Israeli Tax Alerts | Practical Interpretations | 2008-2020

36 resident, including income from business activity. Exemption is determined pursuant to Section 14 (a) and pursuant to Section 97 (b) (regarding capital gains), as applicable, and shall apply , as long as the family company's income was produced and accrued outside of Israel . This decision makes sense from a taxation point of view, especially given that in terms of the Israeli tax system, the tax result would have been similar if the couple continued working through the foreign "agent" company they owned (that already existed or through a new company). However , implementation of this resolution may improve the tax outcome in foreign countries where the activity takes place; For example, the existence of a double taxation treaty between Israel and a certain State with business activities may reduce the rate of tax exemption on income for these activities, or reduce the tax on these activities due to lack of a permanent establishment in accordance with the provisions of the Convention between Israel that State . It should be noted that this decision allows extensive use and creativity regarding the benefits that are given to new immigrants or a long term returning resident, combining family companies and using this taxation decisio n. (December 2009) Benefits to a New Immigrant When Purchasing 2 Apartments in Israel As part of the benefits a new immigrant receives, he is entitled to a reduced purchase tax rates. This in accordance to the real estate taxation regulations (betterment, sale and purchase)-1974, indicating that a new immigrant would pay a reduced purchase tax of 0.5% up to a limit of about 1.4 million NIS. Beyond that limited amount, he would pay 5% tax. The benefit will be granted to the new immigrant just as long as the apartment was purchased within 7 years from the first day he arrived to Israel for the first time or a year before he immigrated to Israel. The reduced purchase tax, as indicated above will apply when purchasing (1) a residential apartment, or an apartment used for residential and business purpose together, so that the new immigrant can use the apartment to reside in it or to reside and work together in that apartment; (2) a business, including an agricultural farm, for the use of the new immigrant or his relative; (3) vacant ground under certain conditions…". It should be noted that the regulation applies on whatever real estate right the new immigrant would purchase, within the benefit period, as mentioned above, meaning, once for a residential apartment and