LOOKING FOR A TAX REFUND? WE’RE ON THE JOB!
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Insights:
Foreign nationals working in Israel under a “Foreign Expert” work permit for a defined and short period of time are typically considered as Non-residents of Israel and therefore may be eligible, themselves or their employers, to substantial tax refunds from the Israeli tax authority for the following reasons:
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Deductions for housing, utilities and per diem expenses during the first 12 months of stay in Israel
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Tax withholding, which is obligatory in Israel, is done on a monthly basis using monthly tax brackets and therefore, working only part of the year may generate a potential refund
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According to the Israeli tax law, Non-residents are taxed on Israeli source income only and with regards to salary income, what relates to work days physically performed in Israel are taxable therefore, working part of the time outside of Israel or frequently travelling abroad for business trips – that portion of the overall compensation may be exempt from tax in Israel
Services:
Considering the above, the only possible way to obtain taxes over withheld at source through the Israeli payroll is by filing an individual tax return and claiming back the eligible tax refund from the Israeli tax authority.
Our group has substantial experience with filing Foreign Experts tax returns, accompanying the individual through the filing process and discussion with the tax authority if necessary until the tax refund is wired to the taxpayer's bank account.
We provide solutions in several types of services
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Preparation and filing of individual Israeli tax returns
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Processing payroll reporting and withholding
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Representation and discussions in front of the Israeli tax authority through routine tax audit
Israel has entered into a totalization agreement (treaty for social purposes) with several countries while resident individuals of a treaty country (Non-Israeli Citizens) may be exempt from Israeli social security tax if they have a Certificate of Coverage from their home social authority!
Nevertheless, foreign nationals are not covered by the Israeli governmental medical scheme.
New Immigrants ("עולה חדש") and Veteran Returning Residents ("תושב חוזר ותיק") are exempt from Israeli income tax on foreign source incomes and therefore, salary for workdays abroad may be exempt from tax in Israel, even if paid by an Israeli employer. In the same manner, trailing income such as bonus or equity income which vested fully or partially while working outside of Israel should also be exempt from Israeli taxes.
Our group may assist foreign entities with establishment of local payroll in Israel for its local or foreign nationals working in Israel. It is possible to run actual or shadow payroll in Israel as tax withholding is obligatory in Israel.
in case of under withholding of Israeli taxes through payroll on regular salary or trailing income such as bonus or equity, filing a tax return may be necessary to pay the tax liability.