Should 35,000 Israelis start worrying that the Israel Tax Authority might knock on their doors in the near future? The Tax Authority has started to receive information from the US on Israelis who maintain accounts there and is examining whether all of them reported their incomes and amounts held as required.
In November and December 2016, under the FATCA (Foreign Account Tax Compliance Act) agreement with the US, data reported by Israeli financial institutions on accounts held by US residents or citizens for 2014 and 2015 was transferred to the US. Following this, the Israel Tax Authority recently received data relating to over 35,000 accounts held by Israeli residents in financial institutions in the US.
Holding an account overseas is not in itself an offence. An Israeli resident may maintain a bank account abroad, but must report to the Israel Tax Authority income deriving from it (dividends, interest, capital gains and so on). Those who have not reported as required can expect a visit from the Tax Authority.
Under the agreement signed with the US two years ago, the Israel Tax Authority will automatically receive information annually from the US Internal Revenue Service, as part of a global effort to bring about greater transparency and exchanges of information between national taxation authorities.
Obtaining information on Israeli residents with financial activity overseas under the FATCA agreement is part of a broader move for obtaining such information from many other countries under the Common Reporting Standard (CRS), which provides for automatic exchanges of information on financial accounts of foreign residents. CRS is an initiative of the OECD.
Last May, Israel Tax Authority director Moshe Asher signed an agreement implementing CRS under which Israel will exchange information with several countries on 2017 and up to September 2018.
Published by Globes [online], Israel business news - www.globes-online.com - on January 16, 2017
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