Presentation : Inheritance tax in Israel
Inheritance tax in Israel differs greatly from that in France, notably because there is no inheritance tax in Israel. However, certain specific rules apply to heirs living outside Israel.
It is therefore essential to understand these differences in order to optimize wealth transfer.
The importance of estate and tax planning
Good estate and tax planning is crucial to the effective protection and transfer of wealth. Special arrangements, such as the setting up a holding company or a living gift, can be considered to minimize the tax impact and ensure the financial security of heirs.
Inheritance tax in France
In France, inheritance taxation is governed by inheritance taxes, which vary according to the relationship between the deceased and the heir. Let's take a look at tax rates, allowances and exemptions, and the different ways in which inheritance is passed on.
Inheritance tax rates in France vary according to the relationship between the deceased and the heir. Direct heirs benefit from lower rates than other heirs. In addition, French legislation provides for certain allowances and exemptions to reduce the inheritance tax burden.
In France, inheritance tax rates vary according to the amount of the inheritance and the relationship between the deceased and the heir. Direct heirs benefit from lower rates than other heirs.
Allowances and exemptions
French legislation provides for various allowances and exemptions to reduce the inheritance tax burden. For example, heirs in the direct line benefit from an allowance of €100,000, while spouses and PACS partners are totally exempt from inheritance tax.
Passing on your heritage
There are a number of ways of passing on wealth in France, each with its own advantages and disadvantages. Dismemberment, living gift, resale, refinancing etc...
The different forms of transmission
In France, assets can be transferred by inheritance, gift, life insurance or will. Each form of inheritance has its advantages and disadvantages, both in terms of taxation and asset management. This article is not intended to give you legal advice, so it is strongly recommended that you consult an expert in French law for this.
Advantages and disadvantages
The choice of a form of inheritance depends on individual objectives and personal circumstances. For example, a gift enables you to pass on your assets during your lifetime while benefiting from tax allowances, but it also implies a loss of control over the assets given.
Inheritance tax in France
In France, inheritance tax is governed by the following rules reporting obligations and deadlines to avoid penalties.
Heirs are required to declare the inheritance to the tax authorities within six months of death, or one year in the event of death abroad. This declaration must list all the assets making up the estate, as well as their value.
Deadlines and penalties
Penalties may apply if the deadline for declaring the inheritance is not met. It is therefore important to respect these deadlines to avoid additional costs.
Inheritance tax in Israel
Inheritance tax in Israel differs considerably from that in France, mainly because there is no inheritance tax. Nevertheless, certain specific rules apply to heirs living outside Israel, and special arrangements can be made to optimize the transfer of assets.
No inheritance tax in Israel
Unlike France, there is no inheritance tax in Israel. This major difference can make inheritance tax more advantageous for heirs living in Israel. However, attention must be paid to the situation of heirs living outside Israel.
Inheritance tax in Israel
Despite the absence of inheritance tax, Israel's inheritance tax system includes specific rules for heirs living outside Israel, as well as tax benefits for new immigrants.
Specific rules for heirs living outside Israel
Heirs living outside Israel need to be aware of the specific rules that apply to their situation. Even if the inheritance is not subject to tax in Israel, tax obligations may arise under the legislation of the heir's country of residence.
For example, if a person dies in Israel, with an apartment in Tel Aviv, and his heirs live in France, they will have to declare the estate and pay inheritance tax in France. Even if the property is located outside France.
The rule that applies is simple to remember: if the deceased, the heir or the inherited asset are in France at the time of death (tax residents or assets geographically located in France), then French inheritance law applies.
Tax benefits for new immigrants (Olim Hadashim)
New immigrants to Israel (Olim Hadashim) benefit from certain tax advantages, such as exemption from foreign income tax for 10 years. These advantages can make it easier for heirs to pass on their assets.
We can also discuss the possible "step up" assembly, which we detail in this video:
Special arrangements to consider
To optimize the transfer of assets while taking into account the inheritance tax system in Israel, special arrangements can be envisaged, such as the creation of a holding company or a living gift.
Setting up a holding company
Setting up a holding company is an effective way of grouping and managing the assets of a company or estate. This arrangement can offer tax advantages and facilitate the transfer of assets to heirs.
A living gift involves passing on part of your estate during your lifetime, rather than through a will after your death. This approach can provide tax benefits and make it easier to manage the transfer of assets.
Inheritance tax comparison between France and Israel
The most notable difference between France and Israel in terms of inheritance taxation is the absence of inheritance tax in Israel. This can make inheritance tax more advantageous for heirs living in Israel. However, the situation of heirs living outside Israel must be taken into account, as tax obligations may arise from the legislation of the heir's country of residence.
In addition, to optimize the transfer of assets while taking into account the inheritance tax system in Israel, special arrangements can be envisaged, such as the creation of a holding company or a living gift.
Despite the significant differences between the two countries, there are also similarities when it comes to inheritance taxation. For example, in both countries, assets can be transferred by inheritance, gift, life insurance or will. Each form of inheritance has its advantages and disadvantages, both in terms of taxation and asset management.
And estate and tax planning are crucial in both countries to protect and pass on wealth effectively.
Wealth transfer and tax optimization
To ensure efficient inheritance and minimize the tax impact, it is essential to implement estate planning strategies tailored to each individual's situation. As there is no inheritance tax in Israel, particular attention must be paid to the situation of heirs residing outside the country, and special arrangements must be considered.
Dray & Natco's tax services on inheritance tax in Israel
Dray & Natco, experts in taxation and accounting, offer services tailored to each client's inheritance tax situation, whether in France or Israel. Solid expertise is essential to optimize inheritance and minimize the tax impact.
The firm is also attentive to the situation of heirs living outside Israel, and offers special arrangements, such as the creation of a holding company or a living gift, to meet the specific needs of each client.
Understanding the tax differences between France and Israel is essential for optimizing the transfer of assets, particularly when it comes to inheritance. The absence of inheritance tax in Israel is a major difference from the French tax system, but attention must also be paid to the specific situations of heirs living outside Israel. Special arrangements to be considered, such as the creation of a holding company or a living gift, can offer tax advantages and make it easier to manage the transfer of assets.
Dray & Natco offers customized solutions to help clients optimize the transfer of their assets, taking into account the specific tax situation in each country. Thanks to its expertise in inheritance tax and personalized support, Dray & Natco is the partner of choice for heirs living in France and Israel, enabling them to secure and perpetuate their assets.