Dear Clients,
We wish to update that the Amendment of the Income Tax Ordinance Law (No. 272), 5784-2024, was published on April 7, 2024, the main provisions of which shall be specified below.
We shall note that prior to this amendment, since 2007, new immigrants and/or long-term returning residents were entitled to a 10-year tax exemption from the time of their immigration/return to Israel, with respect to income that was generated or derived abroad or that originated from assets located abroad. Additionally, immigrants and/or long-term returning residents were exempt from reporting such income and assets. The objective of these said exemptions was to encourage affluent Jews to immigrate to Israel and invest their money in Israel, and thus encourage economic growth in the Israeli market.
As stated, amendment no. 272 was recently published, and its main provisions are as follows:
- The 10-year reporting exemption, from the date of immigration/return to Israel of a new immigrant or a long-term returning resident, regarding their foreign income, was cancelled.
Consequently, the reporting exemption for a trust settlor, who is a new immigrant or a long-term returning resident, was also cancelled.
Assessment officers were concurrently granted authority to demand a report or information from a company whose business is controlled and managed by a long-term returning resident and a new immigrant.
It shall be clarified that the tax exemption for a new immigrant or long-term returning resident, shall continue to apply for a period of 10 years from the time of immigration/return to Israel.
The cancellation of the reporting exemption shall apply to new immigrants and long-term returning residents who attain such status commencing from January 1, 2026. - A new reporting obligation for Israeli-resident trustee regarding Trusts not Required to Submit Annual Reports in Israel – Israeli resident trustees are required to report the existence of a trust that is not required to submit an annual tax report in Israel, as well as the identity of the controlling owners thereof.
We shall state that the objective of the amendment is to enhance transparency within the tax system, in the context of preventing a negative assessment of Israel by the OECD, due to lack of transparency.
Our tax department is at your disposal should you have any questions or require any clarifications regarding these matters.
