RegulationsAdministrative Law
Income Tax Regulations (Implementation of the Common Standard for Reporting and Due Diligence of Information on Financial Accounts), 5779-2019
תקנות מס הכנסה (יישום תקן אחיד לדיווח ולבדיקת נאותות של מידע על חשבונות פיננסיים), תשע"ט-2019
Published: 2019-02-06Consolidated Hebrew text as of 2025-02-16 · Last amended 2021-09-14
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Unofficial English translation — for reference only. It may contain errors or omissions and cannot be relied on as a legal text. Only the Hebrew text published in Reshumot is legally binding.More
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By virtue of my authority under the definitions of "financial institution" and "financial account" in section 135b of the Income Tax Ordinance [New Version] (hereinafter – the Ordinance), and sections 135c, 135d and 243 of the Ordinance, after consulting with the Governor of the Bank of Israel, the Chairman of the Securities Authority and the Minister of Justice, except with respect to regulation 7, and with the approval of the Finance Committee of the Knesset, I hereby make the following Regulations:
Definitions and Interpretation§
1.
(a)In these Regulations –
"dollar" – a United States of America dollar;
"high value account" – an existing account of an individual the aggregate balance of which in existing accounts exceeds one million dollars on the 23rd of Tevet 5779 (31 December 2018) or on 31 December of any year thereafter;
"low value account" – an existing account of an individual the aggregate balance of which in existing accounts does not exceed one million dollars on the 23rd of Tevet 5779 (31 December 2018), and if the account was opened in the months of January to March 2019 – the aggregate balance of which in existing accounts does not exceed one million dollars on the 3rd of Tevet 5780 (31 December 2019);
"reportable account" – an account that has been classified as an account of a resident of a foreign state pursuant to regulations 3 to 5 or pursuant to regulation 11(b) or (c), as the case may be, provided that that foreign state is a reportable jurisdiction;
"new account" – a financial account opened on the 25th of Adar Bet 5779 (1 April 2019) or thereafter;
"excluded account" – as defined in Part VIII, Section C, subsection 17 of the Standard, and also each of the following accounts:
(1)a dormant account the balance of which does not exceed 5,000 dollars;
(2)an account in a training fund as defined in the Provident Funds Supervision Law, designated for the payment of training fees to employees;
(3)an account in a training fund as defined in the Provident Funds Supervision Law, designated for the payment of training fees to the self-employed, provided that the following conditions are met with respect to it:
(a)the annual contributions are limited to 50,000 dollars, or less;
(b)the balance therein does not exceed 50,000 dollars, or the withdrawals therefrom are conditional upon meeting criteria related to the purpose of the account, or fines are imposed on withdrawals made before those criteria have been fulfilled;
(4)an account in a bank as defined in the National Insurance (Long-Term Savings for a Child) Regulations, 5777-2016 (hereinafter – the Long-Term Savings for a Child Regulations);
(5)an account in the child's name in a provident fund for investment within the meaning of the Long-Term Savings for a Child Regulations;
(6)a joint account opened for customers pursuant to section 5(a)(7) of the Anti-Money Laundering Order (Identification, Reporting and Record-Keeping Obligations of Banking Corporations for the Prevention of Money Laundering and Financing of Terrorism), 5761-2001 (hereinafter – the Anti-Money Laundering Order);
(7)an account held in Israel that was opened by a representative of a condominium within the meaning of section 65 of the Land Law, 5729-1969, pursuant to the conditions prescribed in regulation 4(c) of the Cheques Without Cover Regulations, 5741-1981 (hereinafter – the Cheques Without Cover Regulations);
(8)an account held in Israel that was opened by a workers' committee within the meaning of the Collective Agreements Law, 5717-1957, pursuant to the conditions prescribed in regulation 4(c) of the Cheques Without Cover Regulations and in section 3(a)(6) of the Anti-Money Laundering Order;
(9)an account managed for communal purposes for the benefit of a large or undefined group of beneficiaries, in which the conditions prescribed in section 5(a)(6) of the Anti-Money Laundering Order are met;
(10)an account in which the only financial assets are shares or options held by a trustee on behalf of employees, pursuant to section 102 of the Ordinance;
(11)an account held solely by an estate, and the reporting financial institution has verified the fact of death in the Population Registry within the meaning of the Population Registry Law, 5725-1965;
(12)a bank account for the payment of funds for the benefit of a foreign worker and for securing his departure from Israel pursuant to Chapter IV of the Foreign Workers Law, 5751-1991;
"financial account" – as defined in section 135b of the Ordinance, except for an excluded account;
"existing account" – a financial account opened before the 25th of Adar Bet 5779 (1 April 2019);
"dormant account" in a particular year – an account in respect of which, on 31 December of a particular year, three or more years have elapsed from the day on which the last instruction was received from the account holder with respect to it or with respect to any other account owned by him held at the financial institution in which the account is held;
"active entity" – "Active NFE" as defined in Part VIII, Section D.9 of the Standard, and also a public institution;
"passive entity" – "Passive NFE" as defined in Part VIII, Section D.8 of the Standard;
"small Israeli financial institution providing deposit and credit services without interest" – an Israeli financial institution providing deposit and credit services without interest, that meets the requirements set out in Section C, Part III of Annex 2 to the FATCA Agreement;
"public institution", "certificate of incorporation" – as defined in the FATCA Regulations;
"balance" in a financial account, "value" of a financial account or "aggregate balance" – the total of all balances and values in financial accounts owned by the same individual or the same entity, as the case may be, held at a reporting Israeli financial institution and in accounts held at an entity related to the financial institution, if the computerised system of the financial institution links the accounts for the purpose of identifying the account holder and enables the aggregation of the balances or values; for this purpose, "related entity" – within the meaning of Part VIII, Section E.4) of the Standard;
