- The settlor was Israeli resident when the trust was settled and remains so, and there is at least one Israeli resident beneficiary in the year in question.
- There are Israeli resident beneficiaries, but the settlor - who was not Israeli resident - has passed away.
For any trusts settled by an oleh prior to their aliyah, the rules are as follows:
- If the settlor made Aliyah prior to 31 July 2013 (when the laws were enacted), the trust is exempt from taxation for 10 years from the date of Aliyah - provided that there is no income in Israel.
- If the settlor made Aliyah after the above-mentioned date, the trust will be exempt from taxation until the end of the 10-year exemption period of the settlor or any of the beneficiaries; whichever is earlier. As such, anyone considering Aliyah now who has previously settled a trust should ensure that they are aware of the taxation implications, even within their 10-year period.
As you will have noticed over the last few posts, the area of taxation of trust income is fairly complicated. If this is a situation that you think may affect you (be it for an existing trust, or a trust that is intended to be set up) please contact me to set up a meeting to discuss your particular situation.