Israeli Investors Are Being Pursued by the Tax Authorities

Background

The extensive business activity of Israeli investors in Cyprus has become the focus of an investigation by the Israeli tax authorities.

The tax authorities want to know whether Israeli investors in Cyprus are permanent residents of the island or are managing their Cypriot business from Israel, that is, from their country of permanent tax residence.

To find out, the Israeli tax authorities have started checking how often flight tickets between Israel and Cyprus were bought in the names of specific investors and entrepreneurs.

The tax authorities are paying particular attention to businesspeople in the high-tech and real estate sectors.

An additional reason for the increased interest of the Israeli tax authorities in Cyprus is the relatively low corporate income tax (up to 12.5%). In Israel it can reach 50% of taxable income.

Outcome

According to experts, if the tax authorities establish that Israeli investors in Cyprus keep Israel as their permanent place of residence, regardless of whether they hire staff in Cyprus, their business should be taxed at the maximum rate, meaning they would have to pay 50% of their taxable income.

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