"reportable jurisdiction" – a foreign state in respect of which the Administrator has published a notice pursuant to regulation 10(i);
"foreign state" – a state, other than the State of Israel or the United States of America, or a region or territory outside Israel that is not a state, listed in Israeli Standard No. 3166 published on the website of the Israeli Standards Institute at https://portal.sii.org.il/UploadedFiles/06_2013/3166new.pdf;
"participating jurisdiction", in a particular year – a state that has undertaken pursuant to an agreement to transfer to the State of Israel information pursuant to the Standard, listed on 1 January of that year in a list published on the website of the Israel Tax Authority at: www.taxes.gov.il;
"financial institution", "Israeli financial institution" – as defined in section 135b of the Ordinance, except for a public institution;
"reporting Israeli financial institution" – as defined in section 135b of the Ordinance, except for a public institution and except for a non-reporting Israeli financial institution;
"non-reporting Israeli financial institution" – any of the following:
(1)a governmental entity as defined in Part VIII, Section B.2 of the Standard;
(2)an international organisation as defined in Part VIII, Section B.3 of the Standard;
(3)a central bank as defined in Part VIII, Section B.4 of the Standard;
(4)a qualified credit card issuer as defined in Part VIII, Section B.8 of the Standard;
(5)an exempt collective investment vehicle as defined in Part VIII, Section B.9 of the Standard;
(6)a managing company as defined in the Provident Funds Supervision Law;
(7)a provident fund, including an insurance fund and excluding a training fund and a provident fund for investment, as defined in the Provident Funds Supervision Law;
(8)a portfolio manager or investment adviser as defined in the Investment Advice, Investment Marketing and Investment Portfolio Management Regulation Law, 5755-1995;
(9)a fund manager within the meaning of the Joint Investments in Trust Law, 5754-1994;
(10)a trust in which the trustee is a reporting Israeli financial institution and reports all the reportable information pursuant to Part I of the Standard, with respect to all the reportable accounts of the trust;
(11)a small Israeli financial institution providing deposit and credit services without interest;
"relationship manager" – including a person who fulfils a similar role, even if his title differs;
"TIN number" or "TIN" – as defined in the definition of TIN in Part VIII, Section E, subsection 5 of the Standard;
"indicator of a foreign state" – any of the indicators listed in Part III, Section B, subsection 2, paragraphs a) to f) of the Standard;
"documentary evidence" – as defined in Part VIII, Section E, subsections 6 a) to c) of the Standard;
"deposit and credit services without interest" – as defined in the Law for the Regulation of the Provision of Deposit and Credit Services without Interest by Benevolent Loan Institutions, 5779-2019;
"resident of a foreign state" – a resident of a foreign state pursuant to the tax laws of that state, or the estate of a deceased person who was a resident of a foreign state in that state, including an entity that has no residence pursuant to tax laws if its effective management is located in that foreign state, excluding the following:
(1)a corporation whose shares are regularly traded on a regulated securities market;
(2)a related entity of a corporation as referred to in paragraph (1); for this purpose, "related entity" – within the meaning of Part VIII, Section E.4) of the Standard;
(3)a governmental entity as defined in Part VIII, Section B.2) of the Standard;
(4)an international organisation as defined in Part VIII, Section B.3) of the Standard;
(5)a central bank as defined in Part VIII, Section B.4) of the Standard;
(6)a depository institution, a custodial institution, a specified insurance company;
(7)an investment entity as defined in Part VIII, Section A, subsection 6 of the Standard, provided that if it is an entity as referred to in subsection 6.b) therein, it is a resident of a foreign state in a participating jurisdiction;
"self-certification with respect to an individual" – within the meaning of regulation 9(a);
"self-certification with respect to an entity" – within the meaning of regulation 9(b);
"the Standard" – the Common Reporting Standard for automatic exchange of financial account information published by the Organisation for Economic Co-operation and Development (OECD) in the First Schedule;
"FATCA Regulations" – Income Tax Regulations (Implementation of the FATCA Agreement), 5776-2016.
(b)For the purpose of references to the Standard in regulations 1, 3, 4 and 5, wherever in the Standard the phrase "reportable jurisdiction" appears it shall be read as "foreign state", the phrase "reportable person" shall be read as "resident of a foreign state" and the phrase "reportable account" shall be read as "account of a resident of a foreign state"; this sub-regulation shall not apply to paragraph (10) in the definition of "non-reporting Israeli financial institution" in sub-regulation (a).
(c)For the purpose of the reference to Part VIII, Section B.9 of the Standard in the definition of "non-reporting Israeli financial institution" –
(1)in Section B.9.a), instead of "[xx/xx/xxxx]" it shall be read as "the 18th of Tevet 5773 (31 December 2012)";
(2)in Section B.9.c), after "the collective investment vehicle" it shall be read as "or a reporting Israeli financial institution";
(3)Section B.9.d) shall not be read.
(d)All terms in these Regulations shall have the meaning ascribed to them in the Standard, unless otherwise provided in the Ordinance or in these Regulations.
Duty of Registration§
2.
An Israeli financial institution is required to register with the Administrator pursuant to the Second Schedule; an Israeli financial institution that has registered pursuant to the FATCA Regulations shall be deemed to have registered pursuant to these Regulations, provided that its status as a reporting Israeli financial institution or as a person who is not such an institution pursuant to the FATCA Regulations is identical to its status pursuant to these Regulations.
Due Diligence for a Financial Account of an Individual and Classification of an Account as an Account of a Resident of a Foreign State§
3.
