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Comparative taxation France VS Israel New immigrant

Israel New immigrant

Taxation is a key issue for individuals and companies, especially for new immigrants who have to adapt to the tax systems of their host country. Comparing taxes in France and in Israel, it is possible to better understand the differences and advantages offered to new immigrants, such as tax exemption for active income generated outside Israel and passive income for 10 years following Aliyah.

This analysis will also highlight the specificities of taxation in each of these countries, and identify the best strategies for optimizing your tax situation as a new immigrant.

Tax residence

Tax residency is an essential element in determining the tax obligations of individuals and companies. Tax residency criteria vary between France and Israel, and have a direct impact on the taxation of new immigrants.

Definition and criteria of tax residence in France

In France, a tax resident is a person who meets one of the following criteria: having his or her tax domicile in France, i.e. the place of his or her habitual residence, the center of his or her economic interests, or the duration of his or her physical presence on French territory for more than 183 days during a calendar year. French tax residents are subject to income tax on their worldwide income.

Definition and criteria for tax residency in Israel

In Israel, tax residence is determined according to the center of life, which takes into account criteria such as place of habitual residence, place of work, center of economic and social interests, and length of presence in Israel. Tax residents in Israel are subject to income tax on their worldwide income, but benefit from specific tax exemptions for new immigrants.

Impact of tax residency on the taxation of new immigrants

For new immigrants to Israel, tax residency has important tax exemption implications. Indeed, new immigrants, also known as "Ole Hadash", pay no tax on active income generated outside Israel, and are exempt from tax on passive income for 10 years following their Aliyah. This represents a considerable advantage over the French tax system, which taxes the worldwide income of tax residents.

Understanding tax residency criteria and their implications for new immigrants is essential to optimizing their tax situation and taking advantage of the benefits offered by Israeli legislation.

Tax exemption for new immigrants to Israel (Ole Hadash)

New immigrants to Israel, also known as Ole Hadash, benefit from specific tax exemptions on their income. These exemptions apply to active income earned outside Israel, as well as passive income for 10 years following aliyah. It is important to note that these tax benefits are different from those applied in France.

New immigrants pay no tax on active income earned outside Israel. This means that income from work, business or other professional activities carried out abroad is not subject to tax. on income in Israel.

As for passive income, such as interest, dividends, rents or royalties, new immigrants are exempt from income tax for 10 years following their Aliyah. This exemption is particularly advantageous for those with substantial income from financial or real estate investments abroad.

However, there are conditions and limits to these tax exemptions. For example, to benefit from these advantages, new immigrants must meet certain reporting obligations to the Israeli tax authorities. What's more, the tax exemption does not apply to income generated in Israel, which remains subject to income tax according to the scales and rates in force in the country.

In short, it is crucial for new immigrants to Israel to understand the tax exemptions available to them, and to ensure that they comply with the associated conditions and limits. Good tax management as a new immigrant to Israel can lead to significant savings and optimized income.

Income tax

Tax systems in France and in Israel have significant differences, particularly in terms of tax rates and income tax scales. For new immigrants, it is essential to understand these differences in order to optimize their tax situation.

Tax rates and scales in France

In France, income tax is calculated on the basis of a progressive scale made up of several brackets, with rates ranging from 0% to 45%. Taxpayers are taxed according to their taxable income, which takes into account various allowances and deductions. It is important to note that French tax residents are subject to tax on their worldwide income.

Tax rates and scales in Israel

In Israel, income tax is also calculated on a progressive scale, with rates ranging from 10% to 50%. As in France, taxpayers are taxed according to their taxable income, which takes into account various allowances and deductions. Tax residents in Israel are subject to tax on their worldwide income, but new immigrants benefit from specific tax exemptions.

Comparison of tax systems in France and Israel

When comparing tax rates and schedules in France and Israel, it is possible to observe certain differences. For example, tax rates in Israel are generally higher than those in France, but new immigrants benefit from tax exemptions on active income generated outside Israel, as well as on passive income for 10 years following their Aliyah. These tax exemptions represent a significant advantage for new immigrants to Israel over the French tax system.

To optimize your tax situation as a new immigrant to Israel, it's crucial to understand the differences between the French and Israeli tax systems, as well as the tax exemptions available to new immigrants. By being well-informed and taking the appropriate steps, it is possible to take advantage of the tax benefits offered by Israeli legislation.

