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Israel - Special considerations for short-term assignments

Special considerations for short-term assignments

Taxation of international executives

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Residency rules
Payroll considerations
Taxable income
Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 1 year.

Residency rules

Are there special residency considerations for short-term assignments?
 

Special residency considerations for short-term assignments focus mainly on the assignee insuring that they do not become an Israeli resident. Residency in Israel is determined mainly by the center of vital interests test. Therefore, it is advised that special care be taken not to cross the threshold of the center of vital interests as an Israeli resident.

Payroll considerations

Are there special payroll considerations for short-term assignments?

No.

Taxable income

What income will be taxed during short-term assignments?
 

If there is a double taxation treaty between the two countries/jurisdictions, it is possible that there will be no taxation at the host country/jurisdiction. Common requirements for being taxed only at the home country/jurisdiction of the employee include, among other things, the employee is present in the other state for a period or periods not exceeding in the aggregate 183 days in the fiscal year concerned, the remuneration is paid by or on behalf of an employer who is not a resident of the other state, and the remuneration is not deducted from the profits of a permanent establishment.

Additional considerations

Are there any additional considerations that should be considered before initiating a short- term assignment in Israel?

No. 

Levy on employers of foreign workers

Included in the 2003 Economic Plan is a levy on those who employ foreign workers. The tax on the employer is 20 percent of the total income paid to the worker. A reduced levy of between 10-15 percent is imposed on foreign workers employed in specific fields.

Additionally, there are certain categories of employees, regarding whom there is an exemption, for example, those who are employed as caregivers, foreign journalists, foreign athletes, and those foreign workers whose monthly income is equal to or above twice the average salary in Israel.

Disclaimer

All information contained in this publication is summarized by KPMG Somekh Chaikin, the Israel member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. The information contained in this publication is based on the Israel Tax Ordinance (New version) of 1961 as well as subsequent amendments; Income Tax Regulations (Salary from work rendered outside of Israel) 1982; Income Tax Regulations (Deductions for staying expenses of non-residents) 1979; Income Tax Regulations (Deductions for specific expenses) 1972; the Website of the Israeli National Insurance authorities.

Copyright

© 2020 KPMG Somekh Chaikin, the Israel member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.

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