Israel Tax Treaties

Tax treaties in Israel and around the world

Tax treaties are agreements between two countries designed to prevent a resident of one state from double taxation. Meaning, paying tax in the country where he made income or profits, as well as the country where he resides. Tax treaties are usually constructed in order to incentivize foreign investments and international trade, as well as establishing the legal policies regarding international tax laws.

For many years most countries had designed their bilateral tax treaties according to the UN tax treaty model, even tho it wasn’t mandatory. 

מיסוי לפי מדינות

UN tax treaty model

The UN model emphasizes the rights of the ‘origin country’ in which the profits were made to tax them over the resident’s country. These claims are made by developing countries seeking to make profits in taxes from investment and business activities made in their jurisdiction. 

The rules agreed upon in the bilateral agreements are added to the internal tax legislation of each country. When there is a contradiction between the internal tax laws and the treaty, the directives of the treaty prevail.  In cases where the treaty directives are harsher than the internal laws (usually common with old treaties), the internal legislation is preferred.

Since January 2019 many bilateral tax treaties have been modified by the OECD’s MLI agreement, signed by more than 90 countries so far. The agreement was designed as part of the international effort against tax avoidance and tax treaties abuse. 

It’s highly recommended to consult with international tax experts in order to get a comprehensive and professional legal status regarding taxation on every country. Our firm has highly professional lawyers and accountants, all are experts in international tax laws.

Our website is full of information regarding every bilateral tax treaty signed by Israel. Click on the relevant country to get more information about the treaty and other tax-related aspects.   

Consult A Tax Expert