Israel

Corporate - Other issues

Last reviewed - 04 January 2020

Choice of business entities

Investments and business operations in Israel may be structured in a variety of ways. The following are the common types of business entities in Israel: (i) Israeli public or private company; (ii) foreign company in Israel (i.e. a branch); (iii) Israeli general or limited partnership; (iv) foreign general or limited partnership; (v) other entities such as cooperative societies; and (vi) other arrangements (e.g. contractual joint ventures).

Mergers and acquisitions

Israeli tax law allows for non-taxable reorganisations in situations in which the ownership and business enterprise of the original parties is continued after the reorganisation takes place, allowing for the deferral of the tax liability until the shares or assets transferred in such reorganisations are actually sold. Different qualifying requirements and conditions apply (e.g. obtaining a ruling from the ITA in certain cases), depending upon the tax residency of the parties and the type of transfer.

US Foreign Account Tax Compliance Act (FATCA) in Israel

A Model Reciprocal Intergovernmental Agreement (IGA) was signed by Israel and the United States on 30 June 2014 and was ratified on 12 July 2016. The IGA took effect on 4 August 2017, once the Ministry of Finance published the relevant tax code regulations.

The IGA provides clarity around the implementation of FATCA for the financial institutions and investment entities resident in Israel.

The ITA released FATCA Guidance in May 2017.

Common Reporting Standard (CRS) in Israel

Israel has committed to CRS implementation and to undertaking the first exchange of information in 2018. The FATCA law that was passed by the Knesset (Israeli Parliament) on 12 July 2016 also serves as the primary legislation for purposes of the CRS. The secondary legislation (Israeli Tax Code CRS Regulations) was approved by the Finance Committee of the Knesset on 1 January 2019. Israeli financial institutions are expected to submit their first CRS returns in 2019, covering both 2017 and 2018 years.