ISRAEL Law and Practice Contributed by: Yaron Mehulal, Nataly Davidai and Shalom Hershkovitz, FISCHER (FBC & Co.)
August 2016, respectively. As a result, Israel automati - cally exchanges information on an annual basis with the USA, Australia, the UK, Switzerland, Canada and over 90 additional countries. In fact, since 2021, the Swiss Federal Tax Adminis - tration has regularly informed Israelis individuals and entities connected to Israelis that it exchanges infor - mation about Swiss bank accounts beneficially owned by such Israelis. Hence, Israeli tax residents who have held or still hold bank accounts or other financial accounts and assets in foreign countries, as well as foreign tax residents who have held or still hold bank accounts or other financial accounts and assets in Israel, are exposed to the exchange of information between Israel and their home countries. They are strongly advised to set - tle any potential tax issues with both the Israeli and the foreign tax authorities, although the anonymous voluntary discovery procedure offered by the Israel Tax Authority expired on 1 January 2020. It should be noted that a new anonymous voluntary disclosure procedure is expected to be published. Currently, there is no public beneficial ownership reg - ister. However, the Israeli Companies Registrar man - ages the Companies Register and the Partnerships Register, in which the direct shareholders or partners, as applicable, are recorded. In addition, trusts and foundations are required to start reporting their ben - eficial owners and controlling persons to the Israel Tax Authority from the 2025 tax return onwards (to be submitted in 2026). 2. Succession 2.1 Cultural Considerations in Succession Planning Israel is a relatively young country, having existed for only 78 years. Hence, wealthy families in general, and multi-generational wealth transfers in particular, do not play a major role in the country’s economic reality. However, as the country’s founding genera - tion is becoming elderly, the transfer of businesses and wealth to the third and fourth generations is pro - gressively increasing. As a result, multi-generational
wealth transfers are expected to play a major role in Israel’s economy in the near future. In general, people of means from the older first and second generations prefer to transfer their wealth to their children by way of a straightforward inheritance. However, in recent years there has been a significant increase in the older generations’ interest in legal mechanisms such as trusts and the establishment of family constitutions to assist in succession plan - ning. However, their mistrust of financial and legal systems, which is the result of years of nomadism and the exclusion of the Jewish people, is still evident. Additionally, as Israel sees a rapid growth in major individual wealth, as a result of large-scale sales of companies and businesses to global corporations, especially in the hi-tech industry, younger self-made wealthy individuals with young children or those in their second marriage tend to prefer setting up trusts and similar arrangements, such as guardianship, for the regulation of wealth transfers and for the protec - tion of their children. These trusts, although discre - tionary and irrevocable, are often set up for a limited period of time, until the child has reached maturity and is able to cope with large amounts of funds. 2.2 International Planning The Israeli Inheritance Law, 5725-1965 seeks to address the increasing global challenges of interna - tional planning. It contains important rules on interna - tional private law issues that balance the competing claims of Israeli and foreign laws over succession, by providing that Israeli courts have jurisdiction to deal with the inheritance of any person who was a resident of Israel at the time of their death, or whose estate includes assets (one or more) situated in Israel. The succession rules that are applied by the courts are those in force in the country of residence of the deceased at the time of their death. When examining a will, the person’s capacity to testate is determined by the laws of their country of residence at the time the will was made. As regards the formal requirements and features of a valid will, Israeli law is flexible and recognises the validity of the will if it meets the formal requirements of any of the following countries:
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