Israel

*Updated June 2020*

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• Legal system
• Inheritance and succession
• Estate planning
• Taxation
• Residence and domicile
• Other relevant information

Legal system

Israel is a common-law jurisdiction, influenced in part by the Ottoman and British rules that governed the territory prior to the establishment of the State in 1948. Since 1948, the Israeli Parliament enacts the country’s laws, and the courts interpret said laws, forming legal precedents.

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Inheritance and succession

Succession

The law that governs succession matters in Israel is the Succession Law 5725-1965 (the Succession Law), which provides that inheritances may be either testamentary or intestate. As a general rule, the Succession Law grants freedom of testation and does not include forced heirship provisions. Nonetheless, there are certain maintenance provisions in the Succession Law by which the immediate family, if they can provide evidence of financial dependency on the decedent during their lifetime, they may be entitled to certain portions of the estate. In this regard, the following are eligible legal heirs: the decedent’s spouse, the decedent’s children and their issue, the decedent’s parents and their issue, the decedent’s grandparents and their issue. The State of Israel may be the recipient of estate assets where there are no surviving family members living at the time of the decedent's death. The Succession Law provides that the execution of a last will is a personal act to be completed by a testator alone and defines the following four types of wills:.

Handwritten will

A handwritten will shall be handwritten, entirely in the testator’s own handwriting, signed, and dated by the testator.

Will made in the presence of witnesses

A last will is valid if it is in writing (not necessarily handwritten), dated, and signed by the testator before two witnesses after the testator declared before the witnesses that it is their last will.

Will made before an authority

A will made before an authority must be made by the testator orally stating its provisions before a judge, a court registrar, the Succession Cases registrar, a member of the religious court, an Israeli notary, or by presenting a written will by the testator to any of these authorities.

Oral will

The oral will is a unique option declared orally by an individual who reasonably believes to be facing imminent death under all circumstances. The will is then orally declared before two witnesses, who understand the language thereof. The testator’s instructions and the circumstances must be recorded in a memorandum signed by the two witnesses and deposited with the Succession Cases registrar. An oral will becomes void if the testator is still alive one month thereafter.

As mentioned above, the Succession Law grants freedom of testation. In this regard, the courts have a strong tendency to validate a will even where there are certain deficiencies, provided that there is clear evidence that the will reflects the testator's wishes and the main requirements set out above for each of the wills, have been met. The case of Attorney-General v Moshe Lishitzki evidences the courts' approach, where the Supreme Court ruled that a last will and testament is valid although there were some uncertainties in the language thereof.

Mutual wills

In 2005, the Succession Law was amended to provide for the execution of mutual wills by spouses, in reliance on each other's wills. If a mutual will is to be amended during the spouses' lifetime, then notice must be provided to the other spouse and such notice automatically revokes both wills. If a mutual will is to be amended after the death of one spouse, then

• if the spouse's estate has not yet been distributed, the surviving spouse must renounce their share of the estate of the predeceased spouse; and
• if the estate has been distributed, the surviving spouse must return the assets inherited from the decedent spouse.  

Family law and defined inheritance rules

If the decedent died intestate, the decedent’s spouse (including a common-law spouse) is entitled to all of the movable property, including any car that was part of the common household. Additional shares of the estate depend on the family relationship of the other surviving heirs. If the decedent is survived by children, grandchildren or parents, then the spouse's share is 50 per cent of the estate. If the decedent is survived by siblings, issue or grandparents, the spouse's share is two-thirds of the estate, provided that the spouses were married for more than three years and the spouse will receive the entire share of the apartment if the spouses lived together in that apartment.

Probate process

The Israeli courts have jurisdiction over the estate of any person who resides in Israel at the time of their death or who owned property in Israel. Upon such person’s death, an application for a probate or a succession order should be filed with the Succession Cases registrar, together with original documentation including, a death certificate and an original will. If the decedent did not reside in Israel, it is also necessary to submit a legal opinion provided by an attorney who is familiar with the succession laws in the decedent's jurisdiction of residence. 

Mental capacity

Any person over the age of 18 years is capable of executing a will and taking any other legal actions, unless they are declared by a competent court to be legally incompetent, as determined in the Law of Legal Capacity and Guardianship 5722-1962 (the Capacity Law). A guardian may be appointed for the person and/or property of a legally incompetent person. As of 2017, an alternative to the appointment of a guardian is for a legally competent individual may execute an enduring power of attorney (PoA) in favour of an agent of their choice. The enduring PoA (EPA) relates to financial, certain medical and/or personal matters. While the Capacity Law provides for certain limitations of the actions of the agent under an EPA in order to protect the principal, it may include instructions/requests that the principal can provide to the agent in order to assist in the decision-making processes and/or as evidence of the principal's wishes in the event of court proceedings to permit certain transactions as required by the Capacity Law. The EPA is deposited with the guardian general, although it does not act in a supervisory/regulatory agency capacity in this situation.

