Our firm provides the following services to employees moving from one country to another and to their employers:

Support services with regard to taxation, national insurance and salary structuring

Within this context, advice is provided as to how to construct an optimal salary structure from the perspective of both the employer and the employee.
On occasions, the format of the transaction (an Israeli employer or a foreign employer) can have a material bearing on the solution in relation to the employee’s intent, the employer’s intent, the country to which the employee is moving, and the status of the employer in that country. In addition, several possible ways of calculating the employee’s salary might be provided for in the Income Tax Ordinance laws and regulations, and this too could have a material impact on the quality of the solution.

Severance of residency

Our firm supports employees leaving Israel to work abroad with the residency severance process needed for tax purposes in accordance with the Income Tax Regulations for persons who wish to claim severance of Israeli residency for tax purposes and who meet the necessary criteria.

Discussions with the income tax, value added tax and national insurance authorities

Our firm represents employees during their stay abroad in discussions with the various authorities, should this be necessary.

Supporting employees coming from abroad

Our firm advises and supports employees coming to Israel from abroad with regard to all the processes and reporting that is required pursuant to Ministry of Interior laws, income tax laws and national insurance laws. Our firm prepares salary slips (shadow payroll) for such employees, paying particular attention to the special benefits due to such employees in Israel.

Our firm handles hundreds of cases a year and acts as a one-stop shop in providing all the necessary services under one roof for international companies and individuals with regard to relocation both in Israel and abroad in an integral fashion, by virtue of our membership in the international global tax network.

The current legal situation regarding taxation

Relocation taxation in Israel is not clearly related to in the Income Tax Ordinance and to a large extent is based on court rulings on this topic. Due to the topic’s complexity, court rulings do not provide a single, clear legal guideline and every case has to be judged on its own merits.
It is quite possible that a court ruling in a particular case will be different from the ruling given in another case that is not entirely identical to the first case, which makes it difficult to plot a unified course of action for every person who relocates.
The Tax Authority customarily publishes opinions on this topic, and in many instances these opinions diverge from or are different to previous opinions that were published.
Sometimes, the policy implemented at one of the tax regional offices in Israel differs from the policy implemented at another tax regional office, despite the two offices being part of a single tax authority.

Points in dispute with the Tax Authority

✓ What is the residency severance date? Is it the date of leaving Israel or some other date?

✓ Does the severance of residency relate to the family unit or to an individual?

✓ Is the severance of residency for internal legal purposes different from the severance according to tax treaties?

✓ Has the “center of life” actually been transferred abroad?

✓ With regard to options and benefits received by a salaried employee while working in Israel but whose exercise began during his residency abroad, how are these to be taxed?

✓ Does continuing to pay contributions to the National Insurance Institute constitute a heavyweight attachment that negates severance of residency?

✓ What is the minimum length of time for a resident that has left Israel to be recognized as having severed residency for Israeli tax purposes?

✓ What is the maximum number of days during which a resident who lives abroad may visit Israel during the years following the residency severance year without him being treated as an Israeli resident for tax purposes?

✓ What is the date of returning/immigrating to Israel? Is this the date of arriving in Israel or another date?

✓ Is the income generated by a returning Israeli resident/a new immigrant during the benefits period liable to tax in Israel?

For more than 20 years, our firm has been offering advice and providing support services to –

✓ Employers sending employees abroad.

✓ Individuals leaving Israel to work abroad.

✓ Employees arriving from abroad to work in Israel.

✓ Returning Israeli residents and new immigrants.

From our many years of experience with employees needing to relocate, we have learned that a one-hour personal consultation meeting – or even a two-hour meeting – is not enough. Employees contemplating relocation are business people and are preoccupied with many other matters that arise at the time of their relocation; without close personal support and assistance, details can frequently be overlooked in the processes they need to complete when moving from one country to another and, as a consequence, they can suffer economic loss. Our firm offers support and unique ongoing handling of such issues at our offices and our services are individually personalized for every employee leaving Israel or arriving from abroad.

The timing of when to start providing support to the employees is extremely important in order to ensure that they can fully utilize their rights and for improving the conditions relating to taxation and their salary payment.

The need to provide advice to employers and employees leaving to work abroad commences on the date when the employer decides that it intends to send an employee to work abroad and the employee decides that he intends to work abroad, and continues until the date of the employee’s return to Israel, if it is so decided after a number of years.

The need to provide advice to employees arriving from abroad commences on the date when the employee decides that he intends to come to Israel and to work in Israel and continues until the date of having fulfilled all his obligations vis-à-vis the authorities in Israel which – in most cases – is a date after he has already left Israel.

✓ Preliminary consultation to understand the employee’s rights and obligations from the aspect of the tax and national insurance (social security) laws upon relocation.

✓ Examination of the employee’s employment options, taking into consideration the employee’s needs, the employer’s needs and the effects of tax and national insurance (social security) on each of the options.

✓ Preparation of tax computation estimates both for the employee’s home country and also for his relocation country in order to assess the net impact for the employee and the cost for the employer, depending on whether the employee is treated as a foreign resident or as an Israeli resident for tax purposes.

✓ Advice regarding taxation of options, if granted.

✓ Attending to national insurance (social security).

✓ Checking the visas required for employees leaving Israel to work abroad and for employees coming to work in Israel.

✓ Submitting annual filings, as necessary.

✓ Dealing and corresponding with the Tax Authority.

✓ Holding discussions with the Tax Authority.

✓ Dealing and corresponding with the National Insurance Institute.

✓ Holding discussions with the National Insurance Institute.

✓ Consulting on an employer’s withholdings audit with regard to the employment of relocated employees.

✓ Ongoing consulting.

✓ Advice as to the effect of the return date on the tax status.

✓ Advice as to the effect of the return date on the national insurance status.

✓ Dealing with the change in status with the National Insurance Institute.

✓ Submitting annual filings, as necessary.