Israeli Tax Alerts | Practical Interpretations | 2008-2020

236 framework of tax decisions and a professional circular, that he must report on the "Israeli" part of the income from that mixed activity. The ITA accepts and prefers the business days approach for dividing income between the countries, pursuant to which the Israeli part will be calculated in accordance with the number of business days in which the individual stayed in Israel as compared with the number of business days in the year. However, if the circumstances justify this (and with supporting documentation being presented), it is possible to apportion the income differently. In the ruling in the "Yehuda Talmi" case, for example, which deals with the subject, it was stated in the background reasoning that the ITA too accepted and agreed that in certain cases it is possible to multiply the business days in Israel by a particular factor, which typifies a smaller number of work hours, or a lesser economic contribution that those attributed to work done abroad ("The multiplier approach"). Within the framework of that same professional circular and the tax rulings on the subject, it has been determined that weekends, festivals and holidays should be eliminated within the framework of the calculation of the business days. However, it is not mentioned explicitly that sick days should be eliminated, however it would appear that this is self-evident. For the case before us - a new immigrant's enforced stay in Israel will increase the relative part that is attributed to Israel, even though this is a temporary period that lies outside the regular conduct. Accordingly, the elimination of the Corona period (similarly to the elimination that is expected for days of sick leaves generally) will balance the distortion. If the position that the Corona period should be eliminated in its entirety is not accepted, at the very least, the number of business days in that period should be multiplied by some factor whatsoever , which would reduce the part of the income that is attributed to Israel, because of the fact that the economic activity during the Corona period has in any event been reduced significantly. Control and management and the permanent establishment issue in activity involving the provision of services An enforced stay in Israel because of the circumstances that exist, which extends for weeks and maybe even for several months, may lead to the determination of Israeli residency for a company, because of the existence of control and management from Israel, or lead to the existence of an enforced permanent establishment in Israel. 1. Residency of a company The definition of the term "resident" that appears in the Israeli Tax Ordinance, in relation to a Company, determines that a company (which was incorporated abroad) will be considered as