The Israeli Taxation Treaties Summary
Written by: Admin Category: ETS's Cafe Published: 11/07/2018
In the globalization era and the heightens of international transactions and trade which goods, services, tangible and non tangible assets, capital and even people are changing their physical location or alternatively are transferred and be shared in the Internet platform without any physical borders , are causing countries Taxation disputes and conflicts.
For Taxpayers (companies and individuals), different countries taxation internal lows might cause double taxation obligation or tax evasion , when a taxpayer is liable to pay income tax by two states.
In order to avoid or mitigate double taxation events or eliminate tax evasion, countries have been signed on bilateral treaties( agreements) in which the states parties determine the taxation rules applicable to income and assets that have a connection to both countries.
In general, treaties provisions and goals are:
- Define resident and eligible for benefits.
- Which taxes are covered.
- Reduce the amounts of tax withheld from interest, dividends, and royalties which are paid by a resident of one country to residents of the other country.
- limit tax of one country on business income of a resident of the other country to that income from a permanent establishment in the first country.
- Define circumstances in which income of individuals resident in one country will be taxed in the other country, including salary, self-employment, pension, and other income,
- Provide for exemption of certain types of organizations or individuals, and
- Provide procedural frameworks for enforcement and dispute resolution.
As a result, the conventions include principles and a commitment to the exchange of tax information between countries. further to this, treaties conventions are constitute pillar of the taxation rules applicable in the domestic law of each state.
Taxation treaties which prevent double taxation are overrule the domestic law.
For e.g, if the provisions of the convention is lenient in comparison to domestic law regarding tax rates, the provisions of the convention will apply. In addition, if the provisions of the Convention are aggravated in comparison to domestic law (a situation which may apply in old treaties), the provisions of domestic law will apply.
Most of the tax treaties in the world generally follow one or a combination of the two main models and their commentaries which are provided by the UN and OECD. for the Israeli Taxation authority the OECD model is generally being used in practice and with accordance to the Israeli domestic law, special conditions and its policy on tax treaties.
| Commencement Date | Interest | Dividends | Royalties | ||||
| Countries | General Rate | Reduced Rate of Interest by Bank, Government institution or selling by credit | General Rate | Reduced Rate for Intercompany Dividends in Substantial Holding | General Rate | Reduced Rate | |
| Uzbekistan | 1/1/2001 | 10% | – | 10% | – | 10% | 5%- Copyright |
| Austria | 1/1/2019 | 5% | – | 10% | Tax exempt above 10% Holding | Tax exempt in the origin territory | 0% – Copyright |
| Ukraine | 1/1/2007 | 10% | 5%-Bank loan | 15% | 5% 10%-Approval plant | 10% | – |
| Italy | 1/1/1999 | 10% | – | 15% | 10%-Approval plant | 10% | 0% – Copyright |
| Ireland | 1/1/1996 | 10% | 5%- Bank loan or selling by credit | Israel: 10% / Ireland 0% | 10% | 10% | |
| Estonia | 1/1/2010 | 5% | Tax exempt – governmental institution | 5% | Tax exempt above 10% Holding | Tax exempt in the origin territory | |
| United States | 1/1/1995 | 17.5% | Tax exempt – gov ; 10% – financial institution | 25% | 12.5% 15%-Approval plant | 15%-industrial royalty | 10%-Royalties from copyrights or film industry sector |
| Ethiopia | 1/1/2008 | 5% -15% | Tax exempt – governmental institution | 5% -15% | 5% | ||
| Bulgaria | 1/1/2003 | 10% | Tax exempt – gov ; 5% – financial institution | 7.5% -12.5% | 10% Approval plant | 7.5% -12.5% | – |
| Belgium | 18/3/2010 | 5% | – | 5% | Tax exempt above 10% Holding | Tax exempt in the origin territory | – |
| Belarus | 1/1/2004 | 10% | – | 10% | – | 10% | 5%- Copyright |
| Brazil | 1/1/2006 | 15% | Tax exempt – governmental institution | 15% | 10% | 10% | 15%-Trademark |
