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Employee benefits in kind in Israel

benefit in kind in Israel
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How do taxes treat benefits in kind in Israel?

Many employees receive an additional benefit in kind in Israel from their employer, in addition to their salary. These may include a car, free or reduced-cost meals, a cell phone for both business and personal conversations... However, what some employees don't know is that these benefits are taxable. As soon as an employee receives a salary that classifies him or her as a taxable employee, he or she must pay tax on the income generated by his or her work, according to the tax brackets applicable to him or her. But if they also receive one or more of the benefits mentioned above, the tax authorities consider these benefits to be income in their own right, in addition to the income generated by their work. Here are some of the most common benefits and the tax authorities' point of view. taxes about them.

The car - Benefits in kind in Israel

Taxes classify cars into different categories, and each category has a fixed annual tax value. This means that if an employee receives a car from his employer that is not used for his actual duties, and therefore represents a benefit only for the employee, he will have to pay taxes according to the category of the car he has received. It is important to note, however, that the employee will only pay taxes on the car and gasoline financed by his employer according to the actual use of the car and gasoline, which in itself constitutes a tax break. As for the employer, the fact of allocating a car to his employee is all to his advantage, since unlike in the past, this expense for him is tax-free. The calculation of the monthly benefit in kind for cars is: the price of the new car * 2.48%. Example: Your employer supplies you with a new car worth 100,000 Nis, the monthly benefit in kind would be 100,000 *2.48% = 2,480 Nis. If your gross monthly salary is 10,000 Nis, you will be taxed on 10,000 + 2,480 = 12,480 Nis.

Meals - Benefits in kind in Israel

  1. If an employer provides meals to an employee, either through a canteen or directly in cash, the employee will be taxed on the actual cost of the meal or the market price, whichever is higher.

Cell phones - Benefits in kind in Israel

Very often, an employee who receives a cell phone from his employer for work-related conversations can also use it for personal use. In this case, he or she will also have to pay tax on half the cost of the telephone package, up to a maximum of 105 shekels. Let's take an example: if you paid for 150 shekels worth of telephone conversations during the month, you'd have to pay 75 shekels (when the maximum is 105 shekels).
The Bitouah leoumi In the eyes of the bituah leoumi, all these benefits represent income in their own right, in the same way as wages, and so bituah leoumi must be paid on them. See also: Bitouah Leoumi for employees. New logo DD 2021 The "Dray & Dray" accounting firm is based in Jerusalem & Tel Aviv. We provide day-to-day support for your accounting and tax affairs in Israel. We also have an English-speaking department specializing in business start-ups and accounting issues in England. Finally, the firm's real estate department handles tax optimization and real estate issues for owners and investors in Israel. Facebook-f Youtube Linkedin © All rights reserved - Dray & Dray ©

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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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English speaking accountants in Israel
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