A reporting Israeli financial institution shall conduct reviews of an individual who is an account holder in an account that is not an existing account of the type described in Part III, Section A of the Standard, held with it, and shall classify the account as an account of a resident of a foreign state, as set out below:
(1)with respect to an individual who is an account holder in a low value account –
(a)the reporting Israeli financial institution shall conduct the electronic record search as set out in Part III, Section B, subsection 2 of the Standard, and shall classify each of the following as an account of a resident of a foreign state in the foreign state with respect to which an indicator of a foreign state was found:
(1)a low value account in respect of which an indicator from among the indicators listed in Part III, Section B, subsection 2 a) to e) of the Standard was found in the electronic record search;
(2)a low value account in respect of which no indicator of a particular foreign state was found in the electronic record search, but to which a change in circumstances has occurred, such that the electronic records in respect of it include information containing an indicator of that foreign state;
(b)notwithstanding the provisions of sub-paragraph (a), with respect to all low value accounts or with respect to an identified group of such accounts, the reporting Israeli financial institution may act pursuant to the provisions of paragraphs (1) to (3) below, instead of pursuant to the provisions of sub-paragraph (a):
(1)if the records of the financial institution contain a current residential address for the account holder in a particular foreign state, based on documentary evidence, the financial institution shall classify the account as an account of a resident of that foreign state;
(2)if the records of the financial institution contain a current residential address for the account holder in Israel or in the United States of America, based on documentary evidence, and there is no current residential address in a foreign state based on documentary evidence, the financial institution shall not classify the account as an account of a resident of a foreign state;
(3)where the reporting Israeli financial institution has acted pursuant to sub-paragraph (1) or (2), as the case may be, but thereafter a change in the circumstances of the account has occurred such that the financial institution knows or has reason to know that the documentary evidence in its possession is incorrect or unreliable, the financial institution shall approach the account holder and request that he provide it with a self-certification with respect to an individual and documentary evidence issued in a state listed in the self-certification as states in which he is a resident for tax purposes, and the following provisions shall apply:
(a)if the reporting Israeli financial institution received from the account holder a self-certification and documentary evidence as referred to within 90 days from the date of the change or by 31 December of the year in which the change occurred, whichever is later, the financial institution shall act pursuant to sub-paragraph (c) and regulation 10(c);
(b)if the reporting Israeli financial institution did not receive from the account holder a self-certification and documentary evidence as referred to within 90 days from the date of the change or by 31 December of the year in which the change occurred, whichever is later, the financial institution shall conduct the electronic record search as set out in paragraph (1)(a);
(c)notwithstanding the provisions of sub-paragraphs (a) and (b), a reporting Israeli financial institution shall not classify an account as an account of a resident of a foreign state in a particular foreign state if any of the following applies to it:
(1)the account holder has a current residential address in the particular foreign state in the records of the financial institution based on documentary evidence, or an indicator from among the indicators listed in Part III, Section B, subsection 2 a) to d) of the Standard was found in its electronic record search, if the account holder provided the financial institution with a self-certification with respect to an individual, provided that that particular foreign state is not listed in the self-certification as one of the states in which he is a resident for tax purposes, and he also provided documentary evidence issued in a state listed in the self-certification as states in which he is a resident for tax purposes;
(2)only an indicator from among the indicators listed in Part III, Section B, subsection 2(e) of the Standard was found and the account holder provided the financial institution with a self-certification with respect to an individual, provided that that particular foreign state is not listed in the self-certification as one of the states in which he is a resident for tax purposes, or he provided documentary evidence from another state;
(d)with respect to a low value account in respect of which an indicator from among the indicators listed in Part III, Section B, subsection 2.f) of the Standard was found in the electronic record search conducted in respect of it as referred to in sub-paragraph (a) and there is no other address or indicator from among the other indicators listed in Part III, Section B, subsection 2.a) to e) of the Standard, the reporting Israeli financial institution shall conduct a review of the existing documents in its possession with respect to the account, pursuant to the provisions set out in Part III, Section C, subsection 2 of the Standard, for the purpose of searching for an indicator of a foreign state, or shall obtain from the account holder a self-certification with respect to an individual or documentary evidence, for the purpose of determining the residence of the account holder, and shall classify the account as follows:
(1)the account shall be classified as an account of a resident of a foreign state in a particular foreign state if an indicator from among the indicators listed in Part III Section B, subsection 2.a) to e) of the Standard was found in respect of it in the review of existing documents, or the account holder declared in the self-certification that he is a resident therein for tax purposes, or the documentary evidence received was issued by it;
(2)the account shall be classified as an undocumented account if no additional indicators of a foreign state were found in the review of existing documents and the financial institution did not receive from the account holder a self-certification or documentary evidence;
(e)a reporting Israeli financial institution shall conduct reviews and classification of a low value account pursuant to this paragraph once by the 16th of Tevet 5781 (31 December 2020); however –
(1)if a change in circumstances as referred to in paragraph (1)(a)(2) has occurred, the reporting Israeli financial institution shall conduct the review and classification within 90 days from the date of the change or by 31 December of the year in which the change occurred, whichever is later;
(2)the electronic record search pursuant to paragraph (1)(b)(3)(b) shall be conducted by the reporting Israeli financial institution within 180 days from the date of the change or by 31 December of the year in which the change occurred, whichever is later;
(f)notwithstanding the provisions of sub-paragraphs (a) to (e), a reporting Israeli financial institution may apply to a low value account the review and classification provisions applicable pursuant to paragraph (2);