Double taxation

Double taxation is a major issue for new immigrants, who must navigate between the tax systems of their home and host countries. It is essential to understand the principles and mechanisms in place to avoid or mitigate double taxation, including the tax treaty between France and Israel and the tax credit and exemption mechanisms.

Principle and issues of double taxation

Double taxation occurs when the income of an individual or company is taxed in both the country of origin and the country of residence. This can lead to an excessive tax burden and discourage international investment and trade. To prevent double taxation, countries generally sign bilateral tax treaties that set out the rules for sharing taxing rights between the states concerned.

Tax treaty between France and Israel

To avoid double taxation, France and Israel have signed a tax treaty which sets out the rules applicable to tax residents of both countries. In particular, the treaty determines which state has the right to tax certain types of income, and provides mechanisms to avoid double taxation, such as tax credits and exemptions. It is important to note that new immigrants to Israel already benefit from tax exemptions on active income generated outside Israel and passive income for 10 years following their Aliyah.

Tax credit and exemption mechanisms

To prevent double taxation, the tax treaty between France and Israel provides for tax credit and exemption mechanisms. The tax credit allows tax residents to deduct from their tax in one state the tax paid in the other state on the same income. Exemptions allow certain types of income to be taxed in only one of the states concerned. These mechanisms help new immigrants to optimize their tax situation and avoid the excessive tax burden resulting from double taxation.

In short, new immigrants to Israel need to be aware of the issues surrounding double taxation and the mechanisms in place to avoid it, notably the tax treaty between France and Israel and the tax credit and exemption mechanisms. By understanding these principles and taking the appropriate steps, it is possible to take advantage of the tax benefits offered by Israeli legislation and minimize the impact of double taxation on their income.

Other taxes in France and Israel

In addition to income tax, there are a number of other taxes and levies. taxes in France and Israel that can affect the tax situation of new immigrants. It is important to note the different taxes in France and Israel to better understand the advantages and disadvantages of each tax system. These include the value-added tax (VAT), the real estate wealth tax (IFI) in France, and inheritance tax.

Value-added tax (VAT) is an indirect tax levied on the consumption of goods and services. It is levied by companies and paid to the State. VAT rates vary between France and Israel, with a rate of 20% in France and 17% in Israel. This difference can have an impact on the cost of goods and services for consumers, as well as on the competitiveness of companies.

In France, the real estate wealth tax (IFI) applies to people with net real estate assets in excess of a certain threshold, set at 1.3 million euros in 2020. This tax is calculated on the net value of real estate assets, after deduction of debts and expenses. The IFI has no equivalent in Israel, where taxes on wealth are generally lower.

Finally, inheritance and inheritance taxes also differ between France and Israel. In France, inheritance tax is calculated on the value of the assets passed on, according to the relationship between the deceased and the heir, and the allowances and exemptions provided by law. In Israel, there is no inheritance tax, but inheritances may be subject to income tax under certain conditions.

It is essential for new immigrants to France and Israel to understand the different taxes that affect them, and to learn about the advantages and disadvantages of each tax system. Good tax management and an in-depth knowledge of the different taxes in France and Israel will enable new immigrants to make the most of the tax exemptions and advantages offered by the legislation of each country.

Consequences for new immigrants and businesses

The differences between the French and Israeli tax systems have a significant impact on new immigrants and businesses. By understanding these differences and adapting their tax management, individuals and companies can take advantage of the benefits offered by each tax system.

Impact on individual income and tax management

New immigrants to Israel benefit from tax exemptions on active income generated outside Israel and passive income for 10 years following their Aliyah. This offers a considerable advantage over the French tax system, which taxes the worldwide income of tax residents. By adapting their tax management, new immigrants can optimize their tax situation and maximize their income.

Effects on company competitiveness

Companies operating in France and Israel are subject to different VAT rates, respectively 20% and 17%. This difference can have an impact on the cost of goods and services for consumers, and on the competitiveness of companies. Companies that understand these differences and adapt their tax strategies can improve their market competitiveness and save money.

