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Taxation in Israel vs taxation in France

July 31, 2023 191 Time to read: 7 min.

When we want to make a decision to change our place of residence, we compare many factors to determine which country and even a particular city will suit us best. We compare everything from the climate to the cost of groceries at the local supermarket.

Taxes are also an important factor. Before you move to another country, you need to find out what part of your earnings will go to tax deductions. So you can plan your budget in advance for the first time and feel confident in your decision.

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    Taxation in Israel

    Israeli citizens pay income tax on all their income. The amount of income varies from 10 to 50%. A separate category of tax collections includes such categories as: dividends, royalties, interest. Another feature of taxes in Israel is that from the age of 18, all Israeli citizens are required to pay a tax on health insurance.

    Tax resident status

    If a person resides in Israel for at least 183 days in a calendar year, or if the total period of your stay in Israel was at least 425 days in the reporting year and 2 previous years, he has the status of a resident.

    A non-resident will be one who lives in the country for less than 6 months a year and does not work in Israel. In order for a non-resident not to pay the fee for health insurance, you need to report the loss of residence in Bituah Leumi.

    Income tax

    2 flags of france and israel 2This is probably the most interesting article of taxes. Personal income tax makes up the bulk of the direct taxes that we deduct on a regular basis. When moving to another country, it is important to know how much this amount will be and from what factors it is calculated.

    Income tax in Israel – personal income tax, or mas akhnasa – is paid only by employees or self-employed. The country has a progressive scale for calculating personal income tax. Since January 1, 2023, due to inflation, it has been revised upwards. The lowest rate today is 10% and the highest is 50%.

    The amount of personal income tax is calculated in a stepwise way: from each part of the income that fits into the tax framework. That is, when earning 9,000 shekels, a tax of 10% will be calculated on the amount of 6,790 shekels and 14% on the remaining amount.

    Benefits for residents

    In Israel, there is a special system of preferential units, which is called «Nikudot zikuy». Depending on your gender, age and social status, you will be credited with an individual number of preferential units. The minimum number is 2.25 points, which makes it possible to reduce taxes by NIS 5,886 per year. All these points and benefits are summed up and once a year income tax refund is made.

    Benefits for immigrants and repatriates

    For repatriates, there is a special privilege – exemption from taxes for 10 years. During this time, they do not pay taxes on their foreign income. In the first 6-12 months after repatriation, they are also exempt from contributions to Bituach Leumi. In their case, there is a minimum tax rate when buying real estate and other benefits.

    VAT

    With each purchase in the store, you will pay VAT in the amount of 17% of the purchase amount.

    Business taxes

    Those who are engaged in business pay income tax from 10 to 50%, as well as insurance premiums. There are two forms of small business – osek patur and osek murshe. In the case of Esek Patur, you do not have to pay VAT, and Esek Murshe can partially compensate for it at the expense of the development costs of the enterprise.

    Limited Liability Companies pay corporate tax of 23%. Goods and services are subject to 17% VAT.There are special tax incentives for owners of companies dealing with innovative technologies.

    Let’s see how much tax expenses per month the average teacher in Tel Aviv will spend and how much money he will have left for expenses (amounts are in USD):

    Salary: $3630
    Income tax (or payroll tax): -10% ($363)
    Total: $3267

    Taxation in France

    France has one of the highest tax rates in the world. However, the inhabitants of the country have long been accustomed to this and are responsible for filling out the annual tax return. The taxes existing in this country can be divided into three categories; indirect taxes included in the price of goods, or taxes on consumption, taxes on profits (income) and taxes on property.

    view of france

    Income tax

    Income tax is one of the most important elements of the French tax system. It covers all income received both in France and abroad. When calculating the amount, wages, pensions, rents, interest on deposits and other profits are taken into account. Taxes are paid not only by residents of France, but also by foreigners who receive official income in the country.

    The main feature of the income tax is that for its calculation, not a specific individual is taken, but the taxpayer’s family (spouses, children and dependents). Single people are considered a one-person family.

    The progressive scale of rates covers 5 groups of taxpayers with a range from 0 to 45% depending on the amount of annual income.

    VAT

    VAT in France is one of the main taxes that go to the state budget. VAT is levied on goods and services produced and used in the country. The standard value added tax rate in France is 20%.

    Payroll tax

    The employer himself pays contributions for his employee, deducting them from his salary. Monthly mandatory contributions to the medical, pension and social insurance funds are 15.5%. These funds are directed to the state budget for further payment of sick leaves, medical insurance and unemployment benefits.

    Business taxes

    The income tax rate in France is 33.33%. At the same time, there are special benefits for small and medium-sized businesses: for incomes up to 38,120 euros, a 15% rate applies, for incomes above this amount, the tax is calculated at the standard rate. Large companies pay an additional fee of 3.3% of the average tax amount.

    Companies that are engaged in the production, sale or leasing of energy-saving equipment are completely exempt from income tax. Enterprises engaged in research activities also have certain benefits.

    Now you have figured out the taxation system in Israel and France. Consider this information to understand which country is best for living and working in it. Thus, we see the key features of the taxation systems in the two countries.

    We made a table that shows the amount of taxes in two countries:

    Tax type Israel France
    Income tax 10 – 50% 0 – 45%
    VAT 17% 20%
    Business tax 23% 33%

    One of the main features of the French tax system is a social orientation, the predominance of indirect taxes, the special role of income tax, taking into account territorial aspects, as well as a wide system of benefits and discounts.

    The Israeli taxation system has many benefits for both tax residents and non-residents. There is no inheritance tax in Israel. Another interesting feature is the benefits for foreign workers who are qualified specialists.

    We understand that at first glance it may be difficult for you to understand the Israeli tax system, because it has many nuances with special benefits. Our experts will be happy to answer your questions and help you understand this topic.

    Get a free consultation from
    an Israeli citizenship specialist

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