“The question of how the various aliyah benefits affect aliyah is very interesting, and it’s a bit complicated,” said Natah Katz, manager of government advocacy at Nefesh B’Nefesh. “A lot of the value of the benefits depends on the size of your family, and circumstances like whether you’re married, single, nearing retirement age, and things like that. So it’s not fair to say whether one benefit is worth more than others. But certain aliyah benefits can be extremely valuable for new immigrants.”
One of the most valuable benefits, especially for older immigrants with significant savings, is a 10-year tax exemption from paying capital gains and income tax earned outside Israel, said Shay Moyal, head of the international tax division at Fahn Kanne Grant Thornton, one of Israel’s leading accounting firms.
“In 2008, as Israel celebrated its 60th birthday, it decided to increase benefits for olim, so it created a 10-year tax holiday for income generated outside Israel, with some exceptions,” Moyal said. “Salaries earned abroad, as well as capital gains and dividends from your stock portfolio, are exempt from taxes. Lawmakers wanted to make it as easy as possible, so you don’t have to fight with tax authorities. There is even an exemption from declaring overseas assets during this time. There would still be a requirement to pay taxes in your country of origin, although Israel has tax treaties with some countries that may exempt you from that as well.”
There are a number of caveats pertaining to different cases which should be discussed with a qualified tax consultant, Moyal added.
The subject of taxation can be confusing, Katz noted. “When I do webinars on aliyah benefits, I try to make topics like salary tax brackets easier to understand. Basically, if you are in the salary brackets that are relevant for benefits, you can save NIS 20,000 within three-and-a-half years. That’s hard to appreciate, because it’s a savings, not a benefit you see up front, but it can potentially be very valuable.”
Meanwhile, sal klita, the “absorption basket” financial grant, is a cash payment whose value increases according to the size of a family. “If you’re single, sal klita can be about NIS 18,000 over six months, but if you come with a larger family, it could be NIS 60,000-100,000 during that time,” Katz noted.
Those benefits are usually the ones that are most valuable to different demographics of olim, Katz said. Others, like rental assistance, reduced property taxes, tax benefits on buying a new car, can also be very valuable for many.
But these incentives should never be seen as the point of moving to Israel, Katz noted. “Aliyah rights and benefits are not a reason to make aliyah, and they shouldn’t be depended on for planning a budget. It is nice to receive these benefits, but they shouldn’t be how you plan to get by.”