Tax alert

A question that often arises when considering a legal entity for international business operations is whether to set up a subsidiary in a foreign country or a branch office (i.e. permanent establishment); that is, direct company operation in the target country. This question also arises among foreign clients wishing to operate in Israel.

The Israel Supreme Court announced its ruling this month on the case of Gmul America Ltd. (CA 8934/16), concerning interpretation of Article 26, Relief from Double Taxation, of the Israel-US Tax Treaty (hereinafter the "Treaty"). The ruling overturned the District Court's decision on the case (Tax Appeal No. 49525-02-14).

Many entrepreneurs wish to direct their available capital to investment in Israeli companies in a variety of areas, in particular – the Israeli high-tech sector, known to be one of the central growth engines of the economy. Government

As part of the list of reportable tax positions published by the Tax Authority, a position has been added on the sale by an individual who immigrated to Israel either for the first time or after a period of 10 years or more (such a "beneficiary individual" has a 10-year exemption from

The Income Tax Ordinance stipulates the taxpayers obligations to report in their tax return whether they have taken a "reportable tax position". The Tax Authority has added a position entitled "taxation of virtual currencies" to that list. The Tax Authority indicates there that

On and off and in various incarnations since 2005, taxpayers have been able to come forward to the Israel Tax Authority to settle and disclose data on hidden income and assets not previously reported as required by law.

A tax ruling has been published recently on transfer of shares of an Israeli company as a gift to a relative, before being sold by that relative. The tax ruling raises several interesting issues in connection with determining the original price and the date of purchase, eligibility of new immigrants for exemption and a step-up arrangement for receipt of a gift from a foreign resident.

The Israel Tax Authority has recently published a tax ruling on taxation of options and participating units of shares for relocated employees. In the tax ruling, a case was examined in which an employee in an international company allocating him options or Restricted Stock Units - RSU's

A new section of the Tax Ordinance was recently legislated, imposing a surtax on high incomes. At present, the stated surtax stands at 3% on an individual’s taxable income (from all sources) in excess of NIS 640,000, subject to the provisions of the section. The surtax applies to the individual’s taxable income (from all sources) in

About a year ago, an amendment was made to the Tax Ordinance, stating that an individual claiming he is not an Israeli resident, even though the ‘substantial presence test’ applies to him, will be obligated to submit a detailed report indicating the facts on which his claim