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118 TAXATION "Privileged Securities" are tradable securities acquired by an individual during his stay abroad after he had ceased to be an Israeli resident and prior to his return to Israel, and said securities are managed in an account with a banking institution, as well as tradable securities acquired by the individual through income from interest or dividend derived from the Privileged Securities, or from capital gains derived from the sale of the said Privileged Securities and deposited in the same account. (3) Tax exemption for a 10-year period commencing on the date of return to Israel, on capital gains derived from assets located outside Israel, acquired during the individual’s stay abroad and prior to his return to Israel. A proportional exemption will be granted on a capital gain generated after the said 10-year period. 8.2.4. Benefits to Foreign Residents 8.2.4.1. General Foreign residents are subject to the same tax rates as Israeli residents. However, if foreign currency was invested, they may choose to calculate the capital gains in the original currency rather than in Israeli currency. In addition, the inflationary gain on the sale of shares of an Israeli company or other assets, purchased originally with foreign currency, is exempt from tax if the calculation is based on changes in the specific exchange rates of the Israeli currency. A foreign resident will be exempt from capital gains tax on capital gains from the sale of shares allocated to the foreign resident in 2003 onward, in a a R&D designated company as of the date of the allocation, in consideration for monetary investment in the company. BDO Israel
BDO Israel DOING BUSINESS IN ISRAEL Generally, according to the OECD Model Tax Convention Capital gain from the sale of property located in a certain country by a resident of another country will be liable to tax only in the other country (the seller’s country of domicile and not the country where the property is located). As a rule, Israel has adopted this principle in the treaties signed over the past years. 8.2.4.2. The 2009 Amendment In addition, as of January 1st, 2009 a new legislation elaborates on the tax exemptions for foreign residents, prescribing as follows: (a) an exemption for foreign residents on interest income, discount fees and exchange differentials derived from corporate bonds on the Tel Aviv Stock Exchange (if the income is not derived from the foreign resident’s permanent establishment in Israel; (the exemption applies to any foreign resident on the day of payment even if the bonds were acquired prior to January 2009); (b) a foreign resident will be exempt from capital gains tax due on the sale of marketable securities, if the capital gain is not derived from that resident’s permanent establishment in Israel. Under the recent tax reform, the above exemption will also apply to securities purchased prior to being listed. Tax will be charged at the time of sale only on that part of the capital gains generated until their listing (capital gains on a notional sale); c) capital gains exemption on the sale of Israeli non-tradable securities acquired after January 2009, if the capital gain is derived from the foreign resident’s non-Israeli permanent establishment in Israel. Prior to the 2009 Amendment, a foreign resident was exempt from tax on capital gains derived from the sale of shares allocated to a foreign resident during 2003 onward, in a R & D designated company as of the date of the allocation, in consideration for monetary investments in the company. 119
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PREFACE This publication has been p
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7. INVESTMENT INCENTIVES AND TRADE
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8 THE ISRAELI ECONOMY IN 2010 The I
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1.2.4. Fiscal Developments 10 THE I
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12 THE ISRAELI ECONOMY IN 2010 1.2.
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14 THE ISRAELI ECONOMY IN 2010 Comp
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16 ISRAEL - GENERAL OVERVIEW Israel
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2.4. ISRAEL’S CURRENCY 18 ISRAEL
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Legal holidays in 2010 and 2011 are
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22 OVERVIEW OF ISRAEL’S HIGH-TECH
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OVERVIEW OF ISRAEL’S HIGH-TECH IN
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32 BUSINESS STRUCTURE The Companies
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34 BUSINESS STRUCTURE with respect
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36 BUSINESS STRUCTURE recommendatio
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38 BUSINESS STRUCTURE TASE regulati
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40 BUSINESS STRUCTURE ♦ Non-profi
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4.2.2. Prerequisites 42 BUSINESS ST
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44 BUSINESS STRUCTURE As mentioned
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46 BUSINESS STRUCTURE 4.3. INSURANC
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5.1.2. Distribution of Employees 48
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50 BUSINESS ENVIRONMENT As of Janua
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5.2. ANTITRUST LAW 52 BUSINESS ENVI
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5.3. INTERNATIONAL TRADE 54 BUSINES
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5.4. TRADE AGREEMENTS 56 BUSINESS E
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5.5. PROPRIETARY RIGHTS 58 BUSINESS
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60 ACCOUNTING AND AUDITING PERSPECT
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Page 130 and 131: 8.5. TAXATION OF TRUSTS 128 TAXATIO
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Page 148 and 149: Example A NIS Example B NIS APPENDI
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Page 156 and 157: BRAZIL Embassy of Israel S.E.S Av.
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