37 Example of an irrefutable presumption – Israel Resident A significant change is the requirement for confirmation of residence from a reciprocating state (a state that has an international tax convention with Israel). Thus, for example, in a case where a person stayed in Cyprus for 183 days every year during three years, and stayed in Israel 450 days during these three years (presumption no. 2 above), they would be considered an Israel Resident according to an irrebuttable irrefutable presumption, since Cyprus is not a reciprocating state. Even in a parallel case where this person did stay in a reciprocating state (such as the United States), yet for some reason or another, they are not considered a resident there; the Israel Tax Authority would consider them an Israel Resident. Additional example We would like to mention another example of a significant change in the bill, and that is the emphasis placed upon the spouse or common law partner's place of residence. The Amendment proposes to stipulate an irrefutable presumption with respect to a person who stayed in Israel for 100 or more days, and their spouse including a common-law partner, was an Israel Resident (according to the peremptory/rebuttable presumptions or the center of life test). In other words, even a person who stayed in Israel less than 183 days, and according to the present law would not be an Israel Resident (according to the center of life test/rebuttable presumptions) would now be considered an Israel Resident according to an irrefutable presumption because they have marital ties with an Israeli partner, including where these taxpayers are not officially married but rather are common-law partners. Conclusion In conclusion, the draft bill is intended to minimize uncertainty regarding residency in ostensibly clear cases, where it appears the taxpayer is clearly an Israel Resident or, alternately a Foreign Resident. However, these changes create new exposure even for taxpayers the Tax Authority did not view as Israel Residents thus far. In order to minimize the uncertainty, two flowcharts are enclosed in this circular – one for examining whether a person is an Israel Resident, and the other for examining if the person is a Foreign Resident, all according to the above draft bill. For additional information, contact Adv. (CPA) Doron Elmekiesse from our firm.
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