Certain personal acts , such as the execution of a last will and testament, adoption or voting in elections, may not be delegated by an EPA while other actions such as charitable donations, gifts or loans have to be referred to implicitly in the EPA in order for the agent to be allowed to take said actions. In addition, certain actions such as transactions in real property require prior court approval.

The Family Court in Kiryat Gat decided that a PoA granted in 2014, before the amendment of the Capacity Law, could be classified as an EPA even though the law may not be applied retroactively and the formal requirements were not fulfilled. The PoA, limited to a period of 20 years, was signed by the principal in favour of his children at the time that he was fully competent but suffering from Alzheimer’s disease and fully aware of the fact that his mental capacity was decreasing. The PoA allowed the children to represent their father in the management of his company. The court held that the PoA was valid after the principal lost legal capacity, since it was signed while he was of sound mind, respecting the principal’s wishes. 

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Estate planning

Use of trusts in estate planning

The trust institution has been recognised under the Israeli legal system since the 1920s. In fact, the trust concept was recognised even prior to the 20th century. The enactment in 1923 of the Charitable Trusts Ordinance sets out the rules for a public trust. Private trusts were not regulated by statute until 1979, with the enactment of the Trust Law 5739-1979 (the Trust Law). The Israeli legal system recognises foreign legal structures, including trusts established under the laws of foreign jurisdictions. However, Israel is not a party to the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition.

The Trust Law, which regulates various forms of trusts, resembles the Anglo-American model, although the general applicability of this law is wider. A trust has no necessary form and no particular procedure is necessary for its formation. A trust purports to cover any situation in which one is empowered to deal with property for the benefit of another.

An Israeli trust has several specific features. The trustee is endowed with control over the assets, although there are no particular conditions as to the manner of control. A trustee is deemed to have control if the trustee can affect the way by which the trust assets will be dealt with, including whether these are distributed, invested or exchanged for other assets. The trustee must exercise control over assets in order to fulfil the purpose of the trust. A trust will be valid and enforceable where there is an identifiable beneficiary, or where there is a purpose to the trust.

A trust is not a legal entity under Israeli law, and assets cannot be registered in the name of the trust per se. However, a common practice is to use an underlying company as vehicle to hold the assets for the trustee. Such company is considered as a 'flow-through' entity for tax purposes, provided it is incorporated to hold trust assets, the trustee holds all of its shares directly or indirectly, and the required notice has been made to the Israeli Tax Authority (ITA).

Creation of a trust

Trust created by contract

The rights of the parties, the trustee and the beneficiaries, are determined in an agreement. Such agreement subject to the applicable contract law, and thus may be entered into both in writing and orally.

Trust created by deed (hekdesh)

There are two main types of trusts created by a deed: an inter vivos trust and a testamentary trust. In both cases, the deed must be in writing, express the intention of the settlor to create a trust and outline the purposes, properties and terms and conditions of the trust.

An inter vivos trust is set up by the execution of the deed before a notary, and it commences when the trustee has control over the trust assets. A testamentary trust is a trust whose terms and conditions are set out in a valid will that complies with the provisions of the Succession Law, and it commences upon the issuance of a probate order.

Where assets are effectively held in trust but no deed is found, then the court may declare the existence of a trust and define its purposes, properties and terms and conditions.

An Israeli private trust does not require registration in any public registrar and is kept confidential within the notary's office. Only certain information is disclosed to the ITA in cases where the trust is considered reportable under Israeli law.

Contrary to a private trust, a public trust, i.e. a trust (not necessarily a hekdesh), one of whose purposes is a public purpose, is required to be registered with the Registrar of Public Trusts (Rasham Hahakdashot).

Comparison of trusts by contract and by deed

A trust created by deed (hekdesh) must be in writing and comply with certain formal requirements as mentioned above, while a trust created by contract usually needs no formality but is limited to creating an inter vivos trust.

A trust created by contract may be amended at any time by the parties. A trust created by deed may be amended but only if this is explicitly provided for in the original deed or by the agreement of both the settlor and all the beneficiaries. A court may amend the trust, taking into consideration the purposes of the trust.

