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Did anti-Semitism bring you back from relocation? Get a Returning Resident Guide - Walla! money


Highlights: Rising anti-Semitism causes Jews to immigrate and ex-Israelis to return. Since the outbreak of the "Iron Swords" war, about 300,000 people have returned to Israel. Israel has become a very interesting playground for investors, both from a Zionist perspective to invest in Israel and as an insurance policy for them or the next generation. The basket of benefits that returning residents are entitled to is rich in small clauses, the term returning resident is not uniform for everyone who returns.

The war, which is accompanied by manifestations of Israeli patriotism on the one hand and anti-Semitic demonstrations on the other, pushes Jews and Israelis who left the country to immigrate or return to Israel. In their favor, here is a brief tax guide

And Israelis returned to their borders? Rising anti-Semitism causes Jews to immigrate and ex-Israelis to return/ShutterStock

At a time when demonstrations against Israel around the world are intensifying, alongside a sharp increase in the number of anti-Semitic incidents around the world, many Israelis and Jews prefer to return to Israel, despite the war whose end is not soon to be seen.

Adv. Liat Caesarea, Head of the Private Clients Department at Barnea Jaffa Landa Law Office, identifies among her clients a broad trend of people who want to return to Israel and purchase residential apartments. Sometimes also for their children, who were not born in Israel but experience firsthand the widespread phenomena of anti-Semitism and wish to settle in Israel. Caesarea explains that the large mass comes mainly from countries such as the United States, England and Australia.

"Most of my clients are people, most of whom have international businesses, and I can tell you that the sweeping trend to immigrate to Israel until now has been mainly due to all kinds of local decisions in England, for example, at a time when it was feared that Corbyn [leader of the Labour Party, a supporter of Hamas] would come to power, and other specific events in various countries that affected Jewish communities.

"In the past month, there has been growing interest in purchasing apartments in Israel and increasing real estate investments, especially since this is a period when the shekel weakened and the dollar strengthened. Israel has become a very interesting playground for investors, both from a Zionist perspective to invest in Israel and as an insurance policy for them or the next generation."

Even if the depreciation of the shekel has been halted, the value of the Israeli currency has returned to what it was before the war, it is still an improved exchange rate for those holding dollars, compared to what it was until a year ago, for example.

"Since the war began, we have been receiving inquiries from Jews interested in buying an apartment, although at this stage it is still too early to conclude how many of them may sign a contract," addsDror Toren, CEO of America Israel Residences. "This time it is surprising to see that Diaspora Jewry is also interested in buying an apartment in less obvious marketing areas such as Tel Aviv or Jerusalem as an example, but in the clear periphery, and the reason for this is that they are interested in purchasing an apartment with a residential option and not just as an investment.

A number of macro factors are added to the current situation around the world, such as the rise of the dollar and euro against the shekel (see above on the same subject. T.L.), which is equivalent to a discount of 10-15 percent in the absolute price of the apartment in terms of the buyers' local currency. Alongside the fear for their lives in foreign countries, and their desire to purchase a residential apartment or, as some define it, 'an apartment for you to know,' the purchase of an apartment in Israel also has an element of Zionism, since such an acquisition also contributes to the Israeli economy."

Adv. Liat Caesarea, Head of the Private Clients Department at Barnea Jaffa Lande/Nimrod Glickman Law Office

The one that goes up

The Population Authority reports that since the outbreak of the "Iron Swords" war, about 300,000 people have returned to Israel, a considerable number, and probably not strictly final, some of them returning residents who went on relocation and decided to return, and others who have lived overseas for many years and even severed residency from the State of Israel. However, the basket of benefits that returning residents are entitled to is rich in small clauses, the term returning resident is not uniform for everyone who returns to Israel, and in Israel, as in Israel, a little order is required in the mess:

"You have to distinguish between two groups of Israelis who return to Israel," explains attorney Amos Rosenzweig, special counsel at Barnea Jaffa Lande, former chief legal advisor of the National Insurance Institute. "The first group talks about people who have traveled for less than five years, without severing the residency connection between them and the State of Israel. Among them are people who went to school, on a long trip or for one reason or another, and the same person still has other connections such as home, family, etc. in Israel."

Severing a residency relationship may happen in cases of long relocation or immigration, so as not to pay double insurance, what happens if someone does take these measures?
"The meaning of 'severance of residency' is that the person does not have to pay insurance premiums but is also not entitled to benefits from the National Insurance Institute, and more significantly, medical insurance. The severance of residency is done actively by signing a declaratory document, but it is possible for that person to return as a returning resident, of course – as long as he meets a number of clauses."

Rosenzweig explains that up to a decade after leaving, a person can express his desire to be a returning resident, "and there is also some flexibility here. However, it should be a clear decision backed by objective and subjective indicators.

What does this mean? If you decide to take the step and return to Israel, you will need to show that you have taken real steps that will indicate that you do intend to leave, such as changing jobs, selling an apartment, whether you enrolled your children in school in Israel, sent a transport container, etc. The test of return to Israel is important because there are cases in which people consider returning, sometimes receive benefits, but do not actually make the move because in the end the difficulties of reabsorption are not simple."

