Consultation with banks and assistance in transferring funds to and from abroad, including converting and transferring foreign currency from Israel to other countries
Money Transfer to and from Abroad
Israel, like many countries worldwide, is a signatory to the Common Reporting Standards (CRS) for Automatic Exchange of Information between Countries. Under these regulations, banks will transfer information about residents classified as foreign residents to their country of residence. This information will first be transferred to the tax authority in the country where the bank is located and later to the foreign country.
Consequently, banks have imposed strict conditions for transferring funds to and from abroad. Dealing with the international banking system has become extremely complex in recent years and forms the initial basis for any international tax planning. The right banking structure planning for any activity will ensure a convenient and easy option for transferring funds from customers, through the activity company to the customers themselves, besides reducing the tax burden.
The Tax Authority receives excellent “intelligence” as a result of international information exchange agreements, granting every income tax inspector and cell coordinator access to international financial transactions conducted by taxpayers (both individuals and companies).
As part of the recent Arrangements Law, the Tax Authority proposed a requirement (which was not accepted) for financial institutions (including banks, currency service providers, insurance companies, clearing companies, etc.) to report their customers’ financial activities. While this may not seem surprising, as banks are already obligated to transfer such information to the Israel Money Laundering Prohibition Authority, it’s just an anticipated step in reducing the usage of banks for unreported capital. It’s expected that banks will eventually be required to report any significant financial movement to the tax authority.
Our firm advises clients on necessary actions before transferring money abroad, considering the global uniform standard. In addition, banks allow clients to submit objections before being classified as a foreign resident. Our firm assists in preparing objections to banks and has prevented the transfer of a significant amount of information to foreign tax authorities.
Assistance in auditing and arranging a source of funds
We assist in auditing and arranging sources of funds as banks tend to demand an explanation of the funds’ source that are requested to be transferred from abroad to Israel, especially for significant amounts. Our firm provides the bank with approval/letters regarding the funds’ source and, if necessary, advises the client’s accounting firm on auditing, clarifying, and detailing the source of the funds.
Assistance in converting money into foreign currency, transferring money abroad
Due to the strict conditions banks have for transferring funds abroad and the high fees for money conversions, our firm helps transfer funds while overcoming these difficulties, saving tax, and reducing conversion fees.
Withholding tax on transferring money abroad
Our firm specializes in managing the necessary procedures for withholding tax examination with the Tax Authority. These procedures are mandated by banks and tax authorities prior to transferring funds to the recipient. In numerous instances, there exists a possibility to be exempted from withholding tax. Consequently, our firm is adept at facilitating the completion of the requisite documentation for tax exemption, commonly known as the “green track,” or acquiring official approval for exemption from the tax assessor. Among our firm’s clients is a financial institution whose primary activity is the transfer of funds between countries.
Obtaining money transfer approvals from the assessors
Furthermore, we handle obtaining approvals for exemption from withholding to transfer the funds to the payment recipient abroad.
For more information and individual consultation, please contact us.
Other topics you might be interested in:
Our firm handles obtaining approvals for exemption from withholding in order to transfer the funds to the recipient of the payment abroad.
For more information and individual consultation contact us.
