Update: funds can be transferred to the Czech Republic without any need for an application to the Israeli Tax Authorities

The green route, which the Israeli Tax Authorities announced on the 26.09.2017, makes investment in the Czech Republic easier and more remunerative than ever!

One of the primary barriers Israelis who invest abroad (such as individuals who purchase shares in local corporations or who purchase local assets overseas) have encountered up to now is the obligation to deduct the tax at the source while making payments (an obligation based on clauses 164 and 170 of the Israeli Income Tax Ordinances). This obligation made no distinction between types of monetary transfers, regardless of whether they were considered to be a taxable income or not. As a result, those transferring finds were required to provide the banks with tax deduction at source certificates, which extended and complicated these transactions, and sometimes made them non-remunerative or hurt payment obligations (when the transactions were finalized).

The streamlined route to transfer funds to the Czech Republic 

On September 26 2017, the Israeli Tax authorities published a statement according to which, in certain cases, transfer of funds abroad would be permitted on a green route, without any need to apply to the Israeli Tax Authority Offices to receive a permit. Rather, all that would be required would be the signing of an appropriate statement (included in form 2513/2). This form is to be filled by the person transferring the funds, and handed over to the bank, where it would be kept and presented to the tax authorities, upon its request. In the framework of this statement, the signature of the person transferring the funds is required to affirm that he is aware of the authority of the Israeli Tax Authorities to determine a tax deduction at source rate, in the event that any discrepancy should be discovered between the details of the application and the transfer actually committed. 

The streamlined Green route is applicable in the following cases: 

1. The transferred funds are intended for a resident of a treaty member country and to a bank account present in a treaty member country. 

The list of the 53 treaty countries is present in clause 6 of the form, and includes the Czech Republic. The bank account and the foreign resident are not required to be present in the same treaty member state. 

2. The transfer is being performed in order to make one of the following types of payments: 

• • Investment in stock

• Investment in real estate or other tangible assets

  • Providing a loan to an overseas resident

  • Providing an owner’s loan

That is it! Everything is going to be easier, take less time and be much more remunerative from now on! 

We the professionals working in Conbiz can help you receive the best decision for your business. For additional details and setting up a consultation meeting-, you can contact us here today.

To review the full statement of the Israeli Tax Authority to the Israeli Accountants Bar see here

This article was written by CPA Mr. Avi Babai.

It is important to note that this article was written solely in order to provide a general overview of the taxation issue to Israeli investors in the Czech Republic and is not a substitute for professional consultation by a qualified accountant or tax advisor.