international

According to Israeli law and most international treaties, your place of work is defined by where you are physically located. It doesn’t matter where your employer is based, where your clients are, or where your remuneration is paid.
If you work from home in Israel (“You are literally sitting on a chair in Israel”), your income is considered Israeli-sourced. Even if you work for a company incorporated abroad on foreign matters and deals, as long as you are physically in Israel, you are required to pay taxes in Israel for the income earned by virtue of that work.
If you are considered an Israeli resident based on your vital interests but travel and work abroad, you may be eligible for an Israeli tax credit for the taxes paid abroad. However, you are still required to declare all your income in Israel.
Be aware that the Israel Tax Authority has an entire department dedicated to monitoring these cases. They exchange information with other countries and track where you are actually working. The key criterion for their evaluation is whether you are physically in Israel. If someone claims to spend half his time abroad and works only while outside Israel, while treating their time in Israel as purely for leisure, this is usually not accepted by the authorities and is likely to be challenged. The Israeli Tax Authority assumes that any time spent in Israel is also time worked in Israel.

Our office is here to help you to optimize your taxation.

By consulting an expert lawyer or a CPA who is highly specialized in this field, you can be sure you can address all the issues that might arise according to you specific situation.

Yaël Hagege Maruani
Attorney-at-law in Israel and Notary

This circular is intended for general information purposes only and does not constitute a personal legal consultation.