The Lesson from the Wix CEO’s Multi-Million-Shekel Dispute
The recent legal dispute involving the CEO of Wix raised an interesting question, one that many business owners, investors and controlling shareholders do not stop to ask: is the person handling my financial statements, filings and ongoing dealings with the tax authorities also the person who has the knowledge required to provide substantive, strategic and proactive tax advice?
Without taking any position on who is right in the dispute, the case clearly illustrates a recurring issue in the business world:
Many clients assume that their accountant also “covers” their substantive tax issues. In practice, however, that is not always the scope of the service being provided, not always the expertise that was requested, and not always advice that was examined and documented in advance
Accounting and tax advice – related fields, but not the same
The fact that an accountant deals with financial statements, audits, filings and financial matters does not mean that every service they provide also amounts to comprehensive tax advice. Accounting and tax advice are closely related fields, and sometimes even overlap in certain respects, but they are not the same.
An accountant may deal, among other things, with:
- Financial statements
- Audits
- Accounting adjustments
- Filings with the authorities
- Financial and corporate support
- Review of data and documents
By contrast, tax advice focuses on a different question: not only how to report a transaction, but mainly how it should be carried out in the first place – and that is a fundamental distinction.
While accounting work often deals with a reality that has already been created, tax advice frequently involves advance planning:
- Should an investment be made personally or through a company?
- Should funds be injected as equity or as a shareholder loan?
- Is it preferable to extract profits as a dividend, as salary or in another manner?
- Will a particular restructuring reduce exposure or create unnecessary cost?
- What tax implications may arise upon realization, sale or distribution?
When the question is a tax question, it is not always enough to have a professional who handles reporting well. Sometimes, what is needed is a professional who analyzes the structure of the transaction and its possible tax outcomes in advance.
Do not assume that someone has already examined the tax implications
One of the common misconceptions in the business world is that “if I have an accountant, then they have already thought about the tax for me.”
There is a clear difference between ongoing accounting work, filing reports and returns, and formal dealings with the authorities, on the one hand, and proactive tax advice, examination of alternatives, transaction structuring, advance identification of risks, and a clear, documented professional recommendation, on the other.
When a business owner, entrepreneur or investor makes a significant decision without stopping to confirm that they have actually received dedicated tax advice, they may discover too late that the action they took may have been possible from a business perspective, but very costly from a tax perspective.
When a good tax advisor may be the more precise address
There is no need to create an artificial conflict between professions. There are excellent accountants, and some of them also provide very high-quality tax advice. Even so, there are situations in which a good tax advisor is the more precise professional for the decision at hand.
Professional focus on the core of tax matters
A tax advisor naturally focuses on questions that lie at the heart of the tax world. When the main issue is a tax issue, there is a significant advantage to working with a professional who lives this field day to day, follows its practical implementation, and quickly identifies areas of risk and opportunity.
Thinking before the action, not only after it
Many costly tax mistakes are made before the reporting stage. They are made at the moment when a decision is taken without being properly examined.
Early identification of “tax traps”
Many actions that appear entirely straightforward or technical may turn into tax pitfalls: investing through a company rather than personally, injecting funds into a company, shareholder loans, profit distributions, asset acquisitions, share sales, transfers of activity and restructurings.
In most cases, the tax trap is not created because someone “failed to report.” It is created because the structure of the action was not examined carefully enough in advance. This is exactly where the value of a good tax advisor comes in: identifying the point of failure before it becomes a real cost.
In conclusion, in a complex business environment, the difference between the right action and an unnecessary tax cost does not always depend on whether the report was filed on time. Sometimes it begins much earlier – with the question of who supported the decision-making process, who examined the structure of the action, and who warned of the risk in time.
Therefore, not every accountant is necessarily also your tax advisor in the substantive sense of the term. When a decision with real tax implications is on the table, there is no substitute for focused, clear, advanced and documented tax advice.
Need support with investment structuring, funding injections or tax exposure?
Nimrod Yaron & Co. specializes in Israeli and international taxation. Our team is composed of professionals with years of experience at the Israel Tax Authority, alongside experience in leading firms and law offices, bringing together a legal and economic perspective. We advise private and public companies, Israeli and foreign companies, global venture capital funds, and clients seeking focused advice in clear and accessible language. We also work with a professional network of accounting firms and law offices around the world, allowing us to provide comprehensive support in cross-border matters.
If you are considering whether to make an investment personally or through a company, how to inject funds into an activity, how to prepare for a profit distribution or realization event, or how to reduce tax exposure before making a significant decision – it is important to examine these issues in advance, and not only at the reporting stage.
Frequently Asked Questions
What is the difference between an accountant and a tax advisor?
An accountant deals, among other things, with financial statements and audits, while a tax advisor focuses mainly on tax implications, planning, filing and ongoing tax support.
Isn’t my accountant supposed to handle tax as well?
Sometimes yes, but it is not always strategic tax advice. It is important to check exactly what the service includes and what was actually examined.
When should I specifically consult a tax advisor?
Before an investment, sale, dividend distribution, funding injection, restructuring or any action that may create material tax implications.
What is a tax trap?
It is a situation in which a business action that appears logical creates an unnecessary tax liability due to incorrect structuring or lack of advance planning.
How can unnecessary tax exposure be avoided?
By seeking advice in advance, examining alternatives, understanding the tax implications before taking action, and ensuring that the professional recommendation is clear and documented.