Courts are permitted to provide instructions to trustees in connection with their duties, as well as instructions that the court deems necessary for the effective administration of the trust.

Duration and termination

There is no rule against perpetuities under Israeli law. A trust may expire if the assets of the trust have been distributed to the beneficiary or if the objects were accomplished.  

Beneficiaries

The settlor may appoint a primary beneficiary and a secondary beneficiary. The right of a beneficiary under a deed is not assignable, may not be pledged or attached, unless permitted in the deed or ordered by the court. It may then be alienated only for claims of alimony or taxes due from the beneficiary. In specific circumstances, such as in cases of incapacity, the court may also decide that the right of the beneficiary shall be available in order to satisfy other debts of the beneficiary.

Trustees

Any natural or legal person, capable of undertaking binding obligations and performing legal acts, can act as a trustee. Natural persons must be at least 18 years old, and duly competent. A corporation may serve as trustee. A trust may have several trustees.

The duties of trustees include: safekeeping the trust assets; managing and developing them for the purposes of the trust; and doing all that is necessary to fulfil their duties. They must act diligently and faithfully, as would a reasonable person in the same circumstances.

Trustees are not entitled to remuneration for the performance of their function unless this is part of their business, although the court may award remuneration if it finds that the extent of the functions would justify such remuneration. Trustees are entitled to indemnification for reasonable expenses incurred by them in their position as trustees. Trustees must hold trust property separately from any other property or in a way that makes it possible to distinguish between them. Trust investment regulations are prescribed by the Minister of Justice for certain trustees or guardians. Trustees also bear duties regarding the maintenance of accounts, and reporting to government authorities.

A breach of duty entitles both the beneficiaries and the trust to compensation from the trustee.

Trustees may apply to the court to confirm that their acts conform to the law. Self-dealings are void, and trustees, or any of their relatives who benefit from any transaction, may be required to account for the value of the benefit, which has been obtained.

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Taxation

Income tax system

According to Israeli tax legislation, Israeli-resident individuals and entities are subject to Israeli tax on their worldwide income and gains. Consequently, any income produced or accrued from a source within Israel or abroad by an Israeli tax resident, is subject to tax in Israel. At the same time, a foreign tax resident (namely, a person who is not regarded as an Israeli tax resident), is generally subject to tax in Israel but only with respect to income that was derived from a source within Israel. The Israeli tax system grants tax credits on foreign taxes paid outside Israel, subject to several conditions.

New Israeli residents and veteran returning residents, are exempt from reporting and tax in Israel with respect to foreign sourced income and assets. In addition, during the ten-year benefits period, any capital gain derived from the sale of foreign assets is tax-exempt in Israel and, following the expiration of the benefits period, a partial exemption is provided.

Moreover, during the ten-year benefits period, entities which are managed and controlled from Israel will not be regarded as Israeli tax residents merely due to the fact that they are managed and controlled by a new Israeli resident or a veteran returning resident. However, in recent years, the ITA had adopted a stance, according to which, during the ten-year benefits period, a new Israeli resident or a veteran returning resident can be viewed as having constituted a permanent establishment in Israel for a foreign company, based on the activity of the individual and/or the entities owned thereby in Israel.

In addition, the anti-avoidance roles regarding controlled foreign corporations and foreign occupation corporations, are not applicable during the ten-year period.

Personal income tax rates

Personal income tax rates as of 2020 are as follows:

• Earned income from vocation or employment: 10-47 per cent, based upon a progressive tax system.
• Dividend: 25-30 per cent (depending on whether the individual holds more than 10 per cent of the company's means of control).
• Capital gains: 25-30 per cent (dependent upon whether the individual holds more than 10 per cent of the company's means of control).
• Interest: 15-25 per cent.
• Surtax: an individual whose taxable income during a tax year exceeds ILS651,600, shall be liable to additional tax on part of their taxable income, which exceeds such amount, at a rate of 3 per cent.
• Mandatory legal payments for national insurance and national health, commences at the age of 18 up to retirement age.
• Employment Relations: national insurance and national health payment shall be made by the employer and the employee at a rate of up to 19.6 per cent of the employee's salary.
• Independent Contractors: national insurance and national health payment shall be made by a contractor at a rate of up to 17.83 per cent of the contractor's compensation.

There are certain types of citizens/employees with different mandatory allocations towards national insurance and national health payment, such as: unemployed persons (up to 12 per cent); early retirees (up to 11.79 per cent); and housekeepers (up to 7.25 per cent). 

