In 2008, the Israeli government passed Reform 168 modifying the existing tax system for Olim Hadashim.
From now on, this reform offers Olim Hadashim tax exemption in Israel.
This exemption had already been passed in the 90s, to encourage aliyah to Israel.
Thanks to this reform, this exemption has been extended to offer olim the possibility of being tax-exempt in Israel on income earned abroad.
What income is exempt for an Ole Hadash?
Exempt income includes :
- Active income from a foreign company for services provided abroad.
- Dividends received from a foreign company.
- Interest income from foreign financial investments.
- Income from property abroad.
This exemption is available to immigrants for 10 years from the date of aliyah.
The date of aliyah is determined by the Misrad ha Aliyah, which assigns you the Teudat Ole.
The reform is aimed at immigrants who made aliyah after 2007.
It is important to specify that this reform is aimed at Olim Hadashim who made aliyah after January 1, 2007.
Olim who made aliyah before this date benefit from the following advantages:
- Exemption for 5 years following aliyah on "passive" incomeThese include interest, dividends, pensions, copyright and income from real estate purchased abroad.
- Exemption for 4 years following aliyah on "active" income, such as: Income from a business activity abroad that was active for at least 5 years prior to the date of aliyah. In other words, the company had to have been active for at least 5 years prior to aliyah, so that income received via this entity after aliyah would be exempt for 4 years.
- Exemption for 10 years following aliyah on capital gains realized on the sale of foreign assets and investments purchased prior to the date of aliyah.ALSO READ: What happens if you have foreign income?
Your questions - our advice
- What happens after the 10-year exemption?
- Can I "copy" my French company in Israel? What are the tax advantages in this case?
- Do I have to declare my pension received in France?
- What taxes apply to a Toshav Hozer (Returning Resident)?
Visit taxation Israel offers many advantages to those wishing to make Aliyah. Before taking the plunge, it's a good idea to prepare properly to avoid any tax mishaps in the future.
Don't hesitate to contact us, as each case is unique and any advice is welcome!