International Law

Tax Benefits for New Immigrants and Expatriates Returning to Israel: Israel as a New International Business Center

by Alon Kaplan, Lyat Eyal and Susanna von Bassewitz


The recent economic crisis left many countries with an immense "hole" in their treasury. Many states were looking for ways to fill their economic gaps and many increased their pressure on low tax jurisdictions. The Organisation for Economic Cooperation and Development (OECD) took measures against the worldwide tax evasion. It put countries like Switzerland and Liechtenstein on grey lists for not fully implementing the OECD standards. This new trend to combat undeclared assets found its peak in the case of UBS Switzerland and the U.S. Internal Revenue Service (IRS) and further resulted in the following cases: Germany had bought a stolen CD with data from a Swiss branch of HSBC with account information of German taxpayers. In Italy, the government offered a tax amnesty that uncovered EUR 100 billion, of which EUR 5, 6 billion went to the Italian treasury.

Israel with its active economy and modern state, as part of the global village, took a risky stand almost immediately prior to the financial crisis. In 2003, it overhauled its tax system from personal taxation to global taxation, followed by the Taxation of Trusts Law, and more recently added the New Immigrants and Returning Residents Law.

These reforms have made Israel one of the most advantageous jurisdictions to which to immigrate and do business. The Israeli economic environment is particularly interesting for high net worth individuals who might wish to do business in Israel, or to relocate and reside there.

2008 Israeli Tax Reform. In celebration of Israel's 60th anniversary, a new Tax Reform for New Immigrants and Returning Residents was approved by the Ministry of Finance. (Amendment 168. 9 September 2008, "The New Immigrants Law"). The New Immigrants Law grants tax benefits to new immigrants and returning residents to encourage immigration to Israel to stimulate the economy and population. Amendment 168 is revolutionary and creates an advantageous business environment for new immigrants and returning residents.

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Alon Kaplan heads the Alon Kaplan Law Firm in Tel Aviv, is a notary in Israel, and a member of the bar in New York and Frankfurt. His main practice areas include trusts and estates, international taxation, private banking, corporate law, agency and distributorships, and real estate law. Mr Kaplan is the president of the Society of Trust and Estate Practitioners in Israel, and a seven-year member of the STEP Council in London. He is the editor of several Kluwer law and business guides, and writes widely on trusts.

Lyat Eyal practices international law and trusts and estates law at the Alon Kaplan Law Firm. She writes in the area of trusts and taxation in Israel.

Susanna von Bassewitz holds a Master of Law from the University of Zurich and works for the Alon Kaplan Law Firm.