(2)with respect to an individual who is an account holder in a high value account –
(a)the reporting Israeli financial institution shall conduct the electronic record search as set out in Part III, Section B, subsection 2 of the Standard, for the purpose of searching for an indicator of a foreign state;
(b)if it was found in the electronic record search referred to in sub-paragraph (a) that the electronic records do not include all the particulars of information described in Part III, Section C, subsection 3 of the Standard, the reporting Israeli financial institution shall conduct a review of the existing documents in its possession with respect to the account, pursuant to the provisions set out in Part III, Section C, subsection 2 of the Standard, for the purpose of searching for the missing particulars of information; with respect to the particular of information as set out in Part III, Section C, subsection 3.d) of the Standard, the reporting Israeli financial institution shall conduct a review of the existing documents in its possession with respect to the account, pursuant to the provisions referred to, only if there are transfers of funds from the account, which is not a deposit account, to an account in a foreign state during the twelve months preceding the review;
(c)if one of the accounts of the individual is associated with a relationship manager at the financial institution, the financial institution shall examine, in addition to the reviews referred to in sub-paragraphs (a) and (b), whether the relationship manager has actual knowledge that the account holder is a resident of a foreign state;
(d)a reporting Israeli financial institution shall conduct reviews and classification of a high value account pursuant to this paragraph, at the times set out below:
(1)if the balance in the account on the 23rd of Tevet 5779 (31 December 2018) exceeded one million dollars – by the 3rd of Tevet 5780 (31 December 2019); however if a change in circumstances as referred to in sub-paragraph (g)(2) has occurred – within 90 days from the date of the change or by 31 December of the year in which the change occurred, whichever is later;
(2)if the balance on the 23rd of Tevet 5779 (31 December 2018) did not exceed one million dollars, and exceeded one million dollars on 31 December of any year thereafter – within twelve months from the end of the year in which the account holder became an individual with an aggregate balance exceeding one million dollars;
(e)The reporting Israeli financial institution shall carry out the electronic record search detailed in sub-paragraph (a) and the document review detailed in sub-paragraph (b) once in respect of each account at the times prescribed in sub-paragraph (d); an actual knowledge review of the relationship manager as referred to in sub-paragraph (c) shall be carried out once a year;
(f)Notwithstanding the provisions of sub-paragraph (e), the reporting Israeli financial institution shall carry out actions pursuant to sub-paragraph (h) in respect of an undocumented account within the meaning of sub-paragraph (h)(2) once a year;
(g)A reporting Israeli financial institution shall classify each of the following as an account of a resident of a foreign state in the foreign state in respect of which an indicator has been found or actual knowledge exists as aforesaid:
(1)an existing account of an individual in respect of which, in the electronic record search carried out as referred to in sub-paragraph (a) or in the document review carried out as referred to in sub-paragraph (b), an indicator of a foreign state was found;
(2)an existing account of an individual in respect of which, in the electronic record search carried out as referred to in sub-paragraph (a) or in the document review carried out as referred to in sub-paragraph (b), no indicator of a particular foreign state was found, but thereafter a change of circumstances occurred in relation to it such that the electronic records pertaining to it include an indicator of that foreign state;
(3)an existing account of an individual in respect of which the relationship manager has actual knowledge that the account holder is a resident of a foreign state;
(4)Notwithstanding the provisions of sub-paragraphs (1) to (3), a reporting Israeli financial institution shall not classify as an account of a resident of a foreign state in a particular foreign state an account listed in sub-paragraphs (1) to (3), if it has received from the account holder a self-certification in respect of an individual, provided that that particular foreign state is not among the states listed in the self-certification as states in which he is resident for tax purposes, and it has also received documentary evidence issued in a state that is among the states listed in the self-certification as states in which he is resident for tax purposes;
(h)In respect of a high value account in which the reviews detailed in sub-paragraphs (a) to (c) reveal an indicator from among the indicators listed in Part III, Section B, subsection 2(f) of the Standard, and there is no other address or indicator from among the other indicators listed in Part III, Section B, subsection 2(a) to (e) of the Standard, the reporting Israeli financial institution shall obtain from the account holder a self-certification in respect of an individual or documentary evidence for the determination of the account holder's residence for tax purposes and shall classify the account as one of the following:
(1)an account of a resident of the foreign state in the foreign state in which the account holder declared in the self-certification that he is resident for tax purposes, or in which it has been found that the account holder is resident on the basis of the documentary evidence;
(2)an undocumented account, if the financial institution has not received a self-certification or documentary evidence from the account holder;
(3)In respect of the opening of a new account of an individual, the reporting Israeli financial institution shall carry out both of the following:
(a)at the time of opening the account it shall obtain a self-certification in respect of an individual from the account holder and shall verify the reasonableness of the certification as stated in Part IV, Section A of the Standard; notwithstanding the foregoing, if a self-certification of that account holder is already in the possession of the financial institution, the financial institution may refrain from requiring a new self-certification, if no change of circumstances has occurred in relation to the account such that it knows or has reason to know that the self-certification in its possession is incorrect or unreliable;
(b)it shall classify a new account of an individual which, pursuant to a self-certification of the account holder and its verification as referred to in sub-paragraph (a), has been determined to be resident in a particular foreign state, as an account of a resident of a foreign state in that foreign state.
Alternative procedures for financial accounts of individual beneficiaries§
4.
Notwithstanding the provisions of regulation 3, a reporting Israeli financial institution may apply the alternative procedures prescribed in Part VII, Section B of the Standard to financial accounts held by individuals who are individual beneficiaries under a cash value insurance contract or an annuity contract, where the conditions prescribed in Part VII, Section B of the Standard are met.
Due diligence reviews for a financial account of an entity and classification of an account as an account of a resident of a foreign state§
5.
