The principles of taxation in Israel differ from those adopted in other countries, although they are based on the principle of residence. Income taxes are levied on a personal basis regardless of source of origin. Non-residents pay taxes in Israel on a territorial basis, that is, only those received from Israeli sources. Let's figure out what types of taxes exist in Israel and what are the features of their payment in 2021.
Features of the Israeli tax system
Historically, the Israeli tax system was formed on the principles of the British tax model. Quite high taxes have been approved here, sometimes exceeding 50 percent of the tax base. However, paying taxes is considered a duty of every Israeli. In addition, for repatriates, who are the majority in Israel, extensive tax breaks are provided, which we will discuss below.
Taxation in Israel is based on the residence principle. At the same time, to determine a person as an Israeli resident, not only quantitative, but also qualitative indicators are used.
Thus, in general cases, a resident is recognized as someone who stays in Israel for 183 days a year or 30 days in the current year, which, taken together with the previous two years, gives a total of 425 days of stay.
If in 2021 a person does not meet the specified criteria, but wants to purchase a residence and pay “mas akhnasa” (personal income tax) in Israel, the state allows him to challenge the quantitative and apply the qualitative criterion - the center of life. In this case, family ties, the location of the taxpayer’s personal property, the geography of economic interests, and so on are checked.
As in other countries, income earners in Israel are required to file a tax return annually. More on the procedure for declaring income later.
What are the taxes in Israel?
Taxation of Israeli and Russian citizens who are Israeli residents is carried out according to a two-tier system: the country has both state and municipal taxes. State taxes include all income taxes, customs duties, value added tax, land sales tax, and so on.
“Arnona” belongs to the municipal ones. Not everyone knows what “arnona” is in Israel: it is a type of municipal tax that replaces the unified real estate tax. It finances the activities of local authorities.
In addition to territorial differentiation, Israeli taxes are traditionally divided into direct and indirect. Direct taxes are those levied on profits or capital gains, adjusted for a person's ability to pay. For example, the same income tax in Israel or any property tax. Typically, such taxes usually take into account the personal characteristics of the taxpayer, such as marital status, age and health.
Indirect charges usually include charges that burden consumption or costs already incurred. A classic example of an indirect tax is VAT.
In addition, fees can be differentiated depending on the payer: they are paid by both individuals and legal entities.
Taxation of individuals
Taxes for individuals are determined by the composition of the property and the types of activities of the subjects. As a reminder, Israeli residents generally pay taxes from both Israeli and foreign sources.
| Type of tax | Bid | Note |
| Income tax | 10-50 % | Income tax in Israel is levied at a progressive rate within 7 steps, applied depending on the level of welfare of the payer. |
| Tax on dividends | 0.25 | For some government-approved dividend-paying entities, the tax rate is set at 15-20%. |
| Tax on interest income | 0.25 | Interest income from investments in listed securities is taxed at a rate of 15%. |
| Royalties (income from the sale of the right to use intellectual property) | 0.265 | |
| Rental income tax | 31-50 % | A progressive scale is applied depending on the amount of income received. Preferential rates of 10% on residential apartment rentals in Israel also apply |
| Car tax | ≈ 92 % | The car tax in Israel depends on the cost of the vehicle. |
| Municipal tax "arnona" | Set as a fixed amount by each municipality separately | It is paid in the form of a derivative tax rate per 1 m 2 of housing and its area. For example, in Tel Aviv and Bat Yam it is 49 shekels, in Haifa 63 shekels and so on. |
| Dog tax | 338 shekels | The dog tax in Israel is collected exclusively for unneutered pets. |
Taxation of legal entities
Companies are also tax payers. The types of taxes paid by enterprises depend on the type of their activities. Let's look at the most common ones.
| Type of tax | Bid | Note |
| Corporate income tax | 0.23 | A preferential tax rate is applied to partnership participants, which is 15% of the profit of each partner. |
| VAT | 0.17 | For certain areas of activity, the VAT rate in Israel may be changed, for example, for real estate and tourism. |
| Tax on the purchase and sale of land | 0.025 | + 1.2% is charged for the purchase of buildings on land |
| Insurance premiums | 0.125 | Paid on the employee's salary as a pension contribution |
There are no taxes levied on companies involved in agriculture.
If you have an Israeli passport and live in Russia, what taxes should you pay to Israel?
- Teudar Zehut is a domestic identification document. For citizens it is blue, for non-citizens it is orange-pink.
- Teudat ole is a certificate issued by a repatriate until he receives permanent citizenship.
- Teudat maavar is a temporary document for leaving Israel for those who do not have a foreign passport (“lesse pass”).
- Darkon is an Israeli citizen living abroad.
That’s right - they lived in our country - the USSR, Russia - they worked here, created with us what we now successfully eat and live from, paid taxes, like everyone else, and in accordance with their work experience in our country, they have the right to an appropriate retirement pension .
