Repatriation from the US to Israel

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