A reporting Israeli financial institution shall carry out reviews in respect of an entity that is the holder of a financial account held with it and shall classify a financial account of an entity that is not among the entities listed in paragraphs (1) to (7) of the definition of "resident of a foreign state" in regulation 1(a), as an account of a resident of a foreign state, as detailed below:
(1)In respect of an existing account of an entity –
(a)if it is an account subject to review pursuant to Part V, Section B of the Standard, the reporting Israeli financial institution shall carry out a review to identify an account of an entity resident in a foreign state and of a passive entity in which one or more controlling shareholders is a resident of a foreign state for tax purposes, in accordance with the procedures prescribed in Part V, Section D of the Standard, at the following times:
(1)if on the 23rd of Tevet 5779 (31 December 2018) the account had a balance exceeding 250,000 dollars – by the 16th of Tevet 5781 (31 December 2020);
(2)if on the 23rd of Tevet 5779 (31 December 2018) the balance in the account was 250,000 dollars or less, but on 31 December of any year thereafter the balance therein exceeded 250,000 dollars – within twelve months from the end of the year in which the balance on 31 December exceeded 250,000 dollars;
(b)A reporting Israeli financial institution shall classify as an account of a resident of a foreign state in a particular foreign state –
(1)an existing account of an entity that has been reviewed as referred to in sub-paragraph (a), and pursuant to the review the entity holding the account is to be regarded as resident in a foreign state in that state;
(2)an existing account of an entity that has been reviewed as referred to in sub-paragraph (a) and pursuant to the review the entity holding the account is to be regarded as a passive entity in which one or more controlling shareholders is a resident of a foreign state in that state;
(3)an existing account of an entity that pursuant to Part V, Section A of the Standard is not required to undergo review, identification and reporting, if the financial institution has information indicating that the entity holding the account is a resident of a foreign state in that state, or if there is information that a controlling shareholder therein is a resident of a foreign state in that state and a genuine concern has arisen that activity was carried out in the account with the aim of circumventing the identification and reporting obligations prescribed in these Regulations;
(c)
(1)A reporting Israeli financial institution that is unable to determine the status of an account holder as an active entity or as a financial institution shall classify it as a passive entity;
(2)A reporting Israeli financial institution that is unable to determine the status of a controlling shareholder in a passive entity shall carry out in respect of that controlling shareholder the electronic record search as detailed in regulation 3(1)(a);
(d)Notwithstanding the provisions of sub-paragraphs (b) and (c), a reporting Israeli financial institution shall not classify an existing account of an entity as an account of a resident of a foreign state in a particular foreign state in either of the following cases:
(1)where the entity is regarded as a resident of a particular foreign state, if it has provided a self-certification in respect of an entity, provided that that particular foreign state is not among the states listed in the self-certification as states in which it is resident for tax purposes, or if the financial institution has determined, on the basis of information in its possession or publicly available information, that the account holder is not a resident of a foreign state in that particular foreign state;
(2)where the entity is regarded as a passive entity that has one or more controlling shareholders who are regarded as residents of a particular foreign state, if one of the following applies, as the case may be:
(a)the entity has provided a self-certification in respect of an entity that establishes its status as an active entity, or the financial institution has determined, on the basis of information in its possession or publicly available information, that the account holder is an active entity or that it is a financial institution that is not an investment entity described in Part VIII, Section A, subsection 6(b) of the Standard that is not a financial institution of a participating jurisdiction;
(b)a self-certification in respect of an individual has been received in respect of each of the controlling shareholders in the entity, provided that that particular foreign state is not among the states listed in the self-certification as states in which the controlling shareholder is resident for tax purposes, and documentary evidence issued in a state that is among the states listed in the self-certification as states in which he is resident for tax purposes has also been received;
(2)Upon the opening of a new account of an entity –
(a)the reporting Israeli financial institution shall obtain a self-certification in respect of an entity and shall determine whether the account is an account of an entity resident in a foreign state or of a passive entity in which one or more controlling shareholders is a resident of a foreign state, in accordance with the procedures prescribed in Part VI, Section A of the Standard; notwithstanding the foregoing, the financial institution may refrain from requiring a new self-certification from the account holder or from a controlling shareholder in the entity holding the account, if a self-certification of that account holder or of the controlling shareholder in the entity holding the account is already in its possession, provided that no change of circumstances has occurred in relation to the account such that it knows or has reason to know that the self-certification in its possession is incorrect or unreliable;
(b)A reporting Israeli financial institution shall classify as an account of a resident of a foreign state in a particular foreign state each of the following:
(1)a new account of an entity that the financial institution has determined pursuant to sub-paragraph (a) to be an account of an entity resident in a foreign state in that particular foreign state;
(2)a new account owned by a passive entity in which one or more controlling shareholders is a resident of a foreign state in that particular foreign state.
Reports on reportable accounts or on the absence thereof§
6.
(a)A reporting Israeli financial institution shall submit to the Administrator a report in respect of a reportable account that shall include the information detailed in Part I, Section A of the Standard, subject to the provisions of Part I, Sections B to F of the Standard.
(b)The reporting Israeli financial institution shall transmit the report referred to in sub-regulation (a) in respect of the year in which the account was classified as a reportable account and in every year thereafter, unless the account has ceased to be an account of a resident of a particular foreign state as detailed in regulation 10(b) and it is no longer classified as an account of a resident of a foreign state that is a reportable jurisdiction; for this purpose, the year in which an account was classified as a reportable account in respect of a particular foreign state is the year in which the account was classified as an account of a resident of a foreign state in that foreign state or the year in which an agreement was concluded with that foreign state establishing an obligation to transmit the information detailed in Part I of the Standard (hereinafter – the agreement), whichever is the later.
(c)The report shall be submitted to the Administrator at the following times:
(1)not later than 8 September of each year, commencing from the year 2020, in respect of the preceding year;
(2)in respect of first-time reporting on accounts of residents of a foreign state in a particular reportable jurisdiction with which an agreement was concluded after the commencement of these Regulations –
(a)if the agreement with that state was concluded before 30 October of a particular year – not later than 8 September of the following year, in respect of the year in which the agreement was concluded;
(b)if the agreement with that state was concluded after 30 October of a particular year – not later than 8 September of the second year thereafter, in respect of the year following the year in which the agreement was concluded;
(c)if the agreement with that state prescribes a later date for the transmission of information to that state than the dates prescribed in sub-paragraph (a) or (b), as the case may be – not later than 8 September of the year in which information is first to be transmitted pursuant to the agreement.
(d)A reporting Israeli financial institution that has no reportable accounts in a particular year shall submit to the Administrator, at the times prescribed in sub-regulation (c), a report in respect of that year in which it shall declare that it had no reportable accounts in that year.
(e)The reports referred to in sub-regulations (a) and (d) shall be submitted in the manner prescribed in the Third Schedule.
Notice to a customer regarding the transfer of information to the Administrator and from him to the foreign state§
7.
(a)A reporting Israeli financial institution shall send a notice regarding the transfer of information as referred to in sub-regulation (b) to each of the following:
(1)an individual who is an account holder whose account held by the financial institution has been classified as an account of a resident of a foreign state in a reportable jurisdiction;
(2)an entity that is an account holder whose account held by the financial institution has been classified as an account of a resident of a foreign state in a reportable jurisdiction;
(3)an individual who is a controlling shareholder in an entity that is an account holder whose account has been classified as a passive entity, whom the financial institution has identified as a resident of a foreign state in a reportable jurisdiction.
(b)The notice shall state that information in respect of the account holder as referred to in sub-regulation (a), and in respect of a financial account owned by him or owned by an entity under his control, is expected to be transmitted through the Administrator to the foreign reportable jurisdiction in which the financial institution has classified him as resident, at the time prescribed in the agreement with that foreign state; the notice shall also state that the account holder is entitled to submit a written objection to the financial institution against the classification it made, which shall include declarations and documents indicating that he is not a resident of a foreign state in that state, in accordance with the provisions of regulations 3(1)(c), 3(2)(g)(4), 5(1)(d) or 10(b), as the case may be.