According to the amendments to the text of the Federal Law “On Citizenship of the Russian Federation” dated May 31, 2002 No. 62-FZ, everyone who has a passport of another country and who has not previously reported this to the migration service was required to do so by October 2, 2014. Persons who violated the requirements regarding the deadlines for notifying the migration service or provided false information will have to bear an administrative penalty in the form of a fine.
This is also not so simple. theoretically, there is a right to medicine. Practically, without being a member of the health insurance fund, this whole process becomes expensive, tedious and lengthy. Moreover, the national insurance does not provide medical services or health insurance. that is, in the event of an emergency or illness, everything will be very expensive and difficult.
My previous colleague answered me absolutely correctly. You will be able to leave for Russia completely freely, only Israeli citizens can enter the territory of Russia without visas. And then, from the territory of Russia you will need to leave the territory of Russia using your passport from an Israeli citizen, and travel to the territory of Ukraine using a foreign passport of a citizen of Ukraine, regardless of whether that it is expired - you will be able to leave for Ukraine in any case, since on the territory of Ukraine you are only a citizen of Ukraine. And after entering the territory of Ukraine, you will be able to extend the validity of your Ukrainian foreign passport there.
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Real estate taxes
Property taxes primarily refer to property taxes in Israel. The main tax levied on property owners is the Arnona. Its size is set by the municipal authorities in the form of a fixed rate in shekels per 1 m2 of housing per year.
The highest rate in Jerusalem is 74 shekels/1 m2 per year, in Ramat Gan - 64 shekels, in Haifa - 63 shekels. This tax is the main source of replenishment of local budgets.
Taxes on the sale of an apartment may be levied on both buyers and sellers. For example, when purchasing a home, if the transaction price is above NIS 1,623,320, the buyer is charged “mass rechisha” in the amount of 3.5% of the price. The tax is progressive and can reach 5% if the property is more expensive than 1,925,460 shekels, and even 10% for home buyers more expensive than 1,6558,150 shekels.
Sellers, if the cost of an apartment sold earlier than 4 years of ownership exceeds the cost of its purchase, are charged “mas shevah” - a profit tax. Tax calculation depends on many indicators and is carried out by a separate department of the tax service.
Another tax is “etel ashhaba”, the so-called improvement tax. Charged to property owners and long-term tenants who have made improvements that increase the value of the property. This may include reconstruction, repairs, and other improvements that significantly increase the cost of housing.
Other types of jurisdictional duties
- Property tax in Israel
. When purchasing housing, the amount of deduction depends on its value; if the transaction price exceeds $1 million, the state must pay 10%. The same applies to the purchase of land. A municipal fee has been introduced for the ownership of real estate, which is transferred monthly and depends on the area, type and location of the property. The minimum contribution amount is 200 shekels. - Collection for TV
. It was provided for everyone in the amount of 379 shekels per year. Pensioners could use telecommunications services for free. The duty was abolished in 2015. - deductions for inheritance
, as well as penalties for donations or transfers of property rights.
If you want to sell a real estate property located in the country, it is worth considering that the transaction is subject to a capital gains tax. An additional rate may be charged if the seller owns two or more properties.
Taxes from salary
The vast majority of the working population pays taxes on their salaries in Israel. These primarily include the income tax “mas akhnasa”, calculated monthly by the tax agent-employer.
The basic personal income tax rate is 10% of the salary of 6.22 thousand shekels and increases as the salary increases.
So, for an amount exceeding 6.22 thousand shekels. and up to 8.92 thousand shekels. - 14 %; for an amount exceeding 8.92 thousand and up to 14.32 thousand shekels. - 20 %. The next steps are 31, 35, 48 and 50% depending on the salary.
In addition to income tax, employees pay Bituach Leumi insurance premiums and health insurance contributions from their salaries. They can be charged in full or a reduced amount (determined by the size of the salary).
Thus, the cumulative reduced amount of these contributions from the employee is 3.5% (+3.45% from the employer), and the full amount is 12% (+7.5% from the employer) of the salary. In addition to them, contributions to the pension fund are levied in the amount of 6% of the salary (+12.5% from the employer).
Minimum salary in Israel
According to the laws of the country, the minimum salary is determined by the age of the employee (under 18 years of age or over 18 years of age), as well as the form of payment for his work (fixed rate, piecework or hourly work).
The minimum wage per hour is 26.88 shekels (7.73 US dollars). For work hours up to 43 hours per week, the minimum possible rate will be NIS 5,000 ($1,438). For an employment contract with a five-day work week, the daily income cannot be less than 230 shekels ($66.12). For a contract with a six-day work week, the daily income cannot be less than 200 shekels ($57.49).
About 20% of the population lives below the poverty line. The largest number of poor people are unemployed Orthodox Jews, as well as the Arab population.
Double taxation with Israel
Since Israeli residents pay taxes from sources around the world, this may result in unnecessary double taxation in both Israel and the country of source of income. To avoid such violation of the rights of Israelis, the state has entered into special agreements with many countries to avoid double taxation.
