Israel’s Tax Authority has its eye on nationals with financial accounts overseas

By: Trans World Compliance

The Israeli Tax Authority received information about hundreds of Israeli bank accounts with balances in the tens of millions of shekels that were not reported to Israeli authorities. Now, it mailed 220 letters to nationals, announcing the opening of files on them.  

Eran Yaacov, director of the Israel Tax Authority, revealed that hundreds of letters are being mailed to Israelis with offshore bank accounts. The announcement was made at the latest annual conference of the Institute of Tax Consultants in Israel during the opening panel. The reason behind the massive mailing is the large number of outcomes that the Tax Authority receives as a result of the FATCA and CRS information exchanges, for which tax reports are needed.    

"There are 88 countries that send us data by September each year, and it often happens that countries report even before that, so hundreds of letters will go out this week to those from whom we will actively request reports. We’ll open files on them," Yaacov added.  

The jurisdictions with the highest number of accounts from Israelis recorded thus far include the United States (19%), Switzerland (10.5%), the United Kingdom (9.6%), France (6.1%), and Romania (5%). 

Israel has signed more than 50 agreements to eliminate double taxation, under which certain nations have agreed to share information regarding Israelis’ income and currency within their borders. One of those agreements is FATCA, meaning that Israel also sends back information to the IRS on Israeli citizens and their financial assets with ties to the US. Likewise, under CRS, information about the financial accounts of foreign residents in Europe and abroad is automatically sent.   

The information collected showed hundreds of Israeli bank accounts with balances in the tens of millions of shekels that were not reported to Israeli authorities. Some of the files are being transferred in preparation for criminal investigations and proceedings. In other instances, files are tagged for monitoring and the parties involved are asked to report.   

Yaacov added, "We receive a huge deal of information. Some go immediately for investigation, such as where there are large unreported amounts; some go for tax assessments, and some expands the reporting base. We work according to a set of priorities. This week, we will contact hundreds of people to whom we’ll say that we’ve opened a file on them, which means that they have to file a return. If anyone doesn’t file a return, there are sanctions. What has to happen is that a return is filed immediately. I suggest from this platform first of all to hurry to file the returns, and to do so as soon as possible."