In this interview on Globes, tax lawyer Doron Levy clarifies the often-confusing residency criteria for Israeli taxpayers: “Israel has undergone significant tax reforms, particularly Amendment No. 132, which came into effect in 2003. This reform marked a shift from a primarily territorial tax system to one that incorporates personal elements. Before the reform, Israel’s tax regime was essentially territorial, focusing on whether income was generated or received within its geographical boundaries”.
“However, some personal aspects were already present. For instance, certain incomes were deemed to have been generated in Israel under specific conditions, even if they technically weren’t. Similarly, residents’ capital gains were taxed on a personal basis, even if the gains were accrued abroad. The reform introduced a more substantial focus on personal connections, notably residency. This change means that individuals’ and entities’ tax liability is now more closely tied to their residency status”.