| United Kingdom | 25/03/1971 | 5% | 5% | Tax exempt above 10% Holding | Tax exempt in the origin territory | Tax exempt in the origin territory | |
| Georgia | 1/1/2012 | 5% | 5% | Tax exempt above 10% Holding | Tax exempt in the origin territory | ||
| Jamaica | 1/1/1986 | 15% | Tax exempt – governmental institution | 22.50% | 15% | 10% | – |
| Germany | 1/1/2017 | 5% | Tax exempt – governmental institution | 10% | 5% | ||
| Denmark | 1/1/2012 | 5% | Tax Exempt | 10% | Tax exempt above 10% Holding | Tax exempt in the origin territory | – |
| South Africa | 1/4/1978 | 25% | – | 25% | – | Tax exempt | 15%- cinematograph or TV Film industry |
| India | 1/1/1994 | 10% | Tax exempt – governmental institution | 10% | – | 10% | – |
| (Netherlands(Holland | 1/1/1996 | 15% | 10%- Bank | 15% | 5% 10%-Approval plant | 5% | 10%- cinematograph / Ratdio TV& Film industry |
| Hungary | 1/1/1993 | פטור | – | 15% | 5% | פטור | – |
| Vietnam | 1/1/2010 | 10% | Tax exempt – governmental institution | 10% | 5%-10% | ||
| Taiwan | 1/1/2010 | 10% | Tax exempt – governmental institution | 10% | 10% | ||
| Greece | 1/1/1999 | 10% | – | No Threshold | – | 10% | – |
| Japan | 1/1/1994 | 10% | Tax exempt – governmental & financial institutions | 15% | 5% | 10% | – |
| Luxembourg | 1/1/2004 | 10% | 15% | 5% | 5% | ||
| Latvia | 1/1/2007 | 10% | 5% | 15% | 5% – 15% | 5% | |
| Lithuania | 1/1/2007 | 10% | 15% | 5% – 15% | 5% – 10% | ||
| Moldova | 1/1/2008 | 5% | בין 5% ל- 10% | 5% | |||
| Malta | 1/1/2014 | Israel 5% /Malta – Tax exempt | 15% | Tax exempt above 10% Holding | – | – | |
| Mexico | 1/1/2000 | 10% | Tax exempt – governmental institution | 10% | 5% 10%-Approval plant | 10% | – |
| Norway | 1/4/1965 | 25% | – | Israel: 25% / Norway: 15% | Norway:5% | 10% | – |
| China | 1/1/1996 | 10% | 7%- Bank | 10% | – | 10% | – |
| Singapore | 1/1/2006 | 15% | – | פטור בסינגפור בהתאם לדין הפנימי | – | פטור – במדינת המקור 15% – במדינת המושב | – |
| Slovenia | 1/1/2008 | 5% | 5%-15% | 5% | |||
| Slovakia | 1/1/2001 | 10% | 2%- Gov institution 5%- financial institution | 10% | 5% 10%-Approval plant | 5% | – |
| Spain | 1/1/2001 | 10% | – | 10% | – | 7% | 5%- Copyright |
| Poland | 1/1/1992 | 5% | – | 10% | 5% | 10% | 5%- industrial, commercial or scientific equipment |
| Portugal | 1/1/2008 | 10% | 5%-15% | 10% | |||
| Philippines | 1/1/1997 | 10% | Tax exempt – governmental institution | 15% | 10% | 15% or The lowest rate of Philippine tax which can be imposed, under similar conditions, on royalties which have been yielded by a resident of a third country | |
| Finland | 1/1/1999 | 10% | Tax exempt – governmental institution | 15% | 5% above 10% Holding, 10% for approval plant(Israel) when above 25% holding and 5% for all other. | 10% | – |
| Panama | 1/1/2015 | 15% | – | 20% | 15% | 15% | |
| Czech Republic | 1/1/1995 | 10% | Tax exempt – governmental institution | 15% | 5% | 5% | – |
| France | 1/1/1997 | 10% | 5%-מכירה באשראי פטור- גוף ממשלתי | 15%+ זיכוי מס בצרפת (‘Avoir Fiscal’) | 5% Israel: 10%-approval plant | 10% | 0%- Copyright |
| South Korea | 1/1/1998 | 10% | 7.5%-מוסד פיננסי פטור- מכירה באשראי או גוף ממשלתי | 15% | 5% 10%-Approval plant | 5% | 2%- ציוד תעשייתי, מסחרי או מדעי |
| Canada | 1/1/2017 | 10% | Tax exempt – governmental & financial institutions | 15% | – | 15% | 0%- Copyright |
| Croatia | 1/1/2008 | 10% | 5% | 15% | 5% בהחזקה מעל 25% בחברה המשלמת, 10% בהחזקה מעל 10% בחברה המשלמת | 5% | – |
| Rumania | 1/1/1999 | 10% | 5%-מכירה באשראי או בנק פטור-גוף ממשלתי | 15% | – | 10% | |
| Russia | 1/1/2001 | 10% | Tax exempt – governmental & financial institutions | 10% | – | 10% | – |
| Sweden | 3/6/1960 | 25% | – | Israel: Tax exempt/ Sweden : 5% | Sweden :5% | פטור | – |
| Switzerland | 1/1/2002 | 10% | 5%-בנק פטור-מכירה באשראי | 15% | 5% Israel: 10%-approval plant | 5% | – |
| Thailand | 1/1/1997 | 15% | Tax exempt – gov ; 10% – financial institution | Israel: 15% / Thailand: 10% | 10% | 15% | 5%- Copyright |
| Turkey | 1/1/1999 | 10% | Tax exempt – governmental institution | 10% | – | 10% | – |
The information mentioned above is a general summary which might change or be updated from time to time and isn’t a suitable alternative for an in-depth professional tax consultation.