ISRAEL Law and Practice Contributed by: Yaron Mehulal, Nataly Davidai and Shalom Hershkovitz, FISCHER (FBC & Co.)
10.2 Common Charitable Structures There are four legally recognised structures for chari - table planning in Israel: • an amutah (a traditional not-for-profit organisation); • a charitable company (a not-for-profit organisation registered as an Israeli corporation); • a public • hekdesh (similar to a charitable trust); and • a charitable fund (a not-for-profit Israeli corporation aimed at providing grants). All are regulated by the Israeli Registrar of Associa - tions – Non-Profit Organisations, and are subject to the same taxation regulations and to an extensive fil - ing and audit regime. In addition, none of the four structures can distribute profits, directly or indirectly, to their members, shareholders or trustees, including their founders or settlors. Therefore, the actual structure of incorporation depends upon the selected source of law governing the creation of the structure, namely: • an amutah has a separate legal personality and is governed by the Amutot Law, 5740-1980; • a charitable company has a separate legal person - ality similar to a corporation and is governed by the Companies Law, 5759-1999; • a public • hekdesh , which is a form of charitable trust, does not have a separate legal personality and is gov - erned by the Israeli Trust Law; and • a charitable fund has a separate legal personality as a corporation and is governed by the Compa - nies Law, 5759-1999. In fact, sophisticated donors usually prefer to incor - porate a charitable company or charitable fund, as both of these structures provide more flexibility in terms of ability to retain control and allow for the use of up-to-date solutions. However, if the not-for-profit organisation is intended to include many members of the public, an amutah is recommended, as it is easier to manage with a large number of members and ben - efits from a better public image (without any obvious reason).
will, however, unmarried partners may, in some cir - cumstances, assert inheritance rights if they qualify as cohabiting partners. In addition, from a property perspective, married spouses benefit from a statu - tory property equalisation regime unless they have agreed otherwise, whereas unmarried couples do not automatically fall within that framework. Instead, in the absence of cohabitation or a pre-nuptial agree - ment, their rights are usually determined based on general contract principles, evidence of shared inten - tion, contributions to assets and the overall nature of the relationship. As succession and property claims can be evidentially complex and may give rise to disputes, and as their legal position is usually more dependent on proof of the relationship and careful documentation than it is for married couples, unmarried couples are gener - ally well advised to put in place clear estate planning documents, including wills, a family constitution, a cohabitation or pre-nuptial agreement, and durable powers of attorney. As is customary in many jurisdictions around the world, the Israeli Income Tax Ordinance provides for a tax deduction for charitable donations to an Israeli not-for-profit organisation recognised under Section 46 of the Israeli Income Tax Ordinance (up to 35% of the donation if the donor is an individual, other- wise 23%), provided that the donation, which must be higher than ILS207, does not exceed ILS10.35 million or 30% of the donor’s chargeable income for the same year, whichever is lower. In addition, the income of a not-for-profit organisa - tion that has at least seven members (the majority of whom are not related), acting in the areas of religion, culture, education, science, health, welfare, sports or encouragement of populating rural areas, is exempt from income tax and VAT, provided that its income does not constitute business income. 10. Charitable Planning 10.1 Charitable Giving
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