(c)The financial institution shall send the notice to the postal address or electronic mail address of the existing account holder as updated in its records; if the financial account is an account held for the benefit of another, the notice shall be sent to the registered holder in the books of the financial institution; a notice to an individual who is a controlling shareholder in an entity as referred to in sub-regulation (a)(3) shall also be sent to the updated postal address or electronic mail address of the individual controlling shareholder if such an address exists in the records of the financial institution; if no such address exists, the notice to the account holder shall include a requirement to forward it to the controlling shareholder; the financial institution shall maintain a record of the dispatch of the notice, which shall include the manner of dispatch and the date of dispatch.
(d)The notice shall be sent to each addressee as referred to in sub-regulation (a) by 15 February of the year in which information in respect of him is first to be transmitted, and in respect of a financial account opened through an insurance agent as defined in the Financial Services Supervision Law (Insurance), 5741-1981 – by 15 April of the year in which information in respect of him is first to be transmitted; thereafter the notice shall be sent once every two years.
(e)If a written objection has been submitted to the reporting Israeli financial institution as referred to in sub-regulation (b) within 83 days from the day of dispatch of the notice by the financial institution or by 8 May of a particular year, whichever is the later, the financial institution shall respond to the objection not later than 8 August of that year; if an objection as aforesaid is submitted after 83 days from the day of dispatch of the notice or after 8 May of a particular year, whichever is the later, the financial institution may respond to the objection as aforesaid after the transmission of the information in that year, and not later than six months from the day of receipt of the objection; if an Israeli financial institution has rejected the objection, the Israeli financial institution shall include the reasons for its decision, including with reference to the arguments raised by the account holder in the objection.
The obligation to obtain a date of birth or tax identification number§
8.
(a)A reporting Israeli financial institution that has classified an existing account as an account of a resident of a foreign state, and at the time of classification there was no TIN number in the foreign state or date of birth of the account holder or of the controlling shareholder in the passive entity holding the account in its records, shall approach the account holder and request that he provide the financial institution with the date of birth or the TIN number if the financial institution is not exempt from reporting the TIN number pursuant to Part I, Section D of the Standard, as the case may be.
(b)A reporting Israeli financial institution shall accept a self-certification in respect of an individual or a self-certification in respect of an entity even if the self-certification does not include the TIN number of the account holder or of the controlling shareholder in the passive entity holding the account, as the case may be, in a particular foreign state in which he declared in the self-certification that he is resident, if one of the following applies:
(1)the account holder or the controlling shareholder in the passive entity holding the account, as the case may be, declared in his self-certification that no TIN number has been issued to him in that particular foreign state, provided that not all residents of that state are issued a TIN number;
(2)the presentation of the TIN number issued to the account holder or to the controlling shareholder in the passive entity holding the account, as the case may be, by that particular foreign state is not required under its laws;
(3)the account holder is an individual and the particular foreign state is the State of Eritrea, the Republic of Sudan or the Republic of South Sudan, provided that it is not a reportable jurisdiction;
(4)the account holder holds a visa and residence permit of type B/1 pursuant to the Entry into Israel Regulations, 5734-1974, provided that the particular state is not a reportable jurisdiction;
(5)the account holder holds a valid licence pursuant to section 2(a)(5) of the Entry into Israel Law, 5712-1952.
(c)If the reporting Israeli financial institution has received a self-certification that does not include a TIN number because one of the conditions listed in sub-regulation (b) was met, and that condition has ceased to be met, the financial institution shall approach the account holder and request that he provide it with the TIN number.
(d)In respect of a reportable account, an approach as referred to in sub-regulations (a) and (c) shall be made at least once a year, and in respect of an account of a resident of a foreign state that is not a reportable account – once every three years; the approach shall be in writing and shall be sent to the updated postal address or electronic mail address of the account holder as recorded in the records of the reporting Israeli financial institution; if the financial account is an account held for the benefit of another, the approach shall be sent to the postal address or electronic mail address of the registered holder in the books of the financial institution.
Self-certification§
9.
(a)A self-certification in respect of an individual is a declaration by the individual, signed by him or confirmed by him in another manner, that includes the date of signature or confirmation by the individual, as well as the following particulars: the full name of the individual, his address, his date of birth, all the states in which he is a resident for tax purposes, and, subject to the provisions of regulation 8 – also his TIN number in each state in which he is a resident for tax purposes; a self-certification in respect of an individual shall not include particulars concerning the individual's citizenship in a foreign state.
(b)
(1)A self-certification in respect of an entity is any one of the following:
(a)if the entity is an entity as referred to in one of paragraphs (1) to (7) of the definition of "resident of a foreign state" in regulation 1(a) – its declaration to that effect as well as the particulars set out in sub-paragraphs (b)(1) to (4);
(b)if the entity is not among the entities set out in paragraphs (1) to (7) of the definition of "resident of a foreign state" in regulation 1(a) – a declaration by the entity that shall include the following particulars:
(1)the full name of the entity;
(2)the address of the entity;
(3)all the states in which the entity is a resident for tax purposes and its TIN number in each such state, subject to the provisions of regulation 8;
(4)if the entity declares that it has no residence for tax purposes – its place of effective management or the place where its principal office is located;
(5)the entity's declaration as to whether it is an active entity or a passive entity, as the case may be;
(6)if the entity is an active entity – the entity's declaration as to which of the conditions set out in Part VIII, Section D, subsections 9.a) to 9.h) in the definition of active entity in the Standard are fulfilled in respect of it;
(7)if the entity is a passive entity – the entity's declaration as to whether it has controlling shareholders who are residents of a foreign state;
(8)if the entity is a passive entity that has declared that it has controlling shareholders who are residents of a foreign state – a self-certification in respect of an individual of each of the controlling shareholders in the passive entity who is a resident of a foreign state;
(2)A self-certification in respect of an entity as referred to in paragraph (1) shall be furnished in a declaration of the authorised signatory on the entity's account or the person authorised to sign on behalf of the entity, signed by him or confirmed by him in another manner, that includes the date of signature or confirmation; a self-certification in respect of an individual of a controlling shareholder as referred to in paragraph (1)(b)(8) shall be furnished in a declaration of the controlling shareholder or the authorised signatory on the account or in the entity or a person authorised by the controlling shareholder, signed by him or confirmed by him in another manner that includes the date of signature or confirmation.
