Tax Treaty Case Law around the Globe 2018

S. 31Chapter 4 Israel: Residence and the Single Tax Principle

Yariv Brauner and Tsilly Dagan

4.1. Introduction

In this case, the Israeli Supreme Court considered the taxpayer’s status as an Israeli resident under a 2003 amendment to the Israeli income tax ordinance that had adopted a new definition of residency as the state where the “centre of one’s life” is situated (a domestic law term that is closely associated with typical treaty language). Although the case is not explicitly a treaty interpretation case, the authors find it interesting since it is a rare occasion where the Israeli Supreme Court interpreted the Israeli Income Tax Ordinance in light of what the court describes as the current “web of laws” and one of us has entitled “the international tax regime”. In that, it provides an opportunity to look into the ways in which the regime develops and domestic rules converge to both reflect and shape it. The court further adopted the so-called single tax principle in support of its conclusion that the taxpayer should be considered an Israeli resident.

4.2. Facts of the case

The taxpayer immigrated to Israel at the age of 11. He married and had four children. Until 1991 he was an employe...