Israeli Tax Authority Imposes ‘Capital Declaration’ Reporting Requirement On Trusts

Fox Rothschild LLP
Contact

Fox Rothschild LLP

For the first time since Israel began taxing trusts, the Israeli Tax Authority (ITA) has sent inquiries to some trusts seeking a declaration of worldwide assets and liabilities as of December 31, 2019. We have heard that this declaration may be required of all trusts in the future; however, this has not been officially announced.

For U.S. trusts with Israeli resident beneficiaries, this declaration is significant and must be prepared carefully.

According to an Israeli tax professional, the declaration must provide summaries of investment portfolios held with banking and other financial institutions, including the cost of the individual investments (or, if not available, their fair market value, which can be supported by a year-end statement).

ITA is also asking for details about:

  • financial investments, including their cost
  • other investments, including private companies and partnerships
  • investments in real estate, including the original cost and date of acquisition of such investments
  • debtors and creditors
  • loans made and received and mortgage loans owed
  • underlying companies, wholly owned by the trust, including assets and liabilities contained in those companies

Note: All items listed in the declaration must be accompanied by supporting documentation.

Currently, the required Capital Declaration form distributed by the ITA is only in Hebrew, but we expect Israeli tax professionals will soon develop an appropriate form in English. Further, Israeli professionals will likely discuss this disclosure with the ITA to clarify the information needed.

Most of the Capital Declaration forms relating to trusts already known to the ITA should be received by the Israeli filing professional directly. If trustees receive these forms, they should be forwarded to the filing professional as soon as possible.

At this time, trustees who have received such notification from the ITA should begin collecting the information and supporting documentation listed above.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Fox Rothschild LLP | Attorney Advertising

Written by:

Fox Rothschild LLP
Contact
more
less

Fox Rothschild LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.