Definition: A home company is a type of company that is subject to a unique tax regime in Israel.The criteria for a home company are set out in Section 64 of the Israeli IncomeTax Ordinance, in conjunction with Section 76.

To qualify as a home company, a company must meet the following requirements:

• It must be controlled by a maximum of five individuals.
• It cannot function as a subsidiary.
• It must not attract genuine interest from the public.
• The entirety of its assets must consist of buildings.
• Its exclusive business activity must revolve around holding these buildings.

Tax Regime: The tax regime for home companies is unique in that it subjects the company's profits to taxation as if it were "transparent," with tax rates being applied based on the individual members of the company.

This means that the profits of the home company are not taxed at the corporate tax rate, but rather at the individual tax rates of the company's shareholders. This can result insignificant tax savings for home companies, as individual tax rates are typically lower than corporate tax rates.

Purpose of the HomeCompany Regime: The home company regime was created to provide tax relief to small private companies that are engaged in the business of renting out property. The purpose of the regime is to encourage these businesses to operate in Israel, and to help them to compete with larger, publicly traded companies.

Important Considerations:It is important to note that the Israeli courts have consistently upheld the purpose of the home company regime. This means that home companies must be structured and operated in accordance with the requirements of the regime in order to qualify for tax relief.

If a home company fails to meet the requirements of the regime, it may be subject to the corporate tax rate on its profits. In addition, the company may be liable for penalties and interest.

Conclusion: The home company regime is a valuable tax relief mechanism for small private companies that are engaged in the business of renting out property. However, it is important to ensure that the company meets the requirements of the regime in order to qualify for tax relief.