To New Immigrants, Returning Residents and Foreign Investors
(Last update: September 2008)
A- Tax benefits to new immigrants (Olim Hadashim) and returning residents (who were living outside Israel for at least 10 years*):
1. 10 years tax exemption on any income generated from outside of Israel.
2. Adjustment period of 1 year before determination of residency for tax purposes.
3. The amount of tax on a pension originating outside of Israel and received by an immigrant is not to exceed the tax that would have been paid on that same pension, had he remained a resident of said country.
4. Tax credits for the first few years.
5. Foreign companies owned by new immigrant and operating outside of Israel will not automatically be classified as Israeli companies due to management and control.
*In the years 2008-9 if they were living out of Israel for only 5 years!
B- Tax benefits to returning residents (who were living outside Israel for at least 6 years but less than 10 years).
1. 10 years tax exemption on capital gains from assets located outside Israel that were owned prior to becoming a resident of Israel.
2. 5 years tax exemption on passive income (from outside Israel).
3. 5 years tax exemption on interest income from deposits in foreign currency in an Israeli Bank.
C- Tax benefits to foreign investors
1. Tax exemption on capital gain from a sale of shares traded on the Israeli Stock Exchange.
2. Tax exemption on dividend or interest paid on shares traded on the Israeli Stock Exchange.
3. Tax exemption on interest paid on bank deposits in foreign currency.
4. Tax exemption on capital gains from a sale of shares in private companies that are heavily invested in R&D.
5. Tax exemption on profits from selling shares in venture capital.
6. Very low (sometimes 0%) tax rate on dividends paid to foreign investors if the company is granted a “beneficiary status”.
This document was written by David Dan,