Foreign Trust Exemption
A trust created by a non-Israeli resident settlor for non-Israeli beneficiaries is generally exempt from Israeli tax on income from foreign sources. This exemption makes Israel an attractive jurisdiction for managing foreign trusts with no Israeli beneficiaries. However, if an Israeli beneficiary is added, the tax treatment may change.
Israeli Beneficiaries
If a foreign trust has Israeli beneficiaries, distributions to those beneficiaries may be taxable in Israel. The Israeli beneficiary must report trust distributions in their annual return. The specific tax treatment depends on the nature of the distribution (income vs. capital).
Important Note: The information on this website is for general informational purposes only and does not constitute professional tax advice. Consult a qualified tax advisor before making financial decisions.