Israeli Tax Alerts | Practical Interpretations | 2008-2020

13 Judge Altoviah noted that " in matters relating to the Foreign Company's business existence, the protocol should reflect how the decisions were made and if the participants relied on any expert reports, this fact should have been reflected in the protocols ." With this regards, previously mentioned ITA Circular 4/02, emphasizes that in order to locate the place where strategic decisions are made, it is important to examine the decision making process as a whole. That is, one should examine where decisions were essentially made and not only the place were technical formalities were performed, when generally; the process of significant decisions is not shaped at a specific time. In our opinion, the discussed ruling was given in response to the "full picture" which involves a quite radical tax planning and behavior, in addition and regardless of the management and control issue: the judge explicitly states that "The sale back of the company's business to the Israeli Company and the transfer of the dividend to the appellants was made with a main purpose of avoiding tax or reducing it inappropriately." After all, it appears that the ruling's was aimed to "repair" the distortion that was (artificially) created. It should be mentioned that the ruling deals with a daily and acute international tax issue in which an Israeli court decision hasn't been given for more than twenty years, since the " Solel Boneh " supreme-court decision in 1994. However, the contemplated last ruling is a District Court ruling, and therefore, is not considered a binding precedent. (April 2012) New Announcements of the Tax Authority on Individual Residency Recently, the Tax Authority has published a tax ruling and a circular on the subject of fiscal residency of an individual: a taxruling (consensual) that deals with setting of conditions for receiving a certificate of a resident of Israel for treaty purposes, and a circular that deals with the options of receiving prior approval of new immigrant or veteran returning resident status (“beneficiary individual”). Specifics of the circular - receipt of confirmation of “beneficiary individual” status The purpose of the circular is to provide certainty concerning the taxation status of a beneficiary individual, which is certainly necessary in view of the extensive relief that is granted to an individual of this status, mainly - an exemption from tax and from reporting concerning incomes and assets outside of Israel for 10 years. According to the apparatus that has been laid down, the applicants will be divided into two groups, in accordance with the level of affinity for Israel as a tax domicile.