Por estos dos motivos, defensa de JOH solicita repetir juicio
Ran artzi geneve 2013 presentation final
1. Artzi, Hiba & Elmekiesse
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Returning Resident and
New Resident,
Residency interpretation for
Tax Purposes,
Trust Settlements
Ran Artzi, C.p.a. – Managing Partner
Artzi, Hiba & Elmekiesse - Tax Solutions
Ltd.
29/10/2013
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2. Artzi, Hiba & Elmekiesse
Returning Resident
Definitions:
The Israeli Tax Ordinance (“ITA”) distinguishes
between two types of returning residents:
“(Regular) Returning Resident” (“RR”) - a person who
returns to Israel after being a foreign resident for at least
a period of 6 years.
“Long-Term Returning Resident” (“LTRR”) - a person
who returns to Israel after being a foreign resident for at
least a period of 10 years.
“New resident” (New Immigrant) (“NR”) entitles to
benefits as LTRR, as described in the following slides.
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3. Returning Residents
Artzi, Hiba & Elmekiesse
exemptions and relieves granted to LTRR and NR and New:
According to Sections 14(a) and 97(b) of the ITO, income of a
LTRR is exempt during the first 10 years of his residence in
Israel, irrespective of whether the income is passive or active,
or capital gains accrued or derived from outside of Israel,
unless he requests otherwise.
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4. Artzi, Hiba & Elmekiesse
Returning Residents
LTRR and NR are exempt from reporting and disclosing their
income from outside of Israel on their tax returns, meaning
they are not obligated to report and disclose their assets
outside of Israel.
The Exemption is also applicable on newly purchased assets
or new activities outside of Israel, after the date the LTRR and
NR transferred their “center of life” to Israel, under certain
conditions.
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5. Returning Residents
Artzi, Hiba & Elmekiesse
Exemptions and relieves granted to Returning Resident:
According to Sections 14(c) and 97(b)(2) of the ITO, income
of a Returning Resident is exempt as follows:
An RR is exempt from tax for 5 years from the date of return on
passive income (interest, dividends, royalties, rentals and
pensions) generated outside of Israel or whose source is from
assets outside of Israel and for 10 years on capital gains from
the sale of such assets, all this being in relation to assets
acquired by him while being a foreign reside.
Income from interest and dividends derived from assets located
outside of Israel, which are classified as “Eligible Securities”.
The aforesaid exemption on income for RR is awarded under
condition that the income is passive and does not derived form a
business.
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6. Returning Residents
Artzi, Hiba & Elmekiesse
Destinctions betweem RR and LTRR:
Subject / Type of income
(Regular)
Returning
Resident
Long-Term
Returning
Resident and New
Resident
Exemption on passive income from
assets located outside of Israel
Period of 5 years
Period of 10 years
Exemption on capital gains from
assets located outside of Israel
Period of 10
years
Period of 10 years
Exemption on business income
derived outside of Israel
No
Period of 10 years
Exemption on wage or self-employed
income derived outside of Israel
No
Period of 10 years
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7. Returning Residents
Artzi, Hiba & Elmekiesse
subject
(Regular)
Returning
Resident
Long-Term
Returning
Resident and New
Resident
Applicable on newly purchased assets or new
activities
located outside of Israel
No
Yes
Relief with respect to “Management and
Control” test
No
Yes
exemption from reporting and disclosing
income from outside of Israel on tax report,
meaning no obligation to report and disclose
assets outside of Israel
No
Yes
Relief with respect to CFC and Foreign SelfEmployed Company
No
Yes
Conditional trial period
No
Yes
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8. Artzi, Hiba & Elmekiesse
New Court Decisions
Regarding Residency
New court decisions in
interpretation of residency:
Israel
regarding
the
In the matter of Sapir vs. Assessing Officer - regarding
splitting the family unit:
Sapir work and lived with his family in Singapore during the
period of 1994-1998 and afterwards came back to Israel.
Sapir returned solely to Singapore, without his close family,
from the year of 2001.
The question in matter was whether moving to live in
Singapore without his close family, will discontinue the
Israeli residency?
The court decided, that most of Sapir’s linkages indicate that
the “center of life” has been transferred to Singapore, even
thought Sapir’s wife stayed and continued to live in Israel.
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9. Artzi, Hiba & Elmekiesse
New Court Decisions
Regarding Residency
In the matter of Mr. K.A vs. Assessing Officer – the
residency was continued:
K.A claimed that he was a Romanian resident. He started his
operations in Romania from the year of 1998 and lived there
with a Romanian spouse, who was a Romanian resident.
