Restricted Stock Units under Israeli Tax Law

Dr. Avi Nov Adv.

October 2009

The grant of Restricted Stock Units (RSU) is not clearly regulated by the Israeli Income Tax Ordinance [New Version] 1961 (the "Ordinance"), as other forms of employees stock options regulated under section 102.

For more details see:

The taxation of employees’ option plans in Israel

Non-trustee option plans in Israel- Tax issues

Israeli Tax Authority decision

The Israeli Tax Authority issued a decision (Decision 139/06), in which the Israeli Tax Authority permitted RSU to be considered as options regulated under section 102 in the “capital gains route”.

That is to say that the gains derived from the RSU shall be subject to capital gains tax (25%), provided that the trustee held the RSU for at least 24 months. The ruling is contingent upon compliance with the other conditions stipulated in the Ordinance and in that ruling.

Please note that this summary does not discuss all the details of the pertinent laws, rules and regulations that may apply in this matter, and it serves to give you an overview of the legal situation.
 
Dr. Avi Nov Law Offices, Israeli & international tax law 

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*This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion 
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