Taxation and Tax Returns
According to the Israeli Tax Code, taxpayers who have paid income tax in excess of the amounts prescribed by law are entitled to a refund. The refund can be requested within 6 years after the end of the tax year for which the refund is requested. Indexation differences and interest of 4% are added to the tax refund.
Our firm specializes in support of the tax refund process. Our professionalism, extensive knowledge of tax laws and technological tools will help you get the maximum tax refund you deserve.
The tax refund support process includes the following:
- Assistance with document collection.
- Comprehensive verification of income sources and taxes paid.
- Tax refund modelling using special software.
- Submission of tax refund application to the Tax Authorities.
- Ongoing work with the Tax Authorities until the actual receipt of the tax refund to your account.
Registration of tax refunds with our help will allow you to simplify the process, save a lot of time, and, in addition, guarantee maximum tax refund. Only a comprehensive and thorough audit by a professional can guarantee you the maximum tax refund. As part of our due diligence, we pay special attention to nuances in taxation such as:
- Securities tax optimization.
- Tax incentives in relation to termination benefits.
- Taxation of options.
- Possible tax benefits in connection with the sale of real estate.
- Tax deduction from social security benefits.
- Fixing pension rights.
- Tax incentive points.
- Tax credits for new immigrants.
The results of a detailed analysis of the details of your tax situation can lead to additional tax refunds. Leave your information, and we will be happy to contact you.
Retirement is one of the most significant events in our lives. In fact, all our lives, we work and save for retirement, and then at retirement, we reap the benefits of our labour in the long term.
Taxation is the most critical aspect of retirement. Pension taxation in Israel is one of the most complex topics, as it contains a combination of tax laws, pension fund laws, various rulings and directives, and practices that have become entrenched in tax authorities and savings funds.
Only professional support, along with precise planning, can lead to the maximum utilization of tax benefits on the one hand and prevent unpleasant tax incidents on the other.
Tax benefits for pensioners
There are several paramount issues to be addressed in pension tax planning, namely:
- Exemption of the pension from income tax. According to the Israeli Tax Code, a pension is considered taxable income and is taxed on income similar to wages (tax steps less benefit points). However, under Section 9A of the Israeli Tax Code, it is possible to obtain a partial exemption from income tax on pensions.
- Taxation of Retirement Compensation (Pitzuim). Contrary to popular belief, the taxation of pitsuim is a complex issue, especially in retirement. We can help apply all tax benefits with an overview of your total income and needs.
- Capitalisation (Ivun). Under the Israeli Tax Code, tax-free withdrawal of tax savings is possible under certain conditions.
Please note that withdrawing pension savings without complying with the tax law will incur a final tax charge of 35%, so entrust the management of your pension funds to professionals only.
Income tax refund
A tax refund for pensioners differs significantly from a standard refund. That is because several important and complex issues need to be addressed when refunding taxes to pensioners, which are mainly related to retirement:
- Partial tax exemption for pensions
- Taxation of pitsuim
- Withdrawal of pension savings
- Supplemental income, such as investments and additional passive income
- A spouse who has retired and is not working
Also, it is not uncommon for a tax refund to be “defended” to the tax authorities, and additional explanations must be provided to support the tax refund.
Therefore, only a tax refund conducted by an experienced, professional and qualified team authorized to represent you before the tax authority can bring the best results.
Pension taxation is an area “at the crossroads” that combines two worlds and requires a deep understanding and knowledge of pension and tax law.
Therefore, given the fact that only uncompromising expertise and professionalism in this area will lead to the best results for clients, we decided to combine our efforts, namely: an experienced pension consultant – an expert in the field of pensions and a certified auditor – an expert in the world of taxation, who will represent your interests before the tax authorities.
Please note that unprofessional handling can lead to costly and irreversible tax consequences.
Are you planning to retire or have you already done so?
Whether you are just planning to retire, have already retired this year or retired a few years ago – in any of these cases we can help you.
For those planning to retire or have retired this year, we will undertake the best possible tax planning to ensure that you maximize your benefits in the first place.