Even though K.A spent each year less than 183 days in
Israel, the presumption of being an Israeli resident by
staying in Israel 30 days and accumulated 425 days in the
prior of 2 years (“The Presumption”) applied to him.
The court decided that the residency burden of proof was on
K.A because the abovementioned presumption is validated
on him.
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10. Artzi, Hiba & Elmekiesse
New Court Decisions
Regarding Residency
In the matter of Mr. K.A vs. Assessing Officer – the
residency was continued:
Regarding K.A residency, the court decided that the home in
Israel was his “Permanent Home”.
When taking into consideration that K.A claimed for tax
purpose the credit point for being an Israeli resident and
that his claims regarding (i) Romanian spouse and (ii) his
expenses in Romania were not proven, and most of his
personal parameters were tended to Israel.
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11. Artzi, Hiba & Elmekiesse
Implications of the Court
Decisions
From the combination of the Court decision in
recognizing the splitting of the family unit for residency
and in consequence for tax purpose, we believe that that a
spouse of a foreign resident can become an Israeli
resident and will be entitle to the benefits granted to
LTRR, RR or NR as applicable, while the other spouse will
remain a foreign residence, and in the future, the other
spouse, who remained a foreign resident, will be granted
the benefits given to LTRR, RT or NR, as applicable, upon
moving his “center of life” to Israel.
Hence, the spouse who will not transfer his “center of life”
to Israel, will not be subjected to Israel residency as long
as his linkage is to his country of residency.
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12. Artzi, Hiba & Elmekiesse
Implications of the Court
Decisions
For example: a family composed of a husband, wife and
daughter which transferred before their “center of life” to
a foreign country, could split their family unit by means of
returning only the “center of life” to Israel of the wife and
the daughter, and enjoy the benefits granted to RR, while
the husband remains a foreign resident; After a few years,
when the husband will transfer his “center of life” to Israel
he will enjoy the benefits granted to LTRR.
Furthermore, a trust whose settlor will not transfer his
“center of life” to Israel and keep his linkage to a foreign
country, while the settlor’s spouse, who is not a
beneficiary of the trust and will transfer the “center of
life” to Israel, shall maintain its foreign residency, subject
to the examination of the trust’s beneficiaries residencies.
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13. Artzi, Hiba & Elmekiesse
Trust Settlement
Amendment no’ 197 to the Ordinance, added a new definition
of trust - Israeli Beneficiary Trust (“IBT”).
A Sub classification of an IBT is a Relative Trust (“RT”) - a
trust of which the settlor and the beneficiary has family
connection as follows:
The settlor is the father, grandfather, spouse, child or
grandchild of the beneficiary.
The settlor and the beneficiary fulfill one of the following
relative connection as defined in “relative” in section 88 to the
ITA:
spouse, brother, sister, parent, parent's parent, offspring and
spouse's offspring, and the spouse of any of these (“First
Degree Family Relation”).
offspring of a brother or sister, and brother or sister of a
parent (“Second Degree Family Relation”).
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14. Artzi, Hiba & Elmekiesse
Taxations on Israeli Beneficiary
Trust
In light of our past experience with past settlements when
amendments of the ITO came into force, and follow our
recommendation to a committee of the ITA regarding the taxation on
Trusts, we can assume that the RT capital till December 31st 2013,
(“RT Capital”) shall be levied taxes, as follows:
A range of percentage of the RT Capital in cases where the trust
shall be classified as an RT, in case where the trust’s settlor is
alive, when amendment no’ 197 came into force and the settlor
and the beneficiary has one of the either connection, :
First Degree Family Relation, or
The settlor and the beneficiary fulfill a Second Degree Family
Relation and the assessing officer was convinced that the
setting of the trust was in good faith and the beneficiary did
not transfer any consideration to the settlor for his attributed
rights to the trust’s assets.
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15. Artzi, Hiba & Elmekiesse
Taxations on Israeli Beneficiary
Trust
A range of percentage of the of the RT Capital in case where the
trust shall be classified as an RT and the trust’s settlor is not
alive when amendment no’ 197 came into force and:
The settlor, provided he was alive, and the beneficiary has
either First Degree Connection or Second Degree
Connection, and,
The settlor passed away before August 1st 2013.
Furthermore, the assessing officer has to be convinced that
the trust has not been settled for the purpose of tax-avoidance
and the granting of assets to the trust were in good faith.
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16. Artzi, Hiba & Elmekiesse
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Thank you
Ran Artzi, C.p.a. – Managing Partner
artzi@ahe-tax.co.il
Artzi, Hiba & Elmekiesse - Tax Solutions Ltd.
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