(c)A self-certification in respect of an individual and a self-certification in respect of an entity shall state that the self-certification is intended for the purpose of determining whether the account holder or a controlling shareholder in a passive entity that holds the account, as the case may be, is a resident of a foreign state; and it shall further state that if that foreign state is a reportable jurisdiction, information on the account holder or on the controlling shareholder as aforesaid, as the case may be, shall be transferred to that foreign state.
General provisions§
10.
(a)A reporting Israeli financial institution shall embed procedures that ensure the identification of any change in the circumstances of the account that is capable of affecting the classification of the account for the purposes of these Regulations, and in respect of high value accounts it shall embed procedures that ensure that a relationship manager identifies any such change in the circumstances of the account.
(b)A reporting Israeli financial institution shall classify a financial account as an account of a resident of a foreign state in a particular state as detailed in regulations 3 to 5, in the year in which it was identified as an account of a resident of a foreign state in that state and in every year thereafter, unless the account has ceased to be an account of a resident of a foreign state in that state; for this purpose, the account shall be regarded as having ceased to be an account of a resident of a foreign state in a particular state if one of the following has occurred:
(1)the account holder has ceased to be a resident of a foreign state in that particular state; for this purpose the account holder shall be regarded as having ceased to be a resident of a foreign state in a particular state –
(a)in respect of an individual, if he has furnished a self-certification in respect of an individual, and that particular foreign state is not among the states specified in the self-certification as states in which he is a resident for tax purposes, and he has also furnished documentary evidence issued in a state that is among the states specified in the self-certification as states in which he is a resident for tax purposes;
(b)in respect of an entity –
(1)in a case where the financial institution regarded the entity as a resident of a particular foreign state, if it has furnished a self-certification in respect of an entity, and that particular foreign state is not among the states specified in the self-certification as states in which it is a resident for tax purposes;
(2)in a case where the financial institution regarded the entity as a passive entity that has one or more controlling shareholders who are regarded as residents of a particular foreign state, if one of the following has occurred, as the case may be:
(a)the entity has furnished a self-certification in respect of an entity that establishes its status as an active entity;
(b)a self-certification in respect of an individual has been received in respect of each of the controlling shareholders in the entity, and that particular foreign state is not among the states specified in the self-certification as states in which the controlling shareholders are residents for tax purposes, and documentary evidence issued in a state that is among the states specified in the self-certification as states in which he is a resident for tax purposes has also been received;
(2)the account has become an excluded account;
(3)the account has been closed or transferred in full, provided that if the foreign state is a reportable jurisdiction, the closure or transfer of the account shall be reported to that foreign state in respect of the year in which the account was closed or transferred in full.
(c)If a reporting Israeli financial institution has received from the account holder a self-certification or documentary evidence attesting that the account holder or a controlling shareholder in the account holder, as the case may be, is a resident of a foreign state in a particular foreign state, and up to the time of their receipt the financial institution did not regard him as a resident of a foreign state in that foreign state, it shall classify the account as an account of a resident of a foreign state in the foreign state in respect of which a self-certification or documentary evidence as aforesaid has been received.
(d)A reporting Israeli financial institution shall not rely on a self-certification or on documentary evidence if it knows or has reason to know that they are erroneous or unreliable, and if the financial institution relied on such documentation or evidence at the time of examining the account as referred to in regulations 3 to 5, it must re-examine the status of the account; for this purpose, a reporting Israeli financial institution shall not be required to examine the tax laws of a foreign state in order to determine whether a self-certification is erroneous or unreliable.
(e)A reporting Israeli financial institution shall not regard the citizenship of an individual in a particular foreign state as an indicator of that foreign state.
(f)For the purpose of calculating a balance, value or aggregate balance, a reporting Israeli financial institution shall attribute to each of the holders of a financial account held in joint ownership the entire balance or the entire value in the account, and for the purpose of determining whether an account is a high value account, the financial institution shall examine whether a relationship manager knows that another financial account, which is not an account for the benefit of another, is held, directly or indirectly, in the ownership or under the control of the account holder or was created by him.
(g)The amounts denominated in foreign currency in these Regulations shall be calculated, on any given day, according to the representative rate of exchange of the foreign currency, in new shekels, as published by the Bank of Israel on that day, and if no rate was published on that day – according to the last rate published before that day.
(h)For the purpose of reporting on a reportable account as referred to in regulation 6 –
(1)the report shall be made in one of the currencies in which the account is managed or in dollars or in new shekels, and the type of currency as aforesaid shall be indicated;
(2)the amount and characterisation of payments made in respect of a reportable account shall be in accordance with the tax laws in Israel.
(i)The Administrator shall publish in a notice in the Reshumot (Official Gazette) and on the website of the Tax Authority the reportable jurisdictions with which agreements have been made pursuant to which there is a commitment to provide the information detailed in Part I of the Standard, and in respect of each of them, the following information:
(1)the date on which the agreement was made;
(2)the date on which reporting Israeli financial institutions are first required to transfer to the Administrator information pursuant to regulation 6 in respect of reportable accounts classified as accounts of residents of that state;
(3)the date of the first transfer of information to the reportable jurisdiction;
(4)an indication of whether the reportable jurisdiction issues a TIN number to each of its residents, or does not issue a TIN number at all or issues a TIN number to some of its residents;
(5)an indication of whether the presentation of the TIN number issued by the foreign state is not required under its laws;
information as aforesaid in respect of a foreign state with which an agreement has been made shall be published by the Administrator within 30 days from the date on which the agreement was made.
