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Tax ruling 4387/13 international taxation clarification on the detachment date of an individuals’ residency for treaty purposes – January 2014

The Facts:   An Individual has left Israel along with his partner to a foreign state
                      during July 2010.

The individual was employed by a company residing in the foreign state which is a daughter company of an Israeli based company.
After arriving to the foreign state, the individual has received recognition as a resident for tax purposes and has submitted tax reports regularly to the foreign state tax authorities.
Since his departure to the foreign state, the individual continued holding a voluntary position in the service of the state of Israel, requiring him to maintain skills and qualifications. As a result he is forced to stay in Israel up to 90 days per year.
The individual does not qualify under the definition of an Israeli resident individual as stipulated in article 2 to the tax ordinance.
During 2011 the individual has been in Israel for 23 days and during 2012 he has been in Israel for 55 days while his partner remained in Israel for the equivalent amount of time.
The Request:   The Individual requests to set the conditions and the determining date where he will cease to be considered as an Israeli resident and will be considered as a resident of the foreign state for tax treaty purposes.  
The Ruling: the individual and his partner will considered as foreign residents for tax treaty purposes, from the 1st of January 2011 onwards (hereinafter: ”the date of residency detachment”) – as long as the following conditions are met:
1. The individual shall stay in Israel in every tax year after the date of residency
    detachment no more than 90 days per year including his actual service period. 
2. Should the period of service of the individual be reduced to below 30 day a year,
    the maximum staying period shall be reduced accordingly to up to 60 days per
    year including actual service days.
3. The individual’s partner shall be allowed to stay in Israel for no longer than 75
    days consecutively for every tax year.
3. The individual does obtain a residency certificate from the foreign state
    declaring him as a resident for tax purposes.

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