ISRAEL Law and Practice Contributed by: Liran Barak, Herzog Fox & Neeman
10.2 Change of Corporate Control Triggers As licences are non-transferable, this topic does not apply in Israel. 10.3 Passive Investor Requirements As licences are issued only to state-owned monopo- lies, this topic does not apply in Israel.
A reform that came into force in 2019 significantly reduced the tax exemption for gambling prizes. The current tax exemption applies to prizes with a mon- etary value of up to ILS30,500 only (currently standing at ILS33,840, inflation-adjusted), while previously the exemption was as high as ILS50,000. Awarded prizes in excess of the exempted amount are subject to withholding tax at source by the gambling activity organiser. Prizes in the range of ILS33,840 to ILS67,680 are subject to incremental tax rates, with the highest tax level (35%) being levied on prizes worth ILS67,680 or more (the sums are inflation-adjusted as of 2024). Relevant Court Cases During 2018, a couple of Israeli court rulings were ren- dered that contained interesting developments relat- ing to the taxation of gambling-related winnings. The first was the Israeli Supreme Court ruling refer- enced in 1.1 Current Outlook and Recent Changes – Civil Appeal (Supreme Court) 476/17 Amit Amishvili Rafi v Assessing Officer Tel Aviv 4 – where the court presided over a tax appeal filed by a poker player whom the court believed to be a professional. In its ruling, the court held that due to the player practising poker as a profession, his winnings generated from tournaments outside Israel would be taxed as regu- lar income, and not as gambling winnings (effectively resulting in higher taxation). Another court case in 2018 that dealt with the appro- priate tax to be levied on poker tournament winnings abroad was Tax Appeal (Tel Aviv) 45369-02-17 Miller Ori v Assessing Officer Tel Aviv 3 . In its ruling, the Tel Aviv district court had followed the precedent set by the Supreme Court and found that the winnings would be subject to regular income tax and not gambling winning tax. The district court then went even further and also allowed the poker player to deduct certain expenses incurred by him in the course of generating his winnings from the tournaments, including registra- tion fees, flights and accommodation costs.
11. Enforcement 11.1 Powers
Powers of enforcement held by the Ministry of Finance include the suspension or revocation of the National Lottery’s permit and suspension or discontinuation of specific types of permitted gambling activities by the National Lottery or the ISBB. 11.2 Sanctions Sanctions are enforced by way of a formal decision by the Ministry of Finance. Since 2017, the Ministry of Finance has exercised sanctions against the Nation- al Lottery and the ISBB, in the form of revoking the National Lottery’s permit for the operation of land- based video lottery terminals, as well as revoking the ISBB’s permission to conduct horse race wagering. 11.3 Financial Penalties The Ministry of Finance does not issue financial penal- ties to the state-licensed monopolies, but rather uti- lises other forms of enforcement (see 9.5 Sanctions/ Penalties and 11.2 Sanctions ).
12. Tax 12.1 Tax Rate by Sector
As commercial gambling is prohibited in Israel and the only lawful forms of gambling are those offered by the state-licensed monopolies, the main relevant tax is the tax levied on gambling winnings under certain conditions.
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