Taxation of trusts

The classification of a trust for Israeli tax purposes is determined according to the residency of the settlors and the beneficiaries of the trust. In this respect, it should be noted that neither the residency of the trustee nor the place of control and management of the trust are relevant for the purpose of determining the tax classification of the trust under Israeli tax law.

An Israeli trust is treated and considered as an Israeli individual resident for tax purposes. As such, it is subject to tax and reporting in Israel on its worldwide income. The special benefits for new Israeli residents and veteran returning residents may also apply to a trust, subject to the identity of the settlors and beneficiaries.

The taxpayer is generally the trustee, unless otherwise elected.

An underlying company is a separate legal entity that holds a trust’s assets directly or indirectly for the trustee. The shares of this entity, which can be an Israeli or a foreign company, are held, directly or indirectly, by the trustee. The underlying company is a flow-through entity for Israeli tax purposes.

Corporate income tax rates

Israeli company tax rates in 2020 are as follows:

• Regular income: 23 per cent.
• Tax breaks for industry and technology companies from a ‘preferred enterprise’ according to the Law for the Encouragement of Capital Investments, 1959. Development: 7.5 per cent in development area A, 16 per cent elsewhere in Israel. In the case of preferred technology companies, the general tax bracket is 12 per cent, and in development area A the tax rate is 7.5 per cent. Dividends therefrom are taxed at 20 per cent. The resulting combined tax burden on distributed profits is 26-33.8 per cent, subject to any treaty.
• Other tax breaks exist for large-scale ‘special preferred enterprises’, tourism, technology and agricultural enterprises.
• Import duty breaks under Israel’s free trade agreements with Canada, the European Free Trade Association, the EU, Mercosur, Mexico, Jordan, Turkey and the US.

Capital gains tax

Capital gains are divided into real (inflation adjusted) and inflationary components. Individuals are generally taxed on realised gains at rates of 25 per cent to 30 per cent (and an additional 3 per cent tax on income higher than ILS651,600). However, tax rates of up to 50 per cent are possible for any portion accruing before 2003. Companies pay tax on realised gains at the standard rate of company tax (23 per cent: see above). The inflationary component is exempt from tax to the extent that it accrued on or after 1 January 1994, and is generally taxable at a rate of 10 per cent, to the extent that it accrued before that date. Israeli real estate sales are subject to land appreciation tax according to separate but similar rules. 

Non-residents (taxable on)

Subject to any tax treaty, foreign residents are subject to Israeli tax on income and certain capital gains that are accrued or derived in Israel, according to detailed source rules. Foreign residents may be exempt:

• In accordance with any applicable tax treaty.
• On capital gains from Israeli securities unrelated to Israeli real estate or natural resources.

Withholding tax rate (non-treaty)

Salaries are subject to detailed withholding rules, and payments to suppliers are subject to withholding tax rates, typically 20-30 per cent, unless the recipient holds a withholding tax clearance from the ITA. Passive income is subject to withholding tax at rates of 15 per cent to 30 per cent.

Withholding tax rate (treaty)

Subject to any tax treaty, payments to foreign residents are typically subject to 25-30 per cent withholding tax. This tax is usually withheld by Israeli banks unless presented with clearance for any lower rate from the ITA, for example, pursuant to a treaty.

Taxation at death

Currently, Israel does not impose estate or inheritance taxes upon death. Israeli residents who receive assets (whether as an inheritance or as a gift) from abroad, may receive a ‘step up’ to the cost basis and purchase date for capital gains tax (CGT) purposes to the market value and the date of receipt, by approaching the ITA for a tax 'green route' ruling.

Other taxes

Gift tax: Israel does not impose gift tax in the case of gifts made in good faith. However, gifts of assets to foreign residents are subject to CGT.

Exit tax: Israel applies CGT to individuals who have ceased being Israeli tax residents. The individual may pay the tax on the date of residency relinquishing based on the property's fair value, or may postpone the payment until the actual sale based on a pro rata calculation.

Tax treaties

Israel has tax treaties with more than 50 countries. In this regard, Israel has recently signed on new tax treaties with Australia and Serbia. These treaties came into force on 1 January 2020. In addition, a substantive amendment has recently made in the tax treaty between Israel and the UK and Northern Ireland, which came into force on 1 January 2020. For further details, visit:

http://mof.gov.il/en/InternationalAffairs/InternationalTaxation/Pages/AvoidanceDoubleTaxationTreaties.aspx

On 13 September 2018, Israel ratified the Multilateral Convention to Implement Tax Treaty Related measures to prevent BEPS (MLI). The MLI came into force with respect to the relevant Israeli tax treaties on 1 January 2019.

