Relocation, olim and cross-border tax planning

A move abroad does not by itself determine Israeli tax residency. The position depends on the statutory tests, factual circumstances, applicable presumptions, treaty provisions and supporting documentation. Within the agreed scope, the firm may assist with the Israeli tax analysis, exit-tax considerations, organization of relevant information and coordination with an adviser in the destination country, without guaranteeing the position a tax authority may adopt.

Israeli tax residency and relocation tax planning

The information is general professional information only and does not constitute a tax opinion, legal advice or a binding determination of residency. Each matter depends on the facts, documentation, applicable law and relevant tax treaty.

Israel-US Tax Treaty: Where an individual has connections to both Israel and the United States, the domestic tax laws of both countries and the applicable treaty provisions should be reviewed.

The treaty contains rules concerning residency, source of income, employment income, dividends, interest, capital gains and relief from double taxation. Application depends on the facts and the relevant category of income.

Federal and State Taxation: The Israel-US income tax treaty primarily addresses US federal income taxation. State residency and income-tax rules must be reviewed separately, as individual US states may apply independent tax rules and may not apply federal treaty relief in the same manner.

US Tax Residency and Reporting: US citizens, US tax residents and other individuals entering the US tax system may become subject to worldwide income reporting and foreign financial account or asset reporting requirements, including FBAR and FATCA, subject to the applicable thresholds, conditions and exceptions.

US tax residency may arise, among other routes, under the Substantial Presence Test, subject to the statutory calculation rules and applicable exceptions.

Equity Compensation: Relocation to the United States may create tax and reporting obligations in both countries in relation to stock options, RSUs and other equity awards.

The analysis may depend on the type of plan, the applicability of Israeli Section 102, grant and vesting dates, periods of employment in each country, realization or sale dates, tax residency and relevant treaty provisions.

Potential implications under Section 100A of the Israeli Income Tax Ordinance should be reviewed separately.

Cyprus and Greece offer different tax regimes and incentives for certain new residents or qualifying individuals. These are separate regimes with different eligibility conditions.

Obtaining a local tax incentive or special status does not by itself establish termination of Israeli tax residency.

Israeli center-of-life factors, destination-country law and the applicable tax treaty must be reviewed separately.

Center-of-Life Considerations: Where an individual relocates to a country near Israel, the relevant Israeli residency factors should still be reviewed, including permanent home, family residence, employment, business activity, economic ties and days spent in Israel.

Frequency of visits to Israel may form part of the overall factual analysis but is not an independent residency test.

Remote Work and Business Activity: Working remotely from the destination country for an Israeli company, or continuing an independent business relationship with Israeli clients, may raise personal tax, payroll and social-security issues and, in some structures, corporate tax or permanent-establishment considerations.

The analysis depends on the contractual and factual structure and the applicable treaty.

UK Tax Residency: The United Kingdom applies a Statutory Residence Test (SRT), and Split Year Treatment may apply in qualifying circumstances.

UK residency rules should be reviewed together with Israeli residency rules, the relevant tax years and the applicable bilateral tax treaty.

Social Security in Europe: Israel has bilateral social-security agreements with certain European jurisdictions.

Depending on the specific agreement, these arrangements may coordinate social-security coverage, preserve certain rights and, in some circumstances, prevent duplicate contributions.

Each agreement has its own scope and covered insurance branches and must be reviewed individually.

The information above is general professional information only and does not constitute a tax opinion, legal advice or a binding determination of tax residency. Each case depends on its facts, documentation, the laws applicable in Israel and the destination jurisdiction, and the relevant tax treaty.

Israeli tax residency and relocation guide · Tax consulting for individuals and businesses