Sponsored content

This article was written by professional content writers in collaboration with a commercial entity. Globes marketing content articles include  information that may adds value to the reader, while maintaining maximum transparency as part of the Globes Code of Ethics.

Israeli tax lawyer Doron Levy: “Countries are increasingly focused on preventing tax evasion”

Lawyer Doron Levy / Photo: Shay Ben Senior
Lawyer Doron Levy / Photo: Shay Ben Senior

The Amit, Pollak, Matalon & Co. (APM) law firm senior partner offers valuable insights into the intricate aspects of expatriation tax, emphasizing the significance of meticulous planning and seeking professional guidance for individuals contemplating relocation overseas

Sponsored content by Adv. Doron Levy

Moving from one country to another is becoming increasingly common in our interconnected world. However, many individuals may not realize the potential tax implications associated with such a move. Expatriation tax, often overlooked but significant, can significantly impact those relocating from their home country to another jurisdiction. To shed light on this complex topic, we sat down with Israeli tax lawyer Doron Levy, a senior partner in the Amit, Pollak, Matalon & Co. (APM) law firm, who heads its taxation and class action department.

In this interview, Adv. Doron Levy provides valuable insights into the complexities of expatriation tax, highlighting the importance of careful planning and professional advice for individuals considering moving abroad. His expertise clears up on the implications of this evolving area of taxation and underscores the need for proactive tax strategies in an increasingly globalized world.

Can you explain the expatriation tax and how it impacts individuals moving from one country to another?

"Expatriation tax, often referred to as exit tax, is a tax imposed by a country on individuals who cease to be tax residents of that country due to a change in residency status, typically when someone moves to another country. This tax is designed to capture unrealized gains or income that would otherwise go untaxed when the individual leaves the country of origin. It's essentially a way for the original country of residence to ensure it receives its share of taxes on accrued wealth or income before the taxpayer relocates".

Could you elaborate on the two main approaches to expatriation tax - the "exit tax" approach and the "trailing tax" approach?

"The "exit tax" approach involves treating assets and income as if they were realized at emigration, thus subjecting them to immediate taxation. This method ensures that the original country of residence captures any accrued gains or income before the taxpayer relocates. On the other hand, the "trailing tax" approach defers the tax liability until the assets are realized or the income is received after emigration. The purpose is to prevent taxpayers from exploiting tax advantages by relocating to countries with more favorable tax regimes".

How does Israel address expatriation tax, and what are the implications for Israeli residents moving abroad?

"Israel, like many other countries, has adopted provisions to address expatriation tax. Amendment No. 132 introduced Section 100a of the Ordinance, which imposes tax consequences on Israeli residents who emigrate. Under these provisions, assets and income are subject to tax as if they were realized during emigration, following the exit tax approach. This ensures that Israel can tax the increase in value of assets or income accumulated while the individual was an Israeli resident".

Can you give an example?

"Of course. A successful entrepreneur based in Israel, let’s call him Amir, has decided to relocate to Canada with his family to explore new business opportunities and enjoy a change in lifestyle. As he prepares for the move, Amir learns about the potential implications of the expatriation tax on his financial assets".

Relocation to a new country can be challenging / Photo: Canva
 Relocation to a new country can be challenging / Photo: Canva

Lawyer Doron Levy added: "During his time in Israel, Amir has accumulated substantial wealth through investments in Israeli stocks and real estate. He is aware that Israel imposes an exit tax on individuals who cease to be tax residents, which means that any unrealized gains on his investments could be subject to taxation during emigration".

"His decision to relocate involves weighing the financial consequences of expatriation tax against the benefits of pursuing new opportunities abroad. By proactively managing his tax liabilities and seeking expert advice, Amir aims to navigate the complexities of expatriation tax and make informed decisions for his family's future in Canada".

What are some common challenges or concerns individuals face with expatriation tax, particularly when moving from Israel to another country?

"One of the primary challenges is navigating the complexities of tax treaties between Israel and the destination country. Tax treaties often determine which country has the primary right to tax certain types of income or gains, which can impact the application of expatriation tax. Additionally, individuals must consider how their assets will be treated upon emigration and whether they will face immediate tax consequences or deferred liabilities".

Are there any specific strategies or considerations individuals should be aware of when planning to relocate from Israel to another country to minimize their exposure to expatriation tax?

"Planning is crucial for minimizing expatriation tax liabilities. Individuals should seek professional advice before their planned move to understand the tax implications and explore potential strategies. For instance, timing the realization of gains or income before emigrating can be beneficial. Understanding the tax treaties between Israel and the destination country can also help structure assets and income to optimize tax outcomes".

Finally, how do you see the future of expatriation tax evolving globally, and what trends or developments should individuals be aware of?

"The trend towards stricter enforcement of expatriation tax will likely continue globally. Countries are increasingly focused on preventing tax evasion and ensuring their tax base is protected, especially with the rising mobility of individuals across borders. Individuals should stay informed about changes in tax laws and regulations in their home and destination countries to manage their tax obligations when relocating effectively", concludes Israeli tax lawyer Doron Levy.

