How to deduct losses in Israel

losses in Israel

What are the losses in Israel?

The deduction of losses in Israel is designed to reduce profits over a given period by the amount of losses previously incurred.

The general details of loss deduction are specified in articles 28 and 29 (business losses) and article 92 (capital losses) of Israel's General Tax Code.

According to this ordinance, there are three types of losses that can be deducted:

  1. Loss of activity made in Israel - Loss arising from a business activity carried out in Israel, i.e. a business loss (active loss) or a rental loss (passive loss). Article 28 of the Tax Ordinance deals with this type of loss.
  2. Loss of foreign business - Losses arising from business activity or rents abroad. Article 29 of the Ordinance concerns business losses incurred by a resident of Israel as a result of foreign activity.
  3. Capital loss - Loss resulting from investments, whether in Israel or abroad. Article 92 of the Tax Ordinance concerns this loss.ALSO READ: THE GUIDE TO DOING BUSINESS IN ISRAEL


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