Israeli Tax Residence Separately From the Wife

 Income Tax|Taxpayer|Tax Authority|Center of Life

Dr. Avi Nov, Adv.

July, 2013

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.

The Facts

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:

  • He rented an apartment in central Singapore for more than 10 years;
  • He was considered as a permanent resident of Singapore by the authorities and classified as a Singapore resident;
  • He started his own business in Singapore through a Singapore company;
  • He had a private bank account in Singapore;
  • His company had a bank account in Singapore;
  • He paid money into the mandatory Singapore retirement-fund system;
  • He took out medical and other insurance in Singapore;
  • He had strong ties with Singapore;
  • He built up a circle of friends and contacts there;
  • He played tennis and golf there several times a week at sports clubs and participated in tournaments;
  • He was active in the Singapore Jewish community and central Synagogue. 
The question - where is his Center of Life? The Israel Tax Authority claimed that the individual was fiscally resident in Israel in the years 2001-2005, due to various facts but mainly that his wife lived in Israel in those years and that his Center of Life was in Israe. The Israel Tax Authority claimed that the individual’s absences from Israel were all temporary.

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.

See also:

Israel Case Law

Israeli residence certificates

Israeli residency: New Israeli Tax circular

Israeli Tax Ruling on Residence

Israeli Resident for Tax Purposes: The AK case 

Israeli Tax Law on Residency


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

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