Your guide to paying inheritance tax in Israel

16.01.18
6 minute read
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When it comes to taxes, no two places are the exactly same. If you’re an expat - splitting your life between two countries - you have double the work to do, to understand your taxes.

This guide focuses on inheritance tax in Israel. The specifics of inheritance laws and taxes vary by country. While Israel jettisoned its inheritance tax years ago, there are still legal technicalities you’ll need to understand. If you’re involved with an estate or inheritance in Israel, these tips will help you understand your responsibilities and rights.

What is inheritance tax in Israel?

In many countries, a tax is charged to a person who inherits assets from someone who’s deceased. ‘Assets’ usually refers to money or property. In Israel, technically these taxes don’t exist. Israel removed its inheritance tax several years ago, so there’s no direct tax on any inheritance in Israel.

(Source - 27 Dec 2017)

Who has to pay inheritance tax in Israel?

Technically, there isn’t any inheritance tax in Israel. However, if you inherit an Israeli estate but live in another country, you might still have to pay your home country’s inheritance tax. If you inherit a home in Israel and then decide to sell it, you’ll be subject to sales taxes in Israel, but you might be subject to certain taxes in your home country as well if you transfer the proceeds of the sale back to your account there. Seeking help from a professional is a good idea, to make sure you pay the right amount of tax, to the right country.

(Source - 27 Dec 2017)

What’s the process for claiming an inheritance in Israel?

If you’re inheriting real estate or bank accounts, your first step is applying for a probate or succession order from the registrar or religious court. You aren’t allowed to claim the estate without completing this application, and a probate order or succession order that was given outside of Israel isn't valid in Israel. Once you’ve obtained the succession or probate order, you’re required to register any estate property according to the stipulations in that order.

(Source 1 Source 2 27 Dec 2017)

How do I retrieve inheritance in Israel if I’m not there?

If you’re a foreigner or non-resident and were left property or assets by someone in Israel, apply to the inheritance registrar or religious court for a probate order. If there was no will and you’re claiming an inheritance that’s being passed to you through the Law of Succession, you need to apply for a succession order to claim it.

You don’t need to travel to Israel if you aren’t there already. Instead, have a law firm prepare the necessary documents and send them to you for your signature, keep in mind that they do need to have power of attorney in order to help you with this. Your signature will be verified by a notary public or an apostille at the Israeli Consulate. If you require it, the firm can also provide you with a translation of Hebrew documents into English.

(Source - 27 Dec 2017)

What documents do I need to claim an inheritance?

In order to file the necessary probate or succession order with the Israeli inheritance registrar, plan to have the following documents:

  • Application (probate order or succession order)
  • Power of attorney
  • Death certificate of the deceased
  • Original will (if applicable)
  • When the deceased lived in a foreign country, you’ll also need the “legal opinion of the foreign law”

Once you have all the necessary documents you can submit them to the Israel Inheritance Register.

(Source - 27 Dec 2017)

Which legal bodies deal with inheritance, wills, and succession in Israel?

If you have questions about inheritance tax, wills, or succession, a good first step is a law firm. Find a lawyer who is familiar with this practice area. Several firms in Israel have English-language options on their websites. Additionally, you’ll most likely be dealing with the Inheritance Registrar and the religious court. Both of these bodies are legally allowed to handle inheritance issues. If you’re facing a particularly complicated case, you may also be directed to a family court.

(Source 1 27 Dec 2017)

Who has to pay inheritance tax in Israel?

Ownership of the property in Israel

The Israeli Law of Succession prioritizes certain relationships over others when it comes to inheritance. That means that by default, the estate of a deceased person will be passed on a certain order. Of course if the deceased left a will, the assets will be inherited according to the will. However, if the deceased leaves behind a spouse and/or children than they're protected to a certain degree by law, as they do have the right to receive maintenance payments from the estate of the deceased.

If there isn’t a will, the order of inheritance - according to the Law of Succession - is as follows.

  • The deceased’s spouse
  • The deceased’s children, including adopted and illegitimate children
  • The deceased’s siblings, parents, and grandparents
  • The state of Israel

When the estate goes directly to Israel, it’s required by law to go toward education, science, health, or welfare. That said, the Minister of Finance can make payments out of the estate to any of the deceased’s dependants or relatives who aren’t heirs by law.

(Source 1, Source 2 - 27 Dec 2017)

Can I refuse to accept an inheritance in Israel?

If for some reason you don’t want to accept an inheritance in Israel, you’re entitled to refuse all or part of the estate, as long as the estate hasn’t been distributed yet.

(Source - 27 Dec 2017)

What constitutes a “gift tax” in Israel?

A gift tax is a tax placed on assets or funds that are given away. In Israel, there's no tax on gifts given to Israeli residents. However, a capital gains tax of 25-50% will apply to gifts (other than cash) to foreign residents and the sale of assets that were given as a gift.

(Source 27 Dec 2017)

How do I pay my inheritance taxes in Israel? Can I pay online?

The application fee to receive your probate or succession order can be paid online through the Ministry of Justice website. Many people elect to use a credit card or make an international payment via their bank. If you choose to pay online, you need to watch out for high foreign exchange rates and hidden bank fees for foreign transactions. If you’re not vigilant, claiming your inheritance in Israel has the potential to be a costly experience. This is where TransferWise can help.

TransferWise offers you the mid-market exchange rate (the real market rate you see on Google or XE) for foreign transfers. This can help you save money while you are transferring between banks and institutions in different countries.

If you find yourself needing to make recurring transfers to Israel or other countries, consider opening up one of TransferWise’s new multi-currency borderless accounts. These accounts let you hold and manage money in 28 different currencies, including the Israeli shekel. You can also transfer money between more than 50 countries.

(Source 27 Dec 2017)

Navigating inheritance can be confusing, especially if it’s new to you. In Israel, you don’t have to pay tax on what you inherit, but that doesn’t mean you’re free of responsibility. You’ll have to file some paperwork, know your rights, and understand which legal bodies you should consult with. While the state provides a convenient succession framework, you’ll need to double-check

for any administration fees you might incur. You also might be responsible for continued taxes on an estate after you inherit it. If you’re making payments to Israel, consider TransferWise. When it comes to sending or managing your money abroad, TransferWise minimizes time, surcharges, and confusion.

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content is the publication is accurate, complete or up to date.

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