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Tax Benefits for New Immigrants and Veteran Returning Residents

In 2008, the Israeli government  introduced a reform regarding benefits granted to new Israeli immigrants and "veteran returning residents," residents who have been living abroad for at least ten years The  reform was initiated by the Ministry of Immigrant Absorption and the Israeli Tax Authorities, as a part of the "returning home- Israel's 60th" project.

The reform aims to encourage Israelis living abroad to relocate to Israel, by providing the above beneficiaries with extensive tax benefits.

In addition, the reform is designed to serve as a catalyst for investments in Israel, contributing to Israeli financial and social strength.

 

The following is a brief summary of the tax benefits awarded:

  • Tax Exemptions on Passive income

    Starting from arrival/returning date, during the first 10-year period, new immigrants and 'veteran returning residents' will be tax exempt with respect to passive income deriving from assets purchased outside of Israel, whether or not these assets were purchased before or after their arrival/returning date to Israel.

"Passive income" includes dividends, interests, royalties, rent and allowances.

  • Tax exemption of capital gains

During the first 10-year period as of the arrival/returning date, new immigrants and 'veteran returning residents' are eligible for tax exemption with respect to capital gains deriving from sale of assets outside Israel (applicable to assets acquired after the date of return to Israel).

  • Business income

    During the first 10-year period as of the arrival/returning date, new immigrants and 'veteran returning residents' are tax exempt regarding business income, salary and occupation overseas.

  • Adjustment period

    New immigrants as well as 'veteran returning residents' are entitled to a one-year adjustment period during which time they would not be considered as Israeli residents, provided notification is given to the Israeli Tax Authorities during the first 90-day period as of the arrival/returning date.

  • Foreign corporations controlled and managed by new immigrants and 'veteran returning residents'

    An Israeli corporation is defined as being controlled and managed from Israel.
    However, corporations that are managed and controlled by new immigrants or 'veteran returning residents' will not be considered as Israeli corporations and therefore, would not be taxable in Israel other than with respect to income generated in Israel.


  • Exemption on income tax filings

    During the first 10 year period starting from the arrival/returning date, new immigrants and 'veteran returning residents' are exempt from submitting tax reports to the Israeli Tax Authorities with respect to overseas income or overseas assets.