Two years ago, the Calcalist financial daily reported Tuesday, the Tax Authority told the estate of Sammy Ofer, the shipping and property magnate who died in 2011, that it owed five years of back taxes totaling 940 million shekels ($245 million).
What happened in the years since then — whether the sides reached an agreement on the liability or whether a new order was issued — is unclear. Neither the authority nor Pini Rubin, the attorney overseeing the estate, would comment on the report.
The 2013 order was based on the Tax Authority’s estimate that Ofer had income of about 2 billion shekels in the 2006-2010 period.
One of the key questions tax assessors ask when estimating liability is about the taxpayer’s principal place of residence. If a person was in Israel for more than 183 days during the tax year or more than 425 days in the last three years, including 30 in the current year, he or she is regarded as an Israeli resident.
That factor is behind the government’s claim against Ofer and his wife Aviva.
But, according to Calcalist, Rubin maintains that the couple had not been Israeli residents since they left the country for Britain in 1969. In the mid-1970s they moved to Monte Carlo, where they were citizens, until they returned to Israel. They also acted to get European Union citizenship, he says.
“Many people think that the days test is fixed, but that’s exactly correct,” said Anat Tenne, a partner in the Tel Aviv firm Alter Attorneys at Law. “Your principal residence is determined by where your strongest ties are, which are measured by several factors.”
These include where the taxpayer lives and conducts business, where his or her family lives, membership in organizations and even subjective factors, such as whether the taxpayer regards himself or herself as Israeli.
Tenne has no role in the Ofer case and stressed she was only giving general answers about tax issues. She said the fact that Ofer was buried in Israel could not be considered a subjective criterion, which includes “where you choose to live, not where you want to be buried.”
Ofer’s heirs are not subject to estate tax under Israeli law. As long as the estate is cash in a bank account, there is nothing to prevent their heir from dividing it up and taking it, but if it is held in the form of real estate, companies or other assets, they could be liable for taxes, Tenna said.
Even after the estate passes on to the heirs, they could be liable for taxes.
“You can assess for taxes on the deceased up to four years after the death, even when the money has been transferred to heirs. Sammy Ofer died in 2011 and the news reports says the assessment on the estate was made in 2013, so the Tax Authority is inside the timetable,” Tenna said.