Tax-free Israeli company

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21.01.2012

A Trust Own Vehicle (TOV) – is an Israeli company, owned by a (foreign) trust, established by a foreign person and not on behalf of an Israeli person.

 

TOV activity is exempt from any kind of reports and tax free if:

• The income is gained outside Israel;
• The income is formed due to interest paid by Israeli banks.

Requirements for TOV structure:

• There is a trust registered in a jurisdiction recognized by Israel (Curacao, Gibraltar, Panama, Cyprus etc.)
• Settlors of the trust are not tax residents of Israel
• Beneficiaries are not tax residents of Israel
• Shares of the Israeli company are 100% owned by the Trust.

Because a TOV established in Israel is a limited liability company, it falls into the category of the territorial principle of taxation – if profit is gained outside the country, all income is exempt from corporate tax in Israel. Moreover there are no restrictions to TOV activities. The company can trade outside Israel, provide consulting services, invest trust capital, set up subsidiaries etc.

Furthermore, European and Russian tax authorities consider an Israeli company an entity in a jurisdiction with high taxation.