On July 24, 2023, a bill was introduced that establishes clearer criteria for classifying an Israeli tax resident in order to determine whether a person is subject to income tax.
The draft law introduces new criteria for tax residence, as the current definition based on the “centre of life” was often accompanied by a number of uncertainties. In order to provide clarity and clarity to taxpayers, the proposed bill introduces several irrefutable presumptions of tax residency that are based on how much time a person has spent in Israel. However, if none of the specific criteria for these presumptions is met, the existing “centre of life” test, together with the current rebuttable presumptions, will remain applicable.
According to the bill, a person will be classified as a tax resident of Israel if he spent in the country:
- 183 days over two years;
- 100 days in a tax year and 450 days in a three-year tax period (except when a person spends more than 183 days in a country that has signed a bilateral double taxation agreement with Israel);
- 100 days, provided that the spouse of such person has residency.
The bill is currently under consideration by the Cabinet of Ministers and the Knesset.