Published On: Thu, May 22nd, 2014

Tax Authority loses appeal on Israeli resident abroad

Singapore-based Michael Sapir need not pay tax here, even though his wife and children live in Israel.

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An Israeli who resides abroad can be considered for Israeli tax purposes as a person whose center of life is not in Israel, even if his close relatives live in Israel, states the Supreme Court. The court dismissed an appeal by the Israel Tax Authority against Michael Sapir, an Israeli who lives in Singapore. His dispute with the Tax Authority was over the question where the center of his life is.

Supreme Court Judges Esther Hayut, Hanan Melcer, and Uzi Vogelman affirmed the May 2003 ruling of Tel Aviv District Court Judge Magen Altuvia, and ordered the tax assessor to pay Sapir NIS 30, 000 (about $8, 600) in court costs.

The Kfar Saba Tax Assessor’s Office issued a tax assessment against Sapir for 2002-05, which was the cause of the dispute. Sapir moved to Singapore in 1994 with his wife and young daughters. He returned to Israel in 1998, but went back to Singapore in 2001, this time without his family. He works as a senior consultant, and founded a Singapore company for this purpose. He filed annual income tax reports for 2001-05, but did not include his growing income in Singapore. The Tax Authority held that this income should be considered as income of an Israeli resident.

Judge Altuvia ruled that, in 2001, Sapir was an Israeli resident because he resided in the country for 224 days in that year, and therefore was liable to Israeli taxes on his income in Singapore, subject to the provisions against double taxation. However, the judge ruled that, for 2002-05, the center of Sapir’s life was in Singapore, on the basis of his ownership an apartment there, permanent residency, bank accounts, social ties, Jewish community activity, and so on. He noted that Sapir filed tax reports with the Singapore authorities on his income in the country, and paid local taxes.

Published by Globes [online], Israel business news – www.globes-online.com 

 

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