Israel--the implementation of the taxation of Trusts Law

Abstract

The tax reform in Israel began in 2003 when the tax system was converted from one of personal taxation to one of global taxation. Since this time, Israeli residents are taxed on their worldwide income. After this reform, on 1 January 2006, the Taxation of Trusts Law (the ‘Law’) came into force. The main purpose of this law is to legislate the use of trusts by Israeli residents which has not been governed by law prior to 2006. The Law imposes obligations based on one's role in connection with a trust (i.e. trustee, settler and beneficiary). Regulations have also been published, which further clarify these obligations under the Law. The publication of these Regulations was much awaited by professionals in Israel and abroad. Their publication was postponed and these were finally published in 2008. However, as the reporting obligation is imposed, among other positions, on trustees, many of whom are...