רישום חוזר של נכסים בעקבות הליך גירושין

1. Factual Background

1.1. Mr. X and Mrs. Y (together the "Couple"), citizens of both "Country Z" and Israel, became tax residents of Israel during the 1990's ("Aliyah"). A decade later the parties separated, Mr. X ceased to be a tax resident of Israel (left for Z) and a couple of years later the Couple divorced.

1.2. Following the Couple's Aliyah and while they were still together they purchased three properties ("Properties") in country Z. The Properties were held in trust for Mrs. Y and the trustees were the Couple's children, one of whom is an Israeli tax resident. No notice of the trust was required to be given to any authority.

1.3. The Couples' divorce proceedings ended in an agreement, which was sanctioned by the Rabbinical Court. Pursuant to the said agreement the Properties were to be re-registered in Mr. X's name, which registration was carried out.

2. The Issue

What are the Israeli tax consequences of the re-registration of the Properties and what filing duties, if any, are prescribed in conjunction with the said re-registration?

3. Conclusion

3.1. In this tax opinion we examined, amongst others, the applicable legislation with respect to the taxation of real estate, as well as the common longstanding practice of the Israeli Tax Authorities with respect to capital gains arising out of divorces. The aforementioned examination led us to the conclusion that a valid contention may be raised that the re-registration does not constitute a disposition and hence no tax return need be filed.

3.2. In the alternative, the tax opinion suggested that one could contend either joint ownership of the Properties and consequently Mr. X was reregistered only as to 50% of the Properties or that according to the Israeli Tax Ordinance no Israeli tax is due on re-registration of those assets of which the trustees are non-residents.