The following states have signed an agreement on avoidance of double taxation with Israel:
| A country | From when does it apply? |
| Austria | January 1, 2021 |
| Ukraine | January 1, 2007 |
| Italy | January 1, 1999 |
| Estonia | January 1, 2010 |
| USA | January 1, 1995 |
| Belarus | January 1, 2004 |
| Great Britain | January 4, 1961 |
| Georgia | January 1, 2012 |
| Germany | January 1, 2021 |
| Netherlands | January 4, 1970 |
| Hungary | January 1, 1993 |
| Greece | January 1, 1999 |
| Norway | April 1, 1965 |
| Spain | January 1, 2001 |
| Czech | January 1, 1995 |
| Russia | January 1, 2001 |
A complete list of countries that have signed an agreement with Israel can be found at.
General information about the UAE
The UAE has earned worldwide popularity due to the fact that it is one of the countries with the best conditions for doing business. An advantageous geographical location, a rapidly developing economy, the absence of exchange controls, the possibility of registering a company with 100% foreign participation and much more make the UAE an ideal place both to start your business activity and to develop it. The UAE is also perfect for anyone looking for a convenient country to live in.
Taxation plays a vital role in the UAE's attractiveness. While taxes are rising all over the world and their rates are frightening, in the UAE there really are practically none. To understand why there are almost no taxes in the UAE, let’s remember a little about legal regulation in the Emirates.
In the UAE legislative system, there is no single document as such that would clearly regulate the concepts of taxes, their principles and payments. Instead, each UAE emirate has separate regulations to deal with this issue. Since the UAE is an Islamic country, Sharia law applies in this country. Based on this, in the UAE you may not find the usual types of taxes. Taxes in the UAE are not the same as in other countries, and many of them are simply non-existent.
Let's look at several tax categories separately.
Tax benefits for repatriates
During the first 10 years of residence after repatriation, Jewish immigrants are exempt from taxation of income received from foreign sources (real estate, securities, rent, etc.). In addition, other tax benefits are provided for repatriates, for example:
- personal income tax discounts for the first 3 years of residence in accordance with the system of preferential units (3 units during the first 18 months, 2 units during the second year and 1 unit during the 3rd year), amounting to NIS 2.58 thousand;
- exemption from paying income tax on foreign currency savings for 20 years after repatriation;
- exemption from tax on pension savings;
- tax exemption for foreign owned companies.
In addition to repatriates, other categories of the population are also entitled to tax benefits, including:
- with small children;
- low income;
- separate categories;
- loans for laid-off workers;
- with disabilities and others.
Tax payment procedure
Most Israeli residents who are employees are not required to pay income taxes themselves: when it comes to wages, their tax agents are employers or other persons who pay them a regular income. They withhold the tax amount and transfer it to the treasury every month on the 15th.
For self-employed persons, income tax is calculated based on the annual income approved by the tax authorities based on the submitted declaration. Tax payment is made only after the end of the tax period, taking into account monthly advance payments made.
As for property taxes, they are also paid by property owners themselves within 60 days from the date of the transaction. Payment is also allowed. If it later turns out that the citizen overpaid, the tax department will take part of the money.
Filing a declaration
All income tax payers are required to submit an annual personal income tax return to the tax service in the prescribed form. The official tax service in Israel will help you find the one you need and send the report.
Anyone whose annual labor income is lower than 643 thousand shekels is exempt from the obligation to file a declaration. The procedure for filling out a tax return can also be found on.
All declarants are required to submit their reports by April 30 of the year following the reporting year:
- The annual report is submitted electronically.
- To fill it out, you can use the tips on the site.
- The tax will be calculated based on the entered data.
- After this, the declaration is printed and handed over to the tax expert along with documents and attachments.
- After the final inspection by the tax authority, the declarant makes an additional payment of tax (if necessary).
VAT refund for foreigners
Like many other countries, Israel has a tax-free system - a refund of VAT to foreign tourists when exporting purchases outside the country. Moreover, VAT is not included in the rental of transport and guide services, there is no VAT in Israel when booking a hotel and when staying in a hostel, when organizing excursions and meals organized in travel companies or in hotels. VAT cannot be refunded for these services, since it is not added to their cost.
All other purchases exported abroad and made in stores with a special mark (TAX REFUND) allow you to return the tax using the tax-free system.
You can only get a full VAT refund on a purchase amount of about $100. The higher the cost, the lower the return percentage. If we talk about the amount of tax free in Israel they start paying, then usually it is also 100 dollars: issuing a refund for a smaller amount does not make practical sense. So, for a purchase worth up to 100-150 dollars, they will return 15-17%, up to 250 dollars -13%, and so on.
When purchasing, in addition to the receipt, the buyer will need a special store form, which, along with the goods, will have to be presented at the border when leaving. If there is a TAX FREE sign on the store, this means that VAT has already been deducted and cannot be returned.
Please note that there is even a VAT refund for medical services in Israel: in practice, only one company issues it - Change Place; make sure the hospital has a contract with her.
Duty free
Having made purchases in duty free at Ben Gurion Airport, tourists and guests of Israel will not receive a VAT refund, since it is not included in the price.