As a consequence of the MLI, the tax treaties of the parties are subject to a special arrangement, such that with respect to specific articles set out in the MLI, the MLI will apply notwithstanding the articles of the relevant tax treaty between the parties. For more information visit: https://www.oecd.org/tax/treaties/mli-matching-database.htm

Israel has also signed comprehensive social security conventions with the 19 countries. For details visit:

https://www.btl.gov.il/English%20Homepage/Benefits/International%20Conventions%20on%20Social%20Security/Pages/Existingconventions.aspx

Tax information exchange agreements

Israel implemented CRS for the automatic exchange of information on income and account balances in FIs from March 2019 onwards.

Israel is a signatory to the Intergovernmental Agreements with the US for the implementation of FATCA.

Israel is a signatory to the Convention with respect to income tax only.

Israel is a signatory to the Multilateral Competent Authority Agreement (MCAA) on the automatic exchange of country-by-country reports, facilitating the implementation of transfer pricing reporting standards developed under Action 13 of the OECD G20 Base Erosion and Profit Shifting Project.

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Residence and domicile

Special rules on becoming resident

According to Israeli tax law, an individual is considered an Israeli resident for tax purposes, if their 'centre of life' is in Israel.

The centre of life test is a 'facts and circumstances test', which examines the individual's family, economic and social ties. The criteria for the test is comprised of two levels:

• the objective level: where the majority of the individual's relationships are physically found, such as the individual's permanent home, presence of close family, regular place of employment, membership in organisations and institutions, etc; and
• the subjective level: what was the intention of the individual and where the individual considers the centre of life to be, and whether or not, according to their own subjective feelings and opinions, they consider themselves an Israeli resident.

In addition, two rebuttable presumptions are provided, counting the number of days the individual has spent in Israel (a day: including part of a day). Under these presumptions, an individual is deemed an Israeli tax resident if:

• an individual who stays in Israel for more than 183 days in a tax year; or
• more than 425 days over the course of three consecutive tax years and at least 30 days in the third tax year.

However, if the presumptions are not met, it does not necessarily mean that the individual is not an Israeli tax resident and thus the subjective centre of life test should be examined. Both the individual and the ITA can refute the presumptions.

Special rules on ceasing tax residence

An individual ceases to be an Israeli tax resident if the individual does not meet the definition under Israeli tax law and also fulfil the following:

• the individual stayed abroad for at least 183 days or more, in each year, during the current tax year and the following tax year; and
• their centre of life was not in Israel for additional two years after the tax years mentioned in the first condition.

Domicile concept for gifts and inheritance

NOT APPLICABLE

Taxation of holdings by non-residents on death and of gifts

• Gifts: NOT APPLICABLE
• Death: NOT APPLICABLE 

Reporting/auditing requirements

Yes. An individual who meets one of the rebuttable presumptions mentioned above, but claims to be a foreign resident, must file a residency declaration form, attached to the annual tax return, which consists of a list of questions intended to assist in determining the individual's centre of life status.

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Other relevant information

Asset protection laws

Yes. There are several asset protection laws applicable under Israeli law such as the bankruptcy law or the spouse property law.

Foreign currency restrictions

No.

Foreign ownership restrictions

No.

AML/due diligence and other requirements and regulatory precedures

The Israeli the AML Law was enacted in 2000 and the Israeli Money Laundering and Terror Financing Prohibition Authority (IMPA), which serves as a financial intelligence unit, was established in 2002. Israel has an extensive anti-money laundering regime, and is a member of the Financial Action Task Force (FATF). 

The AML Law includes mainly the following aspects:

• the prohibition of money laundering activity and the designation of certain activities as criminal offences under the AML Law;
• the imposition of identification, registration and reporting duties on certain business sectors as determined by the relevant business sector's authority;
• the imposition of reporting requirements relating to the transfer of cash and certain financial assets into and out of Israel; and
• additional provisions regarding reporting duties with respect to certain cash payments, regulatory powers, administrative sanction, forfeiture provisions, exemption from liability and auxiliary powers, provisions regarding databases, the competent authority, transfer and preservation of information etc.

