Arnona Discount for Amutot
How to apply for an Arnona discount for Amutot
This article contains information regarding obtaining an arnona discount for amutot. Our law firm in Tel Aviv and Jerusalem, has many articles on the registration, liquidation and management of non-profit organizations (amutot in Hebrew), among other subjects. This article by Michael Decker, an expert in legal association issues, explains the conditions for receiving a discount on municipal property taxes (“rates” or arnona in Hebrew) for an amuta.
In the past, the arnona discount for amutot was primarily “theoretical”
Israel has many discounts for various organizations, including property taxes for non-profit organizations and a provision for arnona discounts for amutot. Yet, until August 2016, non-profit organizations were entitled to a 67% discount on municipal taxes only if they “primarily” served residents of the local municipal authority from which the discount was requested. Since the legislator’s intent vis-à-vis the stipulation “primarily” was unclear, most local authorities interpreted it in the most extensive manner. Did the association ever serve a single person who came outside the boundaries of that authority? If so, it probably did not deserve the discount.
In the past, the discount was rarely given without a legal fight. Local authorities have harshly tasked associations trying to prove the scope of their activity. As a result, many amutot regarded the discount as primarily theoretical and did not even bother to apply. Many organizations paid municipal taxes like a regular business. The alternative was wasting time and money. It’s hard to tell the municipality something it doesn’t care to accept.
This is a classic example of the good intentions on the part of the legislature proving incompatible with reality. The municipality is always happy to extract more money via arnona payments. On the other hand, the local authority understands very well that the amuta will not stop working or serving the local residents just because it does not receive the discount it deserves.
Why are Arnona discounts for Amutot now practically feasible?
The primary legislation that regulates the subject of municipal taxes in Israel is the Municipal and Government Taxes Ordinance, 1938. The Israeli legislature often prefers to add amendments to existing orders from the 1930s and 1940s. It’s less complicated than enacting a new and comprehensive law. Pressure from lobbyists and stakeholders adds amendments to the orders over time.
In this case, the legislature understood that few non-profit organizations receive the discount without a legal struggle. Furthermore, many do not even apply. Current legislation that regulates the proper functioning of an amuta already results in most associations helping the residents of the municipality in which the amuta operates. On August 2, 2016, the Knesset approved the amendment to the aforementioned ordinance. This results in making arnona discounts for amutot viable for most associations. This amendment naturally has enormous economic implications, as associations get to save money, while municipal authorities find their budgets short.
How to receive an Arnona discount for an Amuta
An Amuta can receive a 67% discount on Arnona by proving that it is a properly registered and administered organization for the benefit of the public. The relevant discount for municipal taxes will be given for a period not less than three years, but is subject to the submission of a signed affidavit that the goals and activities of the amuta will not change during the discount period. The declaration will be submitted after the first year of the discount and before the discount is extended further. Proper registration and administration of an amuta can be achieved with the help of a law office specializing in association issues.
Contact our law office in Tel Aviv and Jerusalem, for legal information and assistance in registering and managing an amuta, obtaining a discount on property tax for associations, and more.