Taxation of Foreign Residents

The tax laws in Israel, including the laws and regulations on real estate taxation, distinguish in many cases between someone who is a resident of Israel and someone who is not a resident of Israel, that is, a foreign resident.

For example, a foreign resident will not be able to benefit from the purchase tax relief for a single apartment or the benefit in capital gains tax due to the inheritance of a decedent’s only apartment.

On the other hand, there are concessions for non-residents who are new immigrants. Anyone who is defined as a new immigrant to Israel receives a purchase tax benefit to encourage immigration to the State of Israel, to provide social assistance to the new immigrants, and to support their settlement in Israel.

To examine whether a person is a foreign resident or a resident of Israel, there are a number of tests outlined by Israeli courts, such as the center of life test. It is important to remember that one person may have more than one place of residence. For example, according to Israeli law, a person may be a resident of Israel but also be considered a resident of another country for tax purposes due to an affinity with that country or a business activity that they carry out there.

Our firm represents many foreign residents in transactions in Israel and abroad, as well as in dealings with the tax authority.