dividends, interest, rent, royalties and
pensions generated by assets held overseas.
• Capital gain - 10 year exemption on capital gain from the alienation of assets
located abroad. Extended to assets located abroad acquired after becoming
Israeli resident.
• Business income - 10 year exemption on business income generated by assets
held overseas.
• Vocational and labor income - 10 year exemption on salaries and income from
activities of independent nature, generated abroad. Applies to business and
occupation acquired or started before or after becoming an Israeli resident.
Optional track for adapting:
A one-year period of adjustment from the date of arrival in Israel is granted upon request,
which enables the individual to choose not to be considered as an Israeli resident for tax
purposes during this one-year period. The request for the adjustment year must be
submitted within 90 days from the date of arrival in Israel.
Foreign companies held and owned by 'Olim' and Senior returning residents:
A company established abroad and owned by an “Oleh” or a “Senior Returning
Resident”, will not be considered as an Israeli company for taxation purposes for a period
of 10 years, and thus will be exempt from taxes in Israel during this period on foreignsource
income (i.e., income derived outside of Israel).
Tax credits:
All Israeli residents are entitled to 2 credit points (reduction of NIS 436 per month from
the tax liability), as well as 0.25 additional points for a working man and 0.75 points for a
working woman, which are not taxed.
Working Olim are entitled to additional points on top of that, for a period of three and a
half years following their Aliyah. This benefit may be extended whilst carrying out
compulsory army service and whilst studying at university or college. Apply for this
benefit by filling out the relevant sections of form 101 (filled out upon start of
employment and at the beginning of every year through your employer):
• For the first 18 months – 3 additional credit points (reduction of NIS 654 per
month or NIS 11,772 for the first 18 months)
• For the following 12 months – 2 additional credit points (reduction of NIS 436 per
month or 5232 annually)
• For the following 12 months – 1 additional credit points (reduction of NIS 218 per
month or NIS 2616 annually)
Additional reductions are available for parents of young children, working mothers,
discharged soldiers and many other reasons.
Additional Tax – High leveled chargeable income will be taxed an additional 2% tax for
every Shekel above 67,560 NIS monthly income (or 810,720 NIS annual income).
The income between 41,791 and 67,560 NIS will be taxed at 48% while every Shekel
above that sum – will be taxed in additional 2% tax.
Income Tax bands from work income (updated 1/1/2015)
MONTHLY
INCOME
YEARLY INCOME
MARGINAL TAX
RATE
0 – 5,270 NIS 0 – 63,240 NIS 10%
5,271 – 9,000 NIS 63,241 – 108,000 NIS 14%
9,001 – 13,990 NIS 108,001 – 167,880 NIS 21%
13,991 – 19,980 NIS 167,881 – 239,760 NIS 31%
19,981 – 41,790 NIS 239,761 – 501,480 NIS 34 %
Each additional shekel Each additional shekel 48%
Published on Ministry of Finance Israel Tax Authority Israel. E & oe. Enter the site ministry at the link below.
https://taxes.gov.il/About/Reforms/Pages/AboutReformHakalot2008.aspx
חזרה לדף מאמרים
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© כל הזכויות שמורות ל TOVADO דורית א. שאנן (1996)
רשיון מס' 1028. תכולת המודעות הן לצורך מידע ראשוני בלבד ואינו מחייב. Israel Tel Aviv TOVADO Realty טובהדו נכסים, משרד תיווך בתל אביב / דירות למכירה בתל - אביב
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