Israel Tax Refund: All You Need To Know

Discovering you’re eligible for a tax refund in Israel can feel like finding hidden treasure. Don’t Worry! We’ve got your back!

Whether you’re an expat or a long-time resident, understanding how to claim your refund is crucial. This guide will walk you through the process, ensuring you get back what you deserve without any hassle.

Let’s dive in!

What Is A VAT Refund In Israel?

In Israel, visitors are eligible for a VAT refund. “Value Added Tax” is what VAT stands for. Many of the goods and items that travelers purchase while in Israel are subject to VAT.

In Israel, the current VAT rate is 17%.

The good news is that travelers can ask at many airports, seaports, or border crossings for a refund of the additional tax money before leaving the nation, even though it may seem a bit high.

They can also add a significant amount of money to your more costly purchases.

What Qualifies For A VAT Refund?

It’s likely that you traveled to Israel and saw notable cities like Tel Aviv, Eilat, and Jerusalem. Perhaps you made a few souvenir purchases to take back to your house.

So, are you eligible for a VAT refund in Israel on your purchases? To be eligible for a refund of VAT:

Your purchase must have been made at a store that participates in this refund (it is easy to check this, there will be a “tax refund for tourists” sticker on the door or window of the shop)
Your purchase must have cost more than 400 shekels (including the VAT tax)
You must be taking the items out of the country and they must be for personal use
Items may not be food, drinks, or tobacco (these do not qualify for a VAT refund)

Having an item’s receipt alone does not ensure a refund. Request a specific tax refund invoice from the store owner after making a transaction.

The store’s printed name must be on it. When requesting a refund, you must present the item, the invoice, and the receipt.

How Can You Get A Tax Refund In Israel?

Change Of Workplace During The Year

Since the progressive tax system calculates tax on your gross salary annually, it will be taken out of your pay stub directly each month. If your pay is not fixed, it will be reassessed every month.

There’s a good probability you overpaid your previous employer’s taxes if you changed jobs during the year.

You Have Filled In Form 101 Incorrectly

Each year, you must complete this form and give it to your company.

You include your name, last name, marital status, number of children, residence, location of employment, and any unique tax benefits (see below).

It’s also possible in this instance that the touch legume owes you money as well.

You’ve Been Made Redundant

Since the progressive tax system calculates tax on your gross salary annually, it will be taken out of your pay stub directly each month. If your pay is not fixed, it will be reassessed every month.

Most likely, if you were laid off, it was because you overpaid taxes to your company.

Recovering a portion of the taxes withheld from your severance pay is frequently feasible.

Increase Your Number Of Nekoudot Zikouye (Tax Credits)

In Israel, every citizen is entitled to a certain number of “tax points”, which can be used to reduce taxes.

In 2017, each point is equivalent to a 2,580 Nis discount.

Here is a non-exhaustive list of other “tax points”:

Israeli Tax Resident: 2.25 points
The woman is entitled to an additional 0.5 points.
Ole Hadash: Advantage during the 3.5 years of Aliyah.
1. 3 points for the first 18 months.
2. 2 points for the following 12 months.
3. 1 point for the following 12 months.
Children: varying between 0.5 and 2 points per child, depending on whether you are a man or a woman and on the child’s age.
Diploma.
Disabled child or child with “educational problems”: 2 points.
A soldier who has completed military service or checkout legume (national service): between 1 and 2 points (calculated according to length of service) for the 3 years following completion of military service.

What Israeli VAT Can Be Deducted?

Taxpayers may deduct any allowed VAT paid on supplier invoices incurred (input VAT) in the course of providing the taxable supplies from the VAT they owe on their sales (output VAT).

This includes the import VAT that is assessed when items are brought into Israel.

It is possible to deduct input VAT for a maximum of six months following the date of the purchase invoice.

It is also possible to deduct input VAT paid on capital goods used in the firm. However, there are severe limitations on the amount of VAT that can be claimed on assets that are used, entirely or substantially, to further the firm.

Expenses for employee entertainment are not covered.

The recovery of pre-VAT registration expenses is not very broad. Taxpayers are required to submit a unique application to the tax office.

How To Claim Your VAT Refund?

When departing Israel, seek out the counter offering a refund of VAT at the harbor, airport, or border crossing.

Since you cannot access your checked luggage once you have left it off at the airline, it is easiest to pack for travel with only your carry-on.

Bring the item, the invoice, and the receipt to the refund counter. To be eligible for the reimbursement, you will also need to present the tourist visa that you were issued when entering Israel.

You won’t be able to get a refund after you depart the nation. It should be noted that in Israel, a service commission is additionally charged when a VAT refund is obtained.

If you follow these steps, after your trip, you will have some additional cash.

Finally, if you would rather shop in Israel without having to pay VAT, go to Eilat. There is tax-free shopping in Eilat.

What Are The Returns Filings And Payments Deadlines For Israeli VAT?

VAT returns must be submitted by the 15th of the month following the reporting period’s end. Any VAT due should be remitted according to the same timetable, and may only be paid to approved Israeli banks.

In addition to the VAT return, taxpayers with an annual turnover above NIS 2.5m are required to provide an electronic transaction report.

Conclusion

Claiming your tax refund in Israel doesn’t have to be a daunting task. With the right information and a bit of effort, you can navigate the process smoothly and ensure you receive every Shekel you’re owed.

Refund Ready!

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