Income Tax|Taxpayer|Tax Authority|Center of Life
Dr. Avi Nov, Adv.
In a recent Israeli tax case, Michael Sapir vs Kfar Saba Assessing Officer, the Tel Aviv District Court ruled that it is possible to establish Israeli Tax Residence Separately from the Wife. The decision against the Israel Tax Authority was delivered by Judge Magen Altuviah.
See also: Israel new Case Law on Tax Residency: The Supreme Court affirmed the ruling of Tel Aviv District Court .
Israeli residency for tax purposes
According to the Israeli Income Tax Ordinance, an individual is defined to be an Israeli tax resident if his Center of Life is in Israel, taking into account various considerations (such as the location of a permanent home; 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), including the place of residence of the individual and his or her family.
In the Sapir Case, the taxpayer left Israel (with his family) to work in Singapore in the years 1994-1998. In the year 2001, he returned to live and work in Singapore as an engineer, his Center of Life was there, but without his wife who continued living and working in Israel.
The taxpayer had a few links to Israel. His wife continued living in an apartment in Israel that the couple owned. Another apartment they jointly owned, was rented out. The taxpayer's pension in Israel was paid into a joint bank account of the couple.
On the other hand, the taxpayer also had strong links to Singapore, mainly:
The Ruling by the Court
The Tel Aviv District court ruled that for the years 2002 onward, most of the taxpayer's ties were to Singapore, his Center of Life. The court further ruled that although his wife’s decision to maintain her center of living in Israel, he chose to maintain his center of living in Singapore. The fact that they are married cannot weigh against all the other ties. The trips of the taxpayer to Israel do not make Israel his Center of Life instead of Singapore. Consequently, the court ruled that the individual had proved his Center of Life in Singapore, and he was a Singapore resident for tax purposes.
Dr. Avi Nov Law Offices, Israeli & international tax law
*This article is intended for informative purposes only and is in no way to be construed as tax advice or a legal opinion