If you retired several years ago, we will conduct a retroactive pension planning review and refund any overpaid income tax.
Taxation of Investments
The choice of investment area depends significantly on the subsequent tax deductions. Whether you invest in real estate, securities or cryptocurrency, a thorough knowledge of the tax implications will usually prevent unnecessary tax expenses.
The tax laws governing the relationship between investors and the government are a complex system of regulations (laws, rulings and professional income tax circulars) that prescribe specific behaviour for virtually every specific area of investment. That includes rental income, interest on bonds, dividends from shares and profits from digital currencies.
Our Office specializes in investment taxation, providing comprehensive tax planning and tax optimization services to investors in real estate, securities and digital currencies.
Our support ensures correct and sensible tax planning that fully considers the tax consequences of the investments made. We give our clients the opportunity (strictly within the law) to reduce their tax burden and make the right strategic decisions that maximize the main objective of any investment – to generate profits. As part of the above, we also ensure the timely submission of all necessary reports and certificates to the tax authorities.
Investments in real estate can profit from the rental income or the sale of real estate property at a profit.
Israeli tax law provides at least three possible options for income taxation arising from the rental of immovable property. The specialists of our Office carefully study the conditions of a particular transaction and offer the best option from the profit-making point of view.
When selling a flat (or other immovable property), we provide our clients with the opportunity to carry out tax planning concerning income tax. Based on the specific situation, recommendations are given on applying existing options, such as charging tax on gains, offsetting losses, using credit points, reducing the tax rate due to age, etc.
The Israeli tax law provides special tax rates for securities and other financial instruments transactions. There are also a few options to reduce tax liabilities through loss compensation rules and using exemptions related to age, socio-economic status, etc.
Our Office specializes in taxing securities, real estate and capital market activities. Our clients include those who manage multiple investment portfolios.
Thanks to efficient tax planning based on our professional knowledge and specialized software, we identify and use all the rights available to our clients to legally reduce their tax liabilities and refund them overpaid taxes.
Tax Benefits for New Repatriates
The Israeli Tax Code contains various provisions regarding the taxation of new repatriates and returning residents. In September 2008, Amendment No. 168 to the Tax Code was published, which expands tax benefits for new repatriates and returning residents. The amendment is based on a wide-ranging plan whose main objective is as follows:
- Attracting quality human capital to the country;
- Encouraging investors with financial potential to make the State of Israel the centre of their lives;
- And as a result of the above, investing in Israel’s economic development.
An additional purpose of the amendment is to create confidence among the repatriates and returning residents in the tax situation and to reduce the possible friction of this population with the tax authorities. The purpose of Amendment 168 is, among other things, to neutralize the fears in the hearts of repatriates and encourage their return to Israel, on the one hand, and, on the other hand, to reduce the number of issues arising from the lack of this very certainty.
At the same time, to make the most of the benefits provided for new immigrants under the law and avoid tax misunderstandings, it is necessary to be thoroughly familiar with the definitions and terms of the benefits above.
Another significant challenge new repatriates face is dealing with the banking system, which sometimes classifies income exempted from reporting to the tax authorities by virtue of Amendment No. 168 as income with a high-risk profile because it is not reported to the tax authorities.
Our firm specializes in accompanying new repatriates and returning residents. We help to understand and monitor the application of tax benefits, represent our clients before the tax authorities, and assist in ongoing work with the regulatory authorities.
Our knowledge of legislative provisions, practical experience, and native Russian and English language skills allow us to provide comprehensive and quality taxation services to newly arrived and returning residents:
- Tax counselling;
- Filing and execution of reports;
- Representation with tax authorities;
- Assistance in obtaining certificates from the tax authorities;
- Support in opinion drafting procedures and comprehensive tax planning.
Annual Tax Report
The Israeli Tax Code and its regulations oblige certain groups of individuals to file an annual report with the tax office. It is also known by its technical name, “1301 report”. The main groups of individuals who must file an annual report with the IRS are:
- Business owners: sole proprietors and partners;
- Business owners who control more than 10% of the company’s share capital;
- Individuals with high incomes: more than 650,000 per year.