In conclusion, the expatriation tax is a significant consideration for individuals moving across borders. By understanding the nuances of this tax concept and leveraging professional advice and strategic planning, individuals can navigate expatriation tax more effectively and optimize their tax outcomes when relocating internationally.

Lawyer Doron Levy / Photo: Shay Ben Senior
Lawyer Doron Levy / Photo: Shay Ben Senior
Tax lawyer Doron Levy / Photo: Canva Tax Lawyer Doron Levy on Residency: What Taxpayers in Israel Should Know

Head of Amit, Pollak, Matalon & Co. Tax and Class Action practices: "Effective tax planning and seeking professional advice are crucial to navigating the complexities of international tax laws”

Lawyer Doron Levy / Photo: Shay Ben Senior Israeli tax lawyer Doron Levy: “Countries are increasingly focused on preventing tax evasion”

The Amit, Pollak, Matalon & Co. (APM) law firm senior partner offers valuable insights into the intricate aspects of expatriation tax, emphasizing the significance of meticulous planning and seeking professional guidance for individuals contemplating relocation overseas

Credit: JDC Strengthening and Supporting Mental Health and Wellbeing

The current reality requires expanding the basket of solutions to further bolster Israeli citizens' mental resilience • Formulating policy, developing evaluation metrics and extensive use of technologies - may help • The Joint-Israel (JDC) is already operating in that direction in collaboration with additional partners

Credit: Ram-Mograbi-Arditi Opportunity During Turmoil: Tel Aviv's Real Estate Appeal

Amidst challenges, Tel Aviv thrives with a resilient spirit, drawing global investors with its tech prowess, strategic planning, and enduring real estate potential

From left to right:  Ilan Rubinstein and Gerson Schapiro, Ruby Capital \ Credit: Arik Sultan "Our international expertise enables us to feel comfortable investing in the local market"

Ilan Rubinstein and Gerson Schapiro, two of the three founders of real estate financing firm Ruby Capital, recently sat down with us to discuss entrepreneurship, global experience, and the compelling reasons to invest in Israel. During the interview, they shared their insights into Israel's real estate market, expressed their belief in its potential, and spoke about their sense of corporate responsibility

Kyiv, Ukraine / Credit: Shutterstock Israeli companies will be able to benefit from the hundreds of billions of dollars that will be poured into the restoration of Ukraine

The war in Ukraine still goes on, though at a low intensity. This is exactly the time for Israeli real estate, energy, infrastructure, communications, and healthcare companies to consider entering a country that will be desperate for international aid during its rehabilitation process

Adv. Doron Levy responses on the Arrangements Law: “There has been an attempt to reduce the uncertainty for investors and companies with respect to their tax payments”

The government has published an amendment draft bill for the Arrangements Law with effect to the Income Tax Ordinance, VAT Law, Real Estate Taxation Law, and more • Adv. Doron Levy details the propositions – and explains how to best prepare

"Businesses have a strategic role in promoting socio-economic change in Israel"

The business sector is becoming an increasingly central part of tackling Israel’s socio-economic challenges. JDC Israel has developed models that will enable any company, large or small, to make an impact.

"Dreams by BMBY" - creating love from the first site

It’s a simple but powerful axiom that people buy when they "fall in love". They buy passionately, emotionally, and expeditiously. Similarly, the difference between falling in like and falling in love is the most critical factor in determining whether a sale will be made.

100% commitment to net zero emissions

Energean was the first gas production company to commit to zero CO² emissions by 2050, inter alia using the unique Green Prinos method that returns the CO² deep into the ground

Community partnership, creative innovation and how they lead to disease reduction

Whether in Israel, Africa, Europe, or America, we all share a childhood dream of changing the world. We often dream about being doctors, fire fighters, or superheros and making the impossible, possible. As we grow up, these dreams often dissipate and fade away. But NALA’s dreams are a reality and as each project comes to fruition, the world becomes a better place.

Photo by CANVA Art Investments – The Beautiful Side of Asset Allocation

“Diversification and patience are two key elements for understanding Art Investments” says Ofer Levin financial strategist and art collector

Source: Shutterstock How to sell to 100 enterprise clients in less than a year

Put the exit dream aside. Every startup aspires to accumulate a large number of enterprise customers - the kind whose logo, when posted on the site, would display a kind of "industry standard” and identify them as a reliable market-leading company. About half of startup companies fail at this task - how can they succeed in their own right and sell their services directly to enterprise-level organizations?

credit: freepik The Coronavirus hurts the real estate market. Meet the technology that offers a solution

“bmby”, an Israeli company from Yokneam, has developed a unique technology for selling apartments online without the need to leave home. The company was selected as one of 20 promising technology companies in the US real estate industry for 2019 by CIO Review Magazine.

Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018