Arnona Reduction for Small Businesses

Arnona (property tax) reduction for businesses in Israel – when is it granted? Many businesses are interested in reducing their arnona payments. This is especially important these days, when the tax burden outweighs the revenues of many businesses due to the corona crisis. In this article, an arnona and real estate lawyer from our firm explains the requirements for reducing the arnona taxes for your business and saving on arnona.

Our law firm in Jerusalem and Tel Aviv specializes in arnona and real estate law. Our firm assists its clients in dealing with the various authorities when applying for an arnona discount for businesses or an arnona reduction or exemption, and it also represents its clients before the various courts in objection and appeal proceedings related to arnona.

Arnona Rate for Businesses

The current period is complex for everyone, but especially for business owners affected by the corona crisis. The crisis has caused major damage to the Israeli economy, and many businesses have found it difficult to cope with their regular payments. Some have even been forced to initiate insolvency proceedings due to the crisis. One of the most problematic issues during this period is the issue of municipal taxation and, especially, arnona payments. This is because the payments are determined simply by the holding of property for business purposes.

Business profits or their absence do not at all affect the arnona rate for businesses. Thus, many businesses find themselves needing to pay the same amount of tax as they did before the crisis, but with much lower revenues or even losses. This situation does not allow them to meet arnona payments.

Arnona Reduction – What is it Important to Know?

The criteria for determining arnona payments, as set out in the Arrangements Law in 1993, are more uniform today than they were in the past. Despite this, there are still significant differences between arnona payments for the same types of businesses in the various municipalities, and sometimes even between businesses within the same municipality. The criteria for determining the arnona rate for businesses are the type of property, its use, its size, and its location. As stated above, the level of income of the business is not one of the criteria set by law.

There are various reasons for the differences in the arnona rate for similar businesses, the prominent one being the different calculation methods used by each and every municipality in determining the rate. In the same manner, different rates apply to the use of similar properties due to different classifications determined by each municipality. These and other factors lead to differences between arnona charges for similar businesses, which means higher payments for business owners without their even being aware of it.

Our firm handles cases involving differences in arnona charges for businesses. We compare between the payments charged by various municipalities and carefully examine the procedures for calculating the size of properties. Our office has often encountered cases in which businesses discovered that their payments were higher than required and managed to save a significant amount on their arnona payments. We recommend every business owner to carefully examine, once every so often, whether the arnona rates that he is being charged correspond to the actual requirements or whether they need to be reduced. If necessary, an objection or appeal may be filed against the amount charged.

Applying for Arnona Reductions for Businesses

In general, there is a limited number of cases in which arnona reductions are granted to businesses. An example of this is cases where the whole property used by the business, or part of it, stands empty or is unfit for use. A comprehensive guide on discounts and exemptions in these cases has been published on our firm’s website and can be found here.

In addition, the Israeli government has enacted regulations under which an arnona reduction may be granted to a business owned by a man who has reached the age of 65 or a woman who has reached the age of 60. The application is brought before a local committee on granting discounts to businesses. A similar discount may also be granted to businesses operated by disabled IDF veterans.

Discounts for Businesses Due to the Corona Crisis

The Small and Medium Business Agency at the Israeli Ministry of Economy recently announced an arnona grant for businesses whose revenues have gone down due to the corona crisis. The grant is equivalent to a discount of up to 95% on arnona payments. Applications for the grant are submitted to the Israel Tax Authority and involve filling out an online form. A key condition for submitting an application is receiving an expense grant from the Tax Authority before submitting the application, and submitting a certificate of receipt of the grant.

Contact Our Experts on Arnona Reductions for Businesses

In this article we explained the main cases in which it may be possible to reduce arnona taxes for businesses. If you have any further questions or need assistance on the matter, our lawyers are available to help you. Our law firm deals regularly and professionally with real estate law and arnona for businesses, and assists in submitting and handling applications for reducing arnona taxes for businesses. You can contact us using the phone numbers or email address listed below.