Israel

Advantages of Israel

Israel offers an extremely advantageous special tax regime for immigrants and returning residents. \"New Residents\" or \"Returning Residents\" receive a full tax exemption for ten years on foreign income and capital gains – including interest, dividends, pensions, and rental income – regardless of whether they are transferred to Israel. Additionally, there is an option for an \"Adjustment Year\" during which one is not yet considered a tax resident after entry. Israel regularly levies income tax up to 50%, a flat corporate tax of 23% applies to corporate profits. There is also a Non-Resident Trust regime, where foreign trust income is not taxed in Israel. These special regulations make Israel particularly attractive for wealthy immigrants – as long as they keep their foreign earnings within the 10-year window.

What Others Say About Israel

“Israel offers highly interesting tax advantages for newcomers. In recent years, these have attracted many super-rich individuals to Israel (such as Roman Abramovich). Important: You must be of Jewish faith or Jewish origin to emigrate to Israel.”

“Israel – biblical land. A journey through Israel – to the cradle of the Western world. How much religion, how much culture, how much history, entanglements, breakthroughs and ruptures, laughter and crying can be packed into a country the size of Hesse? A tour through Israel provides answers.”

“Tel Aviv-Jaffa: as if opposites were to be chained together forever with a hyphen. Here the economic and cultural center of Israel, there the ancient port city that already served the Philistines and still exudes an oriental flair today.”

Tax Benefits in Israel

A significant advantage of Israel's tax system is its territorial principle for non-residents. This means the state does not levy income tax on activities conducted outside Israel, even if performed by an Israeli-registered company or an Israeli citizen. The Israeli Income Tax Ordinance states that income is subject to Israeli tax only if it \"grew, was created, or was received in Israel.\" In plain terms: an Israeli company that generates all its profits outside Israel is not subject to tax in Israel. There is only one exception to this rule: income of a company located outside Israel is considered income of the company in Israel if its \"control and management\" are exercised in Israel. However, this does not apply to non-Israelis whose activities take place outside Israel, nor to Israeli companies whose owners are residents and citizens of Israel, provided that the management and control of the business are exercised outside Israel.

Who Israel is For

Israel is particularly attractive for entrepreneurs. The state has enacted commercial laws that protect the anonymity of company owners who do not wish their names to be publicly known. Israeli commercial law stipulates that whenever a trustee holds shares of a company for a beneficiary, only the trustee is to be registered in the public commercial register, and the registration of the beneficiary is prohibited. Furthermore, English is an official language in Israel, allowing documents to be submitted to the official registrar in the commercial register in English. An Israeli-registered company can prepare all founding documents and subsequent minutes in English. Unlike some other countries, an Israeli-founded company does not require Israeli (co-)owners or directors. Israeli commercial law only requires a \"registered office\" in Israel as a formal address for official documents, such as the annual commercial register fee. Israeli commercial law also does not prescribe any minimum capital for a company and does not require an auditor. The annual report, which a company (unless it is a public company) must submit to the official registrar, only needs to contain basic information like the office address in Israel.

Residency Notes

A key consideration for residency is the Israeli foreign exchange controller. Since its establishment, Israel has maintained foreign exchange controls. This control requires Israeli-founded companies to obtain a permit to operate outside Israel. All the above applies equally to Germans, Austrians, Swiss, and other foreigners, but not to shareholders of an Israeli company who are themselves Israeli citizens.

Tax Rates in Israel

Avoiding Sham Relocation

A significant drawback of many tax havens is their \"disreputable\" image. Those who use them, i.e., conduct business through companies founded there, often receive a wink from their business partners. Far more unpleasant, however, is attracting the increased attention of the authorities in the country where one otherwise files tax returns. In this respect, Israel is a \"good\" tax haven, as it does not have the reputation of being one. However, this only applies to foreigners, not to the residents of Israel themselves. To avoid the \"Boris Becker trap\" of a sham relocation, it is crucial to establish genuine ties and demonstrate a clear intent to reside and conduct significant activities in Israel. Our firm can guide you through the legal and practical steps to ensure your relocation is legitimate and fully compliant with international tax laws.

What Makes Israel Attractive

Beyond its tax benefits, Israel offers a vibrant economy, a thriving tech scene, and a rich cultural heritage. The country's strategic location and strong international ties make it an attractive hub for business and innovation. The quality of life, diverse landscapes, and historical significance also contribute to its appeal as a place to live and work. The \"Start-up Nation\" ethos fosters an environment of innovation and opportunity, drawing in talent and investment from around the globe. For those seeking a dynamic environment with significant personal and professional growth potential, Israel presents a compelling option.

Cost of Living in Israel

The cost of living in Israel, particularly in major cities like Tel Aviv and Jerusalem, can be high, comparable to Western European capitals. Housing, transportation, and certain consumer goods can be expensive. However, salaries in high-tech sectors are also competitive. It's essential to budget carefully and consider your lifestyle choices when planning a move to Israel. Groceries and local produce can be more affordable, and public transportation is widely available. Understanding the local economy and making informed choices can help manage living expenses effectively.

Exit Tax Considerations

When considering a move to Israel, it's crucial to understand the tax implications of leaving your current country of residence. Many countries impose an \"exit tax\" on individuals who relinquish their residency, taxing unrealized capital gains as if assets were sold. Proper planning and professional advice are essential to mitigate potential exit tax liabilities and ensure a smooth transition. Our experts can help you navigate these complexities and structure your departure in the most tax-efficient manner.

Preparation for Your Move

Thorough preparation is key to a successful relocation to Israel. This includes understanding the legal and tax framework, securing necessary visas and permits, and arranging for housing and banking. It's advisable to engage with local experts, such as immigration lawyers and tax advisors, early in the process. Our firm provides comprehensive support, coordinating all aspects of your move to ensure a seamless transition and compliance with all Israeli regulations. We help you avoid common pitfalls and optimize your setup from day one.

CRS and International Reporting

Israel participates in the Common Reporting Standard (CRS) as per OECD guidelines. This means that financial institutions in Israel will report information about financial accounts held by foreign tax residents to their respective tax authorities. It is crucial to understand your reporting obligations and ensure full compliance with international tax transparency rules. Our team can advise you on CRS implications and help you manage your financial affairs to meet all reporting requirements, ensuring peace of mind and avoiding potential penalties.

Formalities for Relocation

The formalities for relocating to Israel involve several steps, including obtaining the appropriate visa (e.g., Aliyah for those of Jewish descent), registering with local authorities, and opening bank accounts. For entrepreneurs, this also includes company registration and obtaining necessary business permits. While the process can be complex, especially for non-Jewish individuals, Israel's government has streamlined many procedures to attract talent and investment. Our firm assists with all these formalities, ensuring a smooth and efficient relocation process.

How We Help

Our firm provides comprehensive tax and legal support for your relocation to tax-friendly countries. We follow a well-established process, involving our local partner firms where necessary, while maintaining overall coordination. Our track record includes helping over 100 entrepreneurs and businesspeople significantly reduce their tax burden. Careful planning, thorough advice, and comprehensive support are our standards. Tax-compliant structuring within international tax law is our top priority.

• •Initial consultation & strategy session
• •Company formation & administration
• •Bank account opening support
• •Residency & visa assistance
• •Tax optimization & compliance
• •Real estate guidance
• •Ongoing administrative support
• •Trust & asset structuring