Advantages and disadvantages of the French and Israeli tax systems

Each tax system has advantages and disadvantages for new immigrants and companies. The French tax system, for example, taxes the worldwide income of tax residents, while the Israeli tax system offers tax exemptions for active income generated outside Israel and passive income for 10 years after Aliyah. By understanding these advantages and disadvantages, new immigrants and companies can adapt their tax management and make the most of the opportunities offered by each tax system.

Cabinet Dray & Natco's tax services

Dray & Natco is an accounting firm specializing in Israeli taxation, offering a range of services tailored to the specific needs of French and Israeli clients. Thanks to our expertise in Israeli accounting and taxation, the professionals at Dray & Natco are able to support companies and individuals in their tax management.

Israeli accounting and tax expertise

Dray & Natco's in-depth knowledge of Israeli tax regulations enables us to offer expert accounting and tax services tailored to our clients' needs. By understanding the specifics of taxation in France and Israel, the firm's experts can advise new immigrants on the tax advantages available to them, such as the exemption for active income generated outside Israel and passive income for 10 years following their Aliyah.

Helping companies and individuals manage their tax affairs

Cabinet Dray & Natco offers personalized support for companies and individuals, helping them to optimize their tax situation and take advantage of the benefits offered by Israeli legislation. Thanks to their in-depth knowledge of taxes in France and Israel, the firm's experts are able to offer solutions tailored to each client's needs, from tax planning and tax returns to optimizing tax exemptions for new immigrants.

Services tailored to the specific needs of French and Israeli customers

Cabinet Dray & Natco offers services tailored to the specific needs of French and Israeli clients, taking into account the tax particularities of each country. Drawing on their experience and expertise in Israeli accounting and taxation, the firm's professionals are able to provide advice and customized solutions to help new immigrants make the most of the tax advantages offered in Israel.

How to optimize your tax situation between France and Israel

To optimize your tax situation between France and Israel, it is essential to understand the differences between the two tax systems and to implement appropriate strategies. In particular, new immigrants to Israel benefit from tax exemptions on active income generated outside Israel and passive income for 10 years following their Aliyah. Here are a few tips and strategies to minimize the tax impact and take advantage of the benefits offered by Israeli legislation.

Tips and strategies to minimize tax impact

It's important to plan your tax situation carefully, taking into account the different tax regimes in France and Israel. This may involve restructuring your investments, determining the best way to earn income abroad, or adapting your consumption habits to take advantage of the more advantageous VAT rates in Israel.

It's also essential to keep abreast of legislative and regulatory developments in both countries, so you can adjust your tax strategy accordingly. In addition, it may be useful to consult accounting and tax experts for personalized advice tailored to your situation.

Using online simulators

Dray & Natco offers online simulators for employees in Israel, enabling them to calculate their take-home pay and the cost to the employer, as well as a real estate acquisition tax simulator for people wishing to buy property in Israel. These tools can help new immigrants better understand their tax situation in Israel and make informed decisions about investing and managing their income.

Collaboration with accounting and tax experts for optimal tax management

Finally, it is advisable to work with accounting and tax experts with in-depth knowledge of taxes in France and Israel. These professionals can help new immigrants optimize their tax situation, taking into account the advantages offered by Israeli legislation, such as the exemption for active income generated outside Israel and passive income for 10 years following their Aliyah. Thanks to their expertise and support, new immigrants can make the most of the tax opportunities available in Israel.

Optimize your tax situation

When comparing taxes in France and Israel for new immigrants, it is essential to understand and manage your tax situation to take advantage of the benefits offered by each system. The tax exemptions granted to new immigrants in Israel, notably for active income generated outside Israel and passive income during the 10 years following Aliyah, offer opportunities for tax optimization.

It's important to work with accounting and tax experts like Cabinet Dray & Natco for personalized advice tailored to your situation. By using the online tools offered by the firm, such as salary and real estate acquisition tax simulators, new immigrants can make informed decisions about investing and managing their income.

For personalized tax advice, don't hesitate to contact us.

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Phone : 02 631 9000
Fax: 02 631 9005
Email : office@cpa-dray.com

Boruch Levenson - CPA

A native English speaker qualified in both Israel and the UK, Boruch cares for the English speaking clients.

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Our consultants in Jerusalem

English speaking accountants in Israel
Address: Kanfei Nesharim 68. Merkaz Oranim
Phone number: 02 631 9000
Fax: 02 631 9005
Email: office@cpa-dray.com