March 2012
The Israeli Tax Authority issued recently a tax circular entitled: Determining the date of ceasing to be Israeli resident and the date when a foreign resident becomes Israeli resident.
Center of life test
According to Israeli Tax Law the substantial test for determining the residence of an individual is the “center of life” test (see especially the Arieh Gonen – Income Tax case 5048/97). See also: Israeli Residence for tax purposes.
The center of life test includes, inter alia, the location of a permanent home; place of residence of the individual and family; place where the individual regularly works or is employed; location of active and material economic interests; place where the individual is active in various organizations, associations or institutions.
Israeli Tax Authority's circular
The Israeli Tax Authority's circular attempts to clarify the center of life test by citing 11 cases of residency tax rulings that it has has issued. There are various conclusions that arise from the Israeli Tax Authority's circular:
· If the wife and children live in Israel and the husband visits them for 125 days per year on average, he will be deemed Israeli resident.
· Visits to Israel to care for family members in a hospital will not in itself trigger Israeli fiscal residence for that person.
· Hospitalization of a person in Israel will not in itself trigger Israeli fiscal residence for that person.
· If a person relocates for at least three years with his wife to a country that has a tax treaty with Israel, they may be treated as foreign residents in that period.
