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Family business in Israel: what you need to know

Family business in Israel

Family companies in Israel are commonplace, and represent an important factor in preserving family wealth. Understanding the tax and legal aspects specific to these structures is essential to optimize their management and ensure their longevity.

The tax and regulatory framework for family companies differs from that of other businesses, offering specific advantages and challenges.

The structure of the family company in Israel

A family-run company in Israel has significant differences from a conventional company, particularly in terms of taxation. It is important to be aware of these specificities to optimize company management and protect family assets.

One of the key aspects to understand concerns company registration. To be considered a family company in Israel, it must be registered as a " חברה משפחתית We can register a "family company" for tax purposes within 3 months of the company's incorporation date. This allows you to benefit from a more advantageous tax framework than that applicable to conventional companies.

There are certain conditions to be met in order to be recognized as a family company in Israel. Firstly, all shareholders must be close relatives, or at least one shareholder must be a close relative of the other shareholders. In addition, the family company's tax representative must hold the majority of the company's shares. These criteria ensure that the company's structure is geared towards preserving family assets and ensuring that family members manage the business together.

The tax advantages of a family company

Family companies in Israel enjoy certain tax advantages over conventional companies. These advantages relate to the method of calculating taxation, as well as exemption from tax on dividends.

One of the main tax advantages of a family company in Israel lies in the way taxation is calculated. Indeed, taxation is based on the individual tax rate of the company representative, which can be more advantageous than the tax rate applied to conventional companies. This specificity enables family companies to benefit from lower taxation, thus encouraging the preservation and growth of family assets.

In addition, family companies in Israel are exempt from dividend tax. This means that family shareholders can receive dividends without having to pay tax on this income. This tax advantage further enhances the attractiveness of family companies for entrepreneurs wishing to protect their assets while optimizing their tax situation.

It is important to note that these tax advantages are not automatic, and require careful tax planning. The services of a chartered accountancy firm, such as Cabinet Dray & Natco, can be of great assistance in helping family businesses manage their tax affairs and optimize their taxation.

Read also: Simulate your taxes in ISRAEL

The challenges and stakes of a family company

Despite the tax advantages and protection of family assets, family companies in Israel can also face specific challenges and issues. These include possible conflicts and disputes between shareholder family members. These conflicts may relate to the management of the company, the distribution of profits or strategic decision-making. In order to prevent and resolve these conflicts, it is essential to choose a professional advisor who can support the family company in tax planning and dispute management.

In addition, the financial security of family members must be taken into account. The management of a family company must ensure the continuity and growth of the family's assets, while guaranteeing financial benefits for each family member. This means implementing a tax optimization and real estate investment strategy tailored to the family's needs and objectives.

Taking these challenges and issues into account is crucial to the success and longevity of a family business in Israel. Collaboration with an accounting firm such as Cabinet Dray & Natco can be an invaluable asset in assisting family companies in their management and development, taking into account the specificities of the Israeli tax and legal framework.

Tips for running a family business

Tax optimization and real estate investment are key to protecting and growing the family assets of a family company in Israel. These aspects are all the more important for Olim Hadashim (new immigrants) who benefit from specific tax advantages in terms of exemption from foreign income tax for 10 years.

Managing a family business in Israel therefore requires a rigorous approach and expertise in tax and regulatory matters. This is where the services offered by an accounting firm such as Cabinet Dray & Natco come in. Specialized in assisting family companies, Dray & Natco offers invaluable support in the accounting and tax management of the business, taking into account the specificities of the Israeli legal framework.

By calling on the services of an accounting firm like Cabinet Dray & Natco, family businesses in Israel can benefit from tailor-made support to optimize their tax situation, manage their real estate assets and ensure the company's long-term viability. What's more, with an in-depth knowledge of the regulations and tax benefits specific to Olim HadashimDray & Natco is the partner of choice for new immigrants wishing to set up or manage a family business in Israel.

Family companies in Israel are commonplace, and represent an important factor in preserving family wealth. Understanding the tax and legal aspects specific to these structures is essential to optimize their management and ensure their longevity.

The tax and regulatory framework for family companies differs from that of other businesses, offering specific advantages and challenges.

Tailor-made tax optimization: the personal family company

A family company in Israel can also be a "one-person" company.

Why is this interesting? Let's just give 2 examples:

  1. Enjoying legal protection while being subject to personal taxation in the same way as a Ossek MourcheThis status is ideal for companies wishing to establish a strong business identity while benefiting from personal taxation and legal protection.
  2. In the early years, if a company records tax losses, their treatment differs depending on the choice of tax regime. Opting for a classic corporate tax structure means that losses are recognized exclusively within the company itself. On the other hand, in the case of a personal family business, losses can be deducted each year, reducing the shareholder's other types of income.

Expertise at your service

Tax planning and the management of family companies in Israel are crucial to ensuring the continuity of family wealth. It is essential to surround yourself with experts such as Cabinet Dray & Natco to navigate the complexities of Israeli taxation and regulations. With our expertise, you can benefit from tailor-made support to optimize your tax situation, manage your real estate assets and ensure the success of your family business.

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Our offices in Israel

Our firm specializes in Israeli accounting and taxation, with in-depth expertise in Olim Hadashim benefits and tax optimization.

Our consultants in Tel Aviv

English speaking accountants in Israel
Address: 31 boulevard Rothschild, Tel-Aviv (Israel)
Phone number: 03-9446635
Fax: 03-9494682
Email: office@cpa-dray.com

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