In general, The AML Law designates the following activities as criminal offences: 

• performing an action in 'prohibited property' (i.e. property originating (directly or indirectly) from certain specified offences under the AML Law, or which was used to commit such an offence or which enabled the conduct of such an offence or property in which an offense was committed), in order to conceal or camouflage its origins, the identity of the owners of interests therein, its location, its movements or any action therein;
• performing an action in property or the provision of false information, in order to avoid certain reports required under the AML Law or in order to cause an erroneous report pursuant to one of those sections; or providing false information regarding prohibited property; and
• performing an action in property, knowing that the property in question is 'prohibited property', having a value determined under the AML Law (currently, the value is at least ILS150,000) and for the purpose of this sub-section, 'knowledge' does not include 'turning a blind eye' to the matter. With respect to this sub-section, criminal liability shall not be imposed on the relevant entity if:
  • the entity reported to the police is as prescribed under the AML Law or with respect to specific supervised entities under the AML Law (certain financial entities and dealers in precious stones), the entity reported as required from such entities under this Law, as applicable.

• Over the years since the AML Law was enacted and pursuant to this law and the Counter-Terrorism Law, 5776-2016 (the CTL Law), several anti-money laundering orders were issued, imposing AML duties on various business sectors, among them: certain financial entities (including banking entities, portfolio managers, insurance companies, credit providers etc.), dealers in precious stones, attorneys and accountants . These orders include, in general, the following duties: registration of client's details, client identification, performance of customer due diligence, documentation and record-keeping, examination  of the identity of  the clients and counterparties  against lists of declared terrorists and terror organisations, reporting duties to the Israel Money Laundering and Terrorist Financing Prohibition Authority (attorneys and accountants are not required to file such reports) etc.  

• AML duties of attorneys and accountants (business service provider, BSP): The ethics rules of the Israeli Bar Association determine that an attorney shall not provide certain 'business services' (as detailed below) as part of their professional services, if the attorney assesses there to be (after reviewing the information provided by the client) a high risk of money laundering or terror financing. Similar provisions exist in the ethics rules applicable to accountants. In accordance with these rules and the AML Law, this prohibition shall only applies to 'business services', which is defined as any of the following activities:
  • purchase, sale or the perpetual leasing of a real estate;
  • purchase or sale of a business;
  • management  of a client's assets, inter alia, managing  monies, securities and real estate, as well as management of client bank accounts or accounts in one of the financial institutions listed under the AML Law;
  • receipt, possession or transfer of funds for the purpose of the establishment or management of a corporation; or
  • establishment or management of a corporation, business or a trust for another.

In a nutshell, any BSP is required to comply with client identification and customer due diligence duties, documentation and record-keeping duties, the duty to examine the identity of the client against the 'terrorists lists' and the duty to provide certain documents in accordance with a requirement of the Commissioner of Business Services Providers in the Israeli Justice Department.

It should be noted that the AML Law acknowledges that its provisions and the provisions of any order under this Law shall not impair the attorney-client privilege.

Customer due diligence requires the client to fill in a detailed questionnaire and sign a declaration regarding the details provided, all in a format provided under the order. The questionnaire includes, inter alia:

• identification details including the client's controlling persons (if applicable);
• the client's occupation/business;
• the requested business service and its purpose;
• the source of funds for the transaction; beneficiary's information (if applicable), and information with respect to what are termed 'politically exposed persons'.

It should be noted that among the details required in respect of trusts is information regarding the trustee, the trust settlor, the trust protector and the trust beneficiaries.

Prohibition of Terrorism Financing

The CTL Law was enacted in 2016, the object of which is to establish criminal and administrative legal provisions, including special enforcement powers, for the purpose of combatting terrorism, including to prevent the establishment, existence and activity of terrorists, as well as preventing and foiling terrorist offenses carried out by terrorist organisations or individuals, all as detailed under this law. The CTL Law designates various activities as criminal offences, includes reporting duties regarding any property of the terrorist as well as the property of a designated terrorist organisation and sets out mechanisms for declaring terrorist organisations.

Additional point to note: as part of the Israeli AML regime, in March 2018, the Minimizing Use of Cash Law, 5778-2018 was enacted, imposing limitations on the use of cash and checks, including foreign currencies. The limitations include ceilings for giving and receiving cash payments, donations, loans and gifts, while differentiating between transactions made between business parties, non-business parties, tourists, attorneys and accountants (the latter within the framework of their providing a business service to their clients). In addition, payments by check, as well as endorsing checks may only be made if certain requirements, as provided under this Law, are met. In general, this Law became effective on 1 January 2019.  

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