Special tax laws in the divorce of businessmen
Taxation of assets in divorce: Israeli law stipulates that the transfer of assets, shares, or funds between persons in promissory notes will be defined as a sale transaction, taxable to the state treasury. However, within the framework of the law, the legislature established restrictions that take into account such actions which were performed under special procedures, and then these actions will be exempt from paying tax. One of the exceptions is set out in section 4A of the Real Estate Tax Law and it concerns the transfer of rights in real estate transferred between spouses in a divorce proceeding. These transfers will be tax-exempt, as they do not constitute a sale event. Another exception is shares transferred between spouses in a divorce proceeding which under certain conditions may be exempt from tax and will not constitute a sale event as defined in section 88 of the Income Tax Ordinance.
To sum up the matter, it has been said that tax planning in the appropriate cases is a required and recommended procedure for any couple who is in divorce proceedings. Accompanied by an understanding between the spouses and rational and emotionless behavior, tax planning can help and turn the whole process into a new growth point for the family who will experience a faster, easier and much less painful divorce process for both spouses and especially for their children.
One of the exceptions is set out in section 4A of the Real Estate Tax Law and it concerns the transfer of rights in real estate transferred between spouses in a divorce proceeding. These transfers will be tax-exempt, as they do not constitute a sale event. Another exception is shares transferred between spouses in a divorce proceeding which under certain conditions may be exempt from tax and will not constitute a sale event as defined in section 88 of the Income Tax Ordinance.
To sum up the matter, it has been said that tax planning in the appropriate cases is a required and recommended procedure for any couple who is in divorce proceedings. Accompanied by an understanding between the spouses and rational and emotionless behavior, tax planning can help and turn the whole process into a new growth point for the family who will experience a faster, easier and much less painful divorce process for both spouses and especially for their children.
