According to section 64a to the Israeli income tax Ordinance, a family company is a company that its shareholders are all family members, who, according to the section, are seen as one person. From the tax standpoint, the income of the company is seen as if it was all produced by the "representative taxpayer", unlike in a partnership, where the incomes are attributed to all the members, according to their proportional hold in the partnership Let's take for example two brothers. One is an Israeli resident and the other is a foreign resident. The two brothers incorporate an Israeli company that applies to be considered as a family company. The foreign resident brother has most of the rights for profits in the company, so he is considered as the "representative taxpayer". Let's also assume that the company has a capital gain from selling Israeli securities traded in the Israeli stock exchange. In light of the fact that the company's profits are attributed to the "representative taxpayer", who in this case is a foreign resident, and since he is entitled to an exemption from paying tax on capital gain in Israel, when selling securities, it could be claimed, that all the capital gain would be exempt from tax in Israel. A similar outcome would be when the company receives capital gain from realizing its investments in Israeli companies. This kind of investment structure can have even wider effect. For example, when a family company, that its "representative taxpayer" is a foreign resident, invests overseas. It could be claimed that the company would not be liable for tax in Israel, The same claim can be ascribed in different cases to veteran resident or a new immigrant that act as the "representative taxpayer". Our firm has much experience when dealing with such structures.