Samuel, a businessman who made his fortune for many years in one of the African countries, purchased several lands in the city of Rehovot and registered them in the name of a company (owned by him) registered in the British Virgin Islands.
He contacted us and asked to transfer the registration of the land ownership from the BVI company into his hands in the “Tabu” (the Land Registrar).
Another customer named Daniel, who lives in the United States, bought an apartment on Dizengoff Street in Tel Aviv and registered it in the name of a company owned by him, registered in Panama.
The company owned the apartment for many years and Daniel used it when he came to visit Israel.
He contacted us and asked to transfer the registration of ownership of the apartment from the Panamanian company into his hands in the “Tabu”.
These two clients have purchased a property located in Israel and registered it in the name of an offshore company (a company registered in a jurisdiction that was once a tax haven). Now that the circumstances have changed, they want to transfer it in their name.
It is essential to pay attention to the following two aspects in order to execute such a deal:
The issue of taxation
There are significant taxes on the transfer of a real estate in Israel between a foreign company and an individual.
Early planning of the taxation aspect will dictate how the transaction is carried out and the amount of tax to be paid.
The purpose of early planning is to reduce the tax as much as possible. This depends, among other things, on the customer’s tax residency – whether he is a tax resident in Israel or another country.
It is possible to dissolve the company and transfer the real estate to the owner upon the liquidation. This option is often the most tax-efficient for Israeli residents. Another option is to transfer the real estate to the owner without consideration.
The transfer of rights in the “Tabu”
The Land Registry (“Tabu”) in Israel has its own rules.
The procedure required to register a transaction when one of the parties is a foreign company is complicated.
Offshore companies have their own rules of conduct (under laws different from the law in Israel).
The complexity of the foreign company, combined with the Israeli bureaucracy, requires particular expertise for registering the rights in the name of the individual, the company’s owner, at the end of the process.
You are most welcome to contact us so we could help you prepare and carry out the appropriate tax planning of the transaction.
Note:
This article provides general and preliminary information only and should not be construed in any event as legal counseling and/or as a substitute for legal counseling in respect of any case and its circumstances.
The above should not be relied upon without consulting with an Israeli lawyer before taking any action or making any decision. The above is true as of the date of its composition, and its veracity may change from time to time.
Distribution and/or duplication and/or photocopying of this document and/or part thereof without permission are prohibited.
