The Mirror Image Of Judgment In The Matter Of Amishvili - Is The Israeli Tax Authority Gamble Right?

Author:Mr Yoad Frenkel
Profession:Ziv Sharon & Co

In civil appeal 476/17, Amit Amishvili Rafi v. Assessing Officer Tel Aviv 4, the Israeli Supreme Court upheld the ITA's position to classify the taxpayer as an Israeli resident despite staying only 30 days (!) in Israel in the 2007 tax year and to tax his income from gambling generated outside of Israel.

The Appellant was an Israeli citizen, single, whose family lives in Israel. From 2002 until 2009, the Appellant stayed alternately in Israel and abroad, while being exposed to the poker game and began to participate in foreign poker competitions abroad making fair profits over the years. The focus of the judgment was in the 2007 tax year, during which the Appellant stayed in Israel for 30 days. The court accepted the assessing officer's claim that the appellant was an Israeli resident in that year, according to the "center of life" test, and therefore his income derived abroad in that year should be taxed in Israel.

The court leaves open the question of whether a person may be a foreign resident for the purposes of domestic law in Israel, and yet not be defined as a resident for tax purposes in any other country in the world. In our opinion, such a situation is certainly possible, since the absence of such person for a significant period of time in a particular country, the absence of a permanent home in that state or the existence of a number of permanent homes alongside the deployment of assets, businesses and perhaps personal family around the world leads to the conclusion that the person is not Resident in a particular country. The "default" set forth in the judgment that if a person does not show that he is a resident of a foreign country for tax purposes it makes Israel the state of his residence for tax purposes, is not anchored in either domestic law or any treaty. Even the thesis of the prevention of "double non-taxation" does not, in my opinion, justify a situation in which that person who is not a resident of any country, does not enjoy the public services of any country and does not meet the residency tests in domestic law and the relevant treaty is taxed on his worldwide income in the default residence country.

Furthermore, in my opinion, a balanced examination of the judgment will lead to a conclusion that in the court's determination there is a service to foreign residents who do not wish to be taxed in Israel as well as gamblers who want to share with the tax authority losses.

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