The Israeli Tax Authority Loves New Immigrants!
The state of Israel was a safe shore for Jews worldwide from the start.
Helping Jews ascend to the holy land (Aliyah) is a priority for Israel's governments. Indeed, thousands of Jews come here yearly, with the backing and encouragement of many different organizations. Over the years, various laws have been passed to encourage both new Olim and Yordim to make Israel their home.
What are the chief benefits gained by Olim and returning Yordim?
Full tax exemption for Olim and returning Yordim
A new immigrant and returning resident enjoy an exemption from taxes for ten years on all income and earnings, as reckoned from the day of their arrival.
Partial tax exemption for returning residents.
A returning Israeli resident enjoys a 5-year exemption on his allotments, interest, dividends, rent, and securities from abroad purchased during his stay abroad.
Tax exemption for foreign companies managed by new Olim and returning Yordim
A foreign company held and controlled by a new oleh or returning yored living abroad for ten years enjoys a ten-year tax exemption from the day the controlling owners arrive in Israel.
Reporting exemption on foreign earnings
New Olim and returning Yordim who lived abroad for ten years are exempt from presenting a yearly report and declaration to income tax authorities for earnings for the first ten years they arrive in Israel.
Foreign pensions for returning Yordim
A foreign pension received by a returning Israeli resident residing abroad for ten years receives a discount on income taxes.
Easing into the Israeli tax regime
Returning Israeli residents living ten years abroad and new Olim can choose not to be considered Israeli citizens for the first year, and keep enjoying the exemptions granted foreign residents.
Tax exemption for interest payments on Forex deposits
A new oleh is eligible for a 20-year tax exemption for interest in Forex deposits from funds earned before he came to Israel.
New Olim and returning Yordim who resided abroad for six years and who have returned between 2010-2012 enjoy 4.5 credit points for the first year and a half from their arrival, 2 credit points for the second year and one for the third year.
Additional benefits for new Olim
New Olim receive an immigration package of several thousands of Shekels to help assist their successful integration into the country.
Olim arriving from the US, Canada, Australia, South Africa, and Europe are eligible for a tax exemption for all new home appliances. Olim from other countries are eligible for an imports grant. New Olim can also purchase a new car tax-free.
New Olim can receive assistance in paying rent and a mortgage, single-parent families and lone soldiers are eligible for expanded assistance with rent.
In recent years, cooperation between governments worldwide has increased as part of international tax treaties and agreements. Therefore, it is advisable for Olim and Yordim alike to reexamine their asset and investment portfolio abroad and act accordingly.
The above is intended for informational purposes only and is not to be construed as constituting advice or personal opinion.
The author is an accountant once employed by the tax division of Somech-Chaikin offices in Tel Aviv. Today he independently supplies accounting services, tax reporting assistance, appraisal and consulting.
Dekel Vaknin, Accountant