Repatriation from the Us to Israel: Practical Perspective

 

Agenda

  • Immigration Status in the US
  • Taxation&Social Security in the US
  • Taxation in Israel
  • Insurance in Israel
  • Custom Regulations in Israel
  • Leaving the US: To Do List
  • Arriving to Israel: To Do List

Immigration Status in the US: Non-Permanent Visa (L, E, H)

  • Check the validity of the L-1/E-1/H-1B Visa
  • Legally, you and the company needs to report to the USCIS at the end of the employment
  • Check the validity of the B-1 Visa
  • Make sure to use only the B-1 Visa upon your next visit to the US

Immigration Status in the US: Permanent Visa (Green Card)

  • Green Card is not valid for non-US residents
  • It is possible to apply for keeping Green Card up to a period of 4 years
  • Permanent Residency and tax liability in the US
  • B-1 Visa is required following Green Card

Taxation in in the US

  • End of Tax Residency Period – last day of presence in the U.S. in the year of transfer from the U.S. and establishing a tax home (principal place of work or employment) in another country.
  • IRS Departure Permit
  • W2: Apr of the year following repatriation
  • State Tax: Up to last day in state
  • 401(K)
  • Social Security – 40 quarters

 

Taxation – Israel

  1. Personal Taxation System
  2. Residential Tests
    “Physical Presence” Test (183/30+425 days)
    “Center of Life” Test
  3. Double Tax Treaty
    Permanent Home
    Center of Vital Interest
    Habitual Abode (regular place of residence)
    Citizenship
  • Toshav Hozer Definition
    For two years 183 abroad P.A.
    “Center of Life” outside for following 2 years

Israel: Tax Residency

  • Tax Residency considerations:

Physical Presence/Length of Assignment

Keeping a residency in Israel (long-term rental)

Purchasing a residency abroad

Economic and Social ties with Israel

Integration with local the community

Registration at Israeli institutes abroad

Visits to Israel

Working status with Israeli companies

Active bank/saving accounts

Active insurance programs

Immigration status in the destination country

Family members in Israel (spouse, children)

Israeli Taxation for Expatriates

  • Israeli Company (Celalim):

Special tax rates (48% > $53k)

Basic Tax Deduction (10%-50% of $4,128)

Accommodation Deduction ($2,500)

Education Deduction (up to $450)

  • Foreign Company (Takanot):

Regular tax rates

Per-diem ($120/$71+$112)

Education Deduction (up to $638)

  • IL – US Double Tax Treaty (Tax Credit) Capital Gains – Section 102
  • No Totalization Agreement
  • National Insurance – Passive Income

Taxation in Israel – Returned Resident (“Toshav Hozer”)

  • Definition: 3 yrs (left up to 31.12.08), 6 yrs (left after 1.1.09) outside Israel
  • Return Date: Intention to stay
  • Passive Income: 5 years exemption
  • Capital Gains: 10 years exemption
  • Approved Equities: exemption on profits from foreign equities purchased during assignment period

Taxation in Israel – Toshav Hozer Vatik

  • Definition: 10 years outside Israel (5 yrs on 2007-9), 8 yrs of non-residency
  • 10 yrs exemption from:

Passive Income

Capital Gains

Income from a Business

Income from Occupation / Employment

Taxation in Israel – Toshav Hozer Vatik (Cont.)

  • Additional Benefits:

Exemption from Reporting

New Assets/Activities

Adaptation Path (1 year)

Entities Residency

Insurance in Israel

  • National Health – Waiting period:

Absence – 183 days P.A.

Two months per year (pre-11/08) and one month per year (post 11/08)

Two to six months, 25 days per month

Redemption payment – 9,990 Nis

  • Complementary Medical Insurance
  • LTD Insurance
  • Life Insurance
  • Pension Savings

Custom Regulations

  • Previous Realization – 6 yrs in IL
  • Toshav Hozer: 2 yrs abroad
  • Exemption on

Furniture

Kitchen Appliances

Washing Machine

  • Car: 2 yrs old, 113% Tax
  • After 6 yrs – all appliances (beside appliances related to permanent installation)
  • Up to two shipments/9 months

MOIA Regulations

  • Toshav Chozer: 2 yrs abroad (3 years for scientists and business entrepreneurs).
  • MOIA Benefits

Flight Tickets

Additional weight

Employment Search

Income Security (Havtachat Hacnesa)

Financing Employment (public sector)

Artists

Scientists

Business Entrepreneurs

Leaving the US: To Do List

  • Medical papers
  • Car Insurance
  • Utilities disconnection
  • Bank Account
  • Leased Accommodation
  • School Records
  • Post Office
  • Authorities (parking tickets, fines)
  • Cars

Household Moving

  • Attended air freight: documents, valuables, cloths, books toys and toiletries for several days.
  • Un-attended Air-freight: 10 days, cloths, books, games, video, baby chair, toiletries.
  • Sea-freight: at least 6 weeks.

Arriving to Israel: To Do List

  • Home Company Redeployment
  • Area Orientation*
  • School/Day-Care registration*
  • Accommodation Return/Lease/Buy*
  • Utilities Connection*
  • Army Reserve/Enlisting Office
  • Municipal Registration
  • Social Security

* Pre-Repatriation Trip