How can I avail myself of tax breaks given to Olim even though I made aliya many years ago?
Question:
I understand that there are tax benefits granted by the Israeli tax authorities to new olim, on the investments held at the date that they made aliya. I have been in Israel for many years now. Could I also get those benefits?
Oleh Vatik
Sent (September 1, 2007)
Answer:
By: ACL
Dear Oleh Vatik,
You are correct in stating that new residents obtain special tax benefits for the first few years after making aliya. Certain of these benefits are only obtained if, on their arrival in Israel, their financial affairs are correctly structured.
A person such as yourself, who has lived in Israel for many years, would be considered in the same category as any other Israeli.
In such a case, the approach that I would take is to restructure your investments to achieve the lowest effective tax rate. It is not possible to avoid taxes, but entirely within one’s control to minimize the tax burden that one has to pay. The Israeli tax rates on investment income and capital gains range from 15% to 49% (and sometimes could also include Bituach Leumi / National Insurance.) Thus it is very important that investment decisions take into consideration the tax ramifications of the particular investment strategy.