In order to receive the grants, the burden of proof is on the applicants
"They want to see that this is an action in practice. As soon as he took the action and passed the test, he was given social security status, which is defined as a returning resident. When considered a returning resident, he is entitled to the National Insurance Institute's support network. And why is this so important? Because the first thing people look for is medical insurance if, God forbid, they or their families get caught up in a medical issue. They want to know they have coverage."

How bureaucratic is this preoccupation?
"Any contact with state authorities involves bureaucracy, but the main barrier for most returning residents is mainly a psychological barrier and in most cases it is not real because many of the benefits that are given are given automatically. Sometimes there is a need for a process of proof, etc., in situations where it is not certain that the matter of relocation is certain."

Are returning residents who have severed residency eligible for insurance from the moment they return?
"In such cases, it is important to know that there is a training period. A waiting period in which a person pays a premium for six months and only after the end of the period is he entitled to full insurance coverage. Of course, alongside medical insurance, there is a network of allowances relating to children and senior citizens. Child allowance for each child, savings for each child and, if he is of the right age, a retirement grant."

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Adv. Amos Rosenzweig, Special Counsel at Barnea Jaffa Lande, Former Chief Legal Advisor of the National Insurance Institute/PR

Seniority Test

Rosenzweig qualifies the issue of the retirement grant for returning residents of pension age, since here too there is a training period. "The law says that in order for a person to be eligible for a senior citizen's pension, he must accumulate a period of 12 years in the National Insurance Institute. Not many people know that even if continuity is not maintained, those residents are entitled to a pension. If, before leaving, that citizen accumulated 12 years in the National Insurance Institute, he is entitled to a senior citizen's pension."

And if not?
"If a person does not have a training period, there are two special squads in the National Insurance Institute that give him a special old-age pension, intended mainly for new immigrants who do not have the necessary training. A type of income supplement allowance, of course, that is granted only to those who pass income tests and need it."

So let's assume that someone still wants to leave the country at this particular time, I understand that severing residency is not something you should rush to do right, and it is very important to emphasize this, and there was already an extreme case of a family that left several years ago due to the events of the Intifada to
France, and as fate would have it, it arrived in Toulouse where there was also a serious terrorist incident. Of course, in this extreme case, a solution was found for a family that actually severed their residency from Israel, but it is very important to pay attention to this."

As mentioned, people do this mainly to avoid double payments
" It is worth noting that in some countries there is a treaty thanks to which there is no need to pay double insurance premiums, that is, both in Israel and in the same country. The problem begins when people don't want to pay the double insurance premiums, but if, God forbid, a health or medical event happens and they want to use the good services of the Israeli health system, they are not covered, so all parameters must be considered before making a decision."

Alona Meron, Partner, Head of Tax at Deloitte/Adi Cohen Zedek

Returning residents

Not only social security and state grants, but also many tax benefits go to returning residents. "The benefits package for new immigrants and returning residents was expanded as part of a reform enacted about 15 years ago as part of Amendment 168, which was intended to encourage immigration and return to Israel and facilitate the transition," explains Alona Meron, partner, head of Deloitte's tax division.

"However, while immigrants and long-time returning residents are entitled to a package of benefits and reliefs almost identical for tax purposes, the benefits package for returning residents is different, and includes smaller benefits and concessions."

According to Meron, here too there are two groups of returning residents. "Returning residents are those who were previously residents of Israel, and here a distinction is made between those who returned to Israel after at least 10 consecutive years of being foreign residents, and who are defined as long-time returning residents, and those who returned to Israel after staying outside Israel for at least six consecutive years and who are defined as returning residents."

Main Benefits Package for Returning Residents includes tax exemption on all types of income generated or earned outside of Israel for 10 years, including exemption from reporting to the tax authorities during the period.

"The exempt income includes income from business or work and occupation, as well as passive income such as rent, dividends, royalties and capital gains from the sale of assets abroad. It is important to emphasize that the application of the benefits also applies to assets purchased or activities that began after the individual's immigration or return to Israel.

It is also important to remember that in the case of a business or occupation, work performed in Israel is not exempt from tax or reporting under any circumstances. Long-time returning residents or new immigrants who work in Israel are in most cases liable for full tax on the work performed from Israel, unless part of the work was produced outside of Israel and for which it is possible to request to split the income for the total number of working days abroad relative to the total working days during the entire period, to an exempt part and a taxable part."

What about tax benefits for returning residents who are not veterans, such as young people who left and returned before a period of time or families who return to Israel?
"Returning residents who enter into the application of the status of 'returning resident' (and not a returning veteran resident) are offered various benefits in respect of foreign assets acquired during their stay outside of Israel, such as tax exemption on income from annuities, royalties, rent, interest and dividends for 5 years, as well as tax exemption on certain capital gains for a period of 10 years, and more."

Meron notes that since the Tax Authority recognizes the fact that the decision to relocate the center of life is a complex decision, an adjustment year mechanism has been established in certain cases, such as new immigrants and returning residents. "In such cases, it is possible to request an adjustment period of one year from the date of arrival in Israel, during which they will continue to be considered foreign residents. The application must be submitted within 90 days of arrival in Israel, which will allow you to choose not to be considered an Israeli resident for tax purposes during this period."

  • More on the subject:
  • Returning residents
  • Relocation
  • War in Gaza

Source: walla

All business articles on 2023-12-02

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