Exemption From Car Import Tax for Clerics and Non-Residents in Israel
How can clergy and non-residents get an exemption from car import tax or car purchase tax? According to the tax laws in Israel, clergy working in Israel under a clergy visa, as well as non-residents who hold certain permits (including academic students and foreign journalists) may be entitled to a tax exemption when importing a car from abroad or purchasing one in Israel. This requires meeting the conditions of the law and following the regulations of the Israel Tax Authority. In this article, attorney Joshua Pex, a partner of our firm who specializes in immigration to Israel, explains all about the exemption.
Many foreign citizens come to Israel for an extended stay, for various reasons. These include clergy who work in Israel, students who come from all over the world to study at academic institutions in Israel, foreign workers (including experts in various fields), foreign romantic partners of Israeli citizens, foreign volunteers, and tourists visiting in the country. Many of these foreign citizens wish to bring their car with them to Israel or to purchase a car for the period of their stay in the country. In contrast with cars that are imported to Israel for Israelis, the assumption about cars that are imported into Israel by foreign citizens is that they are being imported for a limited period of time and that the car will then be taken back abroad. Accordingly, it is possible to apply for a tax exemption when importing these cars. The exemption may also apply to the purchase of a car by a foreign citizen in such cases, since it is understood that, when the car is sold after the visit in Israel, the due taxes will be paid as required. Below we explain in which cases it is possible to receive such an exemption and what the process is for receiving it.
HOW CAN FOREIGN CLERGY GET A TAX EXEMPTION WHEN IMPORTING OR PURCHASING A CAR?
The State of Israel is considered by the three major religions (Judaism, Islam, and Christianity), as well as other religions, as a spiritual home and a holy place. There are many religious institutions and international religious organizations operating in Israel. The representatives of these organizations come to Israel on various religious missions. To allow this, the Entry into Israel Law and the Entry into Israel Regulations require a special type of permit (visa) for clerics (the A3 visa). Applications for this type of visa are examined, inter alia, by professionals at the Ministry of Religious Services. The permit is granted by the Ministry of Interior’s Population and Immigration Authority, subject to the recommendation of the Ministry of Religious Services’ representatives. The visa is generally granted for a period of one year. After that, the visa may be extended upon request for a cumulative period of up to five years. In special cases, the visa may be extended for an even longer period. You can find detailed information about this in another article published on our website regarding clergy visas in Israel.
The tax laws in Israel stipulate that a car that was imported or purchased from a bonded warehouse within three months after the cleric who purchased it entered Israel with a clergy visa, and the remaining required taxes were paid for the car, may be exempt from taxes for the import or purchase until the expiration date of the clergy visa. To receive this exemption, the cleric must present, inter alia, obligatory car insurance (Bituach Chova), a valid visa, a driver’s license that is valid in Israel, and a valid vehicle license in the name of the applicant. The cleric’s religious institution must also undertake to comply with the conditions of the exemption, in a manner that is satisfactory for the customs authorities. This also includes undertaking to pay any taxes that were not paid by the cleric for keeping the vehicle in Israel after the agreed period or any other unpaid taxes.
It is mandatory that the type of the imported car be a type that is licensed to be on the road in Israel. Also, the right of a different person to drive the car must be conditional on the presence in the car of the person who is eligible for the exemption together with the driver. It is also important to note that clergy who regularly stay in Israel for extended periods of time may generally enjoy an additional exemption and the right to import or purchase a replacement car if their personal car was in their possession for at least three years. It may sometimes be possible to receive such an exemption even if the car was in their possession for a shorter period of time, if special reasons exist.
CAN NON-RESIDENTS RECEIVE AN EXEMPTION FROM CAR IMPORT OR PURCHASE TAX IN ANY OTHER CASES?
The answer is yes. The law allows non-residents, as well, in certain cases, to import a car without paying taxes or depositing a guarantee if they hold a B1 (tourist) visa, a B2 (work) visa, a B4 (volunteer) visa, or an A2 (student) visa. To receive this exemption, the applicant must present, inter alia, obligatory car insurance (Bituach Chova), a valid visa, a driver’s license that is valid in Israel, and a valid vehicle license in the name of the applicant. In certain cases, the applicant may be required to deposit a bank guarantee to ensure that the car will be removed from Israel. The amount of the bank deposit may reach the full amount of import taxes for the car. In general, the exemption is granted in such cases for up to six months. After that, it will be necessary to remove the car from the country; but, in certain cases, it is possible to extend the period of the exemption for six more months and keep the car in Israel for this extended period. However, if the applicant holds a student visa (called an A2 visa), or if the applicant is a journalist or photographer with a journalist certificate granted by the Government Press Office, they may receive the exemption for the whole period of their stay in Israel under these types of visa.
WHAT ELSE IS IT IMPORTANT TO KNOW ABOUT THESE EXEMPTIONS?
The law in Israel stipulates that vehicles for which at least four years have passed since their manufacture, or whose manufacture date is unknown, are taxable. Accordingly, a car may only receive a tax exemption for its import or purchase if it was manufactured within four years of the request for a tax exemption. If a longer period of time has passed, it will no longer be possible to receive the exemption, and it will be necessary to remove the car from the country or, alternatively, pay the due taxes. Also, according to the Transportation Regulations, if more than one year has passed since the car was imported, it will be necessary to register the car at the Israel Licensing Ministry, and the car will not be allowed on Israeli roads with a foreign license plate. Additional requirements may apply in certain cases to receive the exemption or after receiving the exemption. Therefore, to ensure that you act in accordance with the law in your specific case, you should consult with a lawyer who specializes in immigration to Israel and in tax law.
EXEMPTION FROM CAR IMPORT OR PURCHASE TAX FOR CLERICS AND NON-RESIDENTS—CONTACT A LAWYER WHO SPECIALIZES IN IMMIGRATION TO ISRAEL AND IN TAX LAW
This article explained the option of receiving a tax exemption when importing or purchasing a car in Israel for clerics and non-residents who are staying in Israel for an extended period of time. If you have any further questions or need assistance, you can contact our offices and we will be happy to help. Our lawyers specialize in immigration to Israel and in tax law, and they provide a comprehensive legal solution regarding visas, Israeli legal status, work permits, import of vehicles and assets, and so on.
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