April 1

Transition Arrangements for Israeli Beneficiary’s Trusts

Lior Pick, Adv. CPA TEP

I. General Overview

The Law to Change the National Priorities (Legislation Amendments to Achieve Budget Goals for 2013 – 2014) came into effect on August 1st 2013. The Taxes Chapter therein constitutes Amendment no. 197 to the Income Tax Ordinance (hereinafter: “the Law” and/or “the Amendment” and/or “the Ordinance”, respectively). Within the Law, the provisions of Chapter Four “B”, Part 2 to the Ordinance (hereinafter: “the Trust Chapter”) and the reporting duties stipulated in section 131 to the Ordinance were modified.

October 2

Tax Amendments in Israel for TRUSTS

(Amendment No. 197)

Lior Pick, Advocate, CPA (Isr.), TEP

On the 1.8.2013, the Law on Changes in National Priorities took legal force (meaning legislative Amendments for the National Budget for 2013-2014) which modifies Part 4 of the Israeli Income Tax ordinance (the “ITO”) and expands its reporting requirements regarding incomes of Trusts that Section 131 of the ITO is applicable to.

January 7

Foreign Resident Beneficiary Trusteeship in Israel

Lior Pick, Advocate (CPA (Isr.)) TEP

In accordance with the provisions of section 75J of the Ordinance, a “foreign resident beneficiary trusteeship in Israel” is a trusteeship in which, for the tax year, all of the following conditions are fulfilled, provided only that the conditions for classifying it as an “Israeli residents trusteeship” or a “trusteeship in accordance with a will” do not apply to it, as follows:

December 24

International Trust Fund in Cyprus

Lior Pick, Adv. (Auditor), member of International STEP Association, Israel

1. General Background

Cyprus is situated in the north-eastern region of the Mediterranean Sea and is its largest island. Cyprus population is around 700,000 inhabitants, the capital of Cyprus – Nicosia. The official languages are Greek, Turkish and English. The political system is based on the western-type democratic government with due respect to human rights. Flight connection with other countries is stable and, in addition, the country operates modern communication systems for telephony and mailing. ‬ ‪Cyprus is an international business center. The flight time thereto from Israel is only about 40 minutes. The country is a member of the European Union. Cyprus has signed a number of agreements on the prevention of double taxation which fact significantly reduces withholding of tax on dividends, interest and/or royalties that should be paid to Cyprus government. There is no agreement between Israel and Cyprus on the prevention of double taxation, and consequently there are no regulations on the data exchange between the two countries.