Semi-Annual Reporting Deadlines

Semi-annual reporting is required twice a year:

- By July 31 for the January-June period.

- By January 31 for the July-December period of the previous year.

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Abbreviated Reporting: An Alternative to Annual Reporting

In addition to semi-annual reporting, there is an option for abbreviated reporting on foreign income. This is an annual reporting obligation designed to simplify tax reporting and payment procedures.

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Who is Required to File an Abbreviated Report?

Abbreviated reporting applies to an individual who meets three conditions:

1. They have "foreign income" that is not tax-exempt in Israel.

2. They are not required to pay monthly or bi-monthly advances.

3. They are not a new immigrant or returning resident whose foreign income for that tax year is entirely tax-exempt.

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What is "Foreign Income"?

"Foreign income" includes:

- Capital gains from the sale of foreign securities.

- Profits from securities of an Israeli company listed on a foreign stock exchange.

- Interest income sourced from abroad (subject to 25% tax).

- Income from renting real estate abroad (subject to 15% tax).

- Dividend income sourced from abroad (subject to 25% or 30% tax).

- Income from gambling, lotteries, or prizes (subject to 35% tax).

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Deadline for Abbreviated Reporting and Advance Payment

The abbreviated report and advance payment must be made by April 30 of the year following the reporting year.

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Calculating the Advance in Abbreviated Reporting

- Multiply the foreign income by the applicable tax rate.

- Subtract the foreign tax paid from the advance amount (up to the calculated advance amount).

- No deductions, credits, or offsets can be made against the advance payment.

- For rental income and income from gambling/lotteries/prizes, foreign taxes paid cannot be deducted.

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Consequences of Not Filing a Report and Paying the Advance on Time

Failure to meet reporting and payment obligations may result in:

- Liability for linkage differentials and interest at an annual rate of 4%.

- A late payment penalty of 0.2% for each week of delay or part thereof.

It should be noted that so far, the Tax Authority has not taken severe sanctions for non-filing, but this situation may change.

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Summary

Understanding reporting and payment obligations in the field of capital market taxation is complex but critical. Filing reports and paying advances on time is a legal obligation, and failure to comply may result in financial sanctions.

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