In addition, several other criteria oblige Israeli residents and foreign residents with income in Israel to file an annual report. According to these criteria, several other groups can be distinguished:
- Holders of investment portfolios on foreign investment platforms;
- Persons who have passive rental income;
- Hired employees who carried out “Prisat Pitzuim” (Case 97);
- Employees with multiple sources of income (Case 93);
- Owners of properties abroad;
- Foreign residents with income in Israel;
- Taxpayers whose annual report is required by the Tax Authority for particular reasons.
In addition to the mandatory filing of the annual report, there are situations in which the taxpayer himself may initiate the filing of the annual report. In most cases, it is a tax refund (Case 91), but there are additional, less common cases. These cases are mainly related to issues of residency and moving abroad.
After the report is filed with the IRS, it is reviewed by IRS employees. More often than not, they have questions ranging from technical enquiries regarding accompanying materials to professional questions regarding interpretation of tax laws.
Only filing an adequately prepared annual report by a professional ensures optimal tax results and avoids unnecessary disputes with the tax authorities. Our office specializes in filing annual reports with the tax authorities.
- In-depth and comprehensive knowledge of tax legislation,
- Understanding of the structure of the report and all its appendices,
- Experience in filing reports and representation with tax authorities.
- All this allows us to provide our clients with quality, professional and efficient services.
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Tax consulting is a pretty affordable way to clarify your tax position and get clear answers to all arising questions. Targeted tax consultations significantly save clients time and effort associated with collecting various information and provide a clear understanding of possible tax consequences and ways to mitigate the pressure on the client’s financial position.
Israel is a country with a complex tax system. Insufficient knowledge of this system usually leads to various conflict situations with the state tax control authorities. Conflict situations can manifest in overpayment of tax due to poor tax planning and fines and penalties for late and incomplete tax reporting.
The experience accumulated by our Office suggests that a significant portion of these frictions with the tax authorities can be avoided by consulting a tax expert. Tax counselling aims to identify a transaction or situation that requires detailed consideration and determine the best course of action from a tax perspective. It is not uncommon that several options may be offered, and the consultant’s task is to choose the most suitable one with the client.
Tax consultations are conducted by the head of the Office — Roman Tserelstein, a C.P.A. with more than twenty years of experience in accounting, taxation and financial management. During the consultations, Mr Tserelstein examines the client’s specific situation in detail, gives clear answers to questions, helps to calculate tax liabilities and understands approximate tax savings.
These consultations will undoubtedly interest new repatriates and foreign nationals when both want to understand the unfamiliar Israeli tax laws. They are no less important for ordinary citizens who want to start a business or buy/sell property. Even in pension payments, tax consulting helps pensioners fully realize their rights to income tax reduction.
Tax planning is a process in which existing tax laws are used in such a way as to minimize the tax burden of individuals and companies as much as possible.
The process of tax planning should be distinct from tax evasion. Tax planning is a lawful and legitimate action undertaken within the law, while tax evasion is a serious offence of both a criminal and civil nature.
It is essential to realize that most financial transactions in Israel have tax implications. Whether we are talking about actions that occur every day, such as business income, receiving a pension or trading securities, or referring to transactions that go beyond everyday life, such as selling or buying real estate, redeeming compensation or pension funds, etc.
Business owners and companies carry out tax planning regularly, as they are often accompanied by an auditor who can be consulted on the tax implications of certain transactions and events. However, when it comes to individuals who do not have regular contact with an accountant, in this case people only sometimes find it necessary to engage in tax planning.
For most, every financial event in our lives, whether an investment, retirement, entering into a business partnership, or a change of residence, has significant tax implications.
Tax planning allows us to use the tax laws to our advantage and save significant money.
Roman Tzerelstein is a licensed auditor in Israel, professional accountant (Roe Heshbon).
Registering and starting a business, taxation, Esek Murshe, Hevra Baam, Amuta and Halatz registration. Annual report, capital declaration.
Tax refunds, counselling, pension taxation. Professional accounting services for businesses at any level.
Ramat Gan, 52573
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