(j)For the purpose of implementing these Regulations, a reporting Israeli financial institution shall recognise an entity as a public institution if it has presented to it a certificate of incorporation and a confirmation by an auditor of the submission of an annual report to the Tax Authority pursuant to section 9(2)(b) of the Ordinance.
(k)If a reporting Israeli financial institution did not specify in a notice sent pursuant to regulation 7(a) what the indicator is or what the reason is for which an account was classified as an account of a resident of a foreign state, and the financial institution has been requested, in writing, by the account holder or by a controlling shareholder in a passive entity that holds the account, as the case may be, to specify what the indicator is or what the reason is for which the account was classified as an account of a resident of a foreign state, the financial institution shall furnish the answer, which shall include the indicator or the reason as aforesaid, within 30 days from the date of receipt of the request.
(l)A reporting Israeli financial institution shall retain documentation of the steps it took for the purpose of classifying an account pursuant to these Regulations and every document that served it for that purpose, including documentary evidence, a self-certification in respect of an individual and a self-certification in respect of an entity (in this sub-regulation – the documents), until the end of 6 years from the end of the last tax year for which the documents are necessary for the purpose of classifying the account.
(m)If the Administrator has reasonable grounds to assume that a person or an Israeli financial institution has performed an action, refrained from performing an action or was a party to an arrangement, and one of the main purposes of such action, refraining or arrangement is to avoid fulfilling an obligation pursuant to these Regulations, he may determine that the obligation pursuant to these Regulations shall apply as if the action had not been performed or the performance of the action had not been refrained from or the arrangement had not been participated in, as the case may be (hereinafter – the determination), and all of the following shall apply:
(1)the Administrator shall notify the reporting Israeli financial institution of the particulars of the determination and of the reporting year to which it relates;
(2)the reporting Israeli financial institution shall notify, in the manner prescribed in regulation 7(c), of the determination and its particulars to the person in respect of whom it relates within 30 days from the date on which the Administrator notified it of the determination;
(3)the reporting Israeli financial institution shall transfer to the Administrator a report pursuant to regulation 6(a) in respect of an account in respect of which the determination was made, within 60 days from the date on which the Administrator notified it of the determination.
Commencement and transitional provisions§
11.
(a)The commencement of regulation 9(c) shall be on the 28th of Iyar 5779 (2 June 2019).
(b)Notwithstanding the provisions of regulations 3(1) and (2), a reporting Israeli financial institution that before the 23rd of Tevet 5779 (31 December 2018) classified an existing account of an individual subject to examination pursuant to those regulations as an account of a resident of a foreign state, on the basis of the individual's declaration, shall not conduct the examinations pursuant to those regulations and shall rely on the classification it conducted as aforesaid, unless it knows or has reason to know that the individual's declaration in its possession is erroneous or unreliable; for this purpose, "the individual's declaration" – a declaration in which the states in which the individual is a resident for tax purposes were specified, whether given in connection with that account or whether given in connection with another account, or as a declaration of a controlling shareholder in an entity holding an account in another account, provided that it was signed by the individual or confirmed by him in another manner.
(c)Notwithstanding the provisions of regulation 5(1), a reporting Israeli financial institution that before the 23rd of Tevet 5779 (31 December 2018) classified an existing account of an entity as an account of a resident of a foreign state, on the basis of the entity's declaration in which the states in which it is a resident for tax purposes were specified, which was signed by the authorised signatory on the entity's account or confirmed by him in another manner, shall not conduct the examinations pursuant to Part V, Section D.1 of the Standard and shall rely on the classification it conducted as aforesaid, unless it knows or has reason to know that the entity's declaration in its possession is erroneous or unreliable.
(d)Notwithstanding the provisions of regulation 6(c), a reporting Israeli financial institution shall furnish to the Administrator, no later than the 20th of Sivan 5779 (23 June 2019), a report as referred to in regulation 6(a) in respect of the year 2017, in respect of a reportable account that was classified up to the 13th of Tevet 5778 (31 December 2017) pursuant to sub-regulations (b) or (c), except for such an account of an entity the balance of which did not exceed 250,000 dollars on the 13th of Tevet 5778 (31 December 2017), provided that the account holder has not submitted an objection as referred to in regulation 7(b) up to the date prescribed for this purpose in paragraph (2), and if such an objection has been submitted – the financial institution has responded to the objection by the 26th of Iyar 5779 (31 May 2019); if the financial institution responded to the objection after the 26th of Iyar 5779 (31 May 2019), the financial institution shall furnish to the Administrator a report in respect of that reportable account in respect of the year 2018 at the time prescribed therefor in sub-regulation (e); for the purpose of a report as referred to in this sub-regulation –
(1)in regulation 7(d), instead of "15 February" it shall read "28 February";
(2)wherever it appears in regulation 7(e), instead of "83 days" it shall read "28 days", instead of "8 May in a particular year" it shall read "the 21st of Adar Bet 5779 (28 March 2019)" and instead of "8 August in that year" it shall read "the 18th of Sivan 5779 (28 June 2019)".
(e)For the purpose of a report as referred to in regulation 6(a) in respect of the year 2018 –
(1)a reporting Israeli financial institution shall furnish to the Administrator, no later than the 8th of Elul 5779 (8 September 2019), a report as detailed in regulation 6(a), in respect of a reportable account that was classified up to the 23rd of Tevet 5779 (31 December 2018) pursuant to sub-regulation (b) or (c), except for such an account of an entity the balance of which did not exceed 250,000 dollars on the 23rd of Tevet 5779 (31 December 2018);
(2)in regulation 7(d), instead of "15 February" it shall read "1 April";
(3)wherever it appears in regulation 7(e), instead of "83 days" it shall read "53 days", instead of "8 May in a particular year" it shall read "the 18th of Iyar 5779 (23 May 2019)" and instead of "8 August in a particular year" it shall read "the 14th of Av 5779 (15 August 2019)".
(f)For the purpose of a report as referred to in regulation 6(a) in respect of the years 2017 and 2018 –
(1)the concluding part beginning with the words "a financial institution rejected" in regulation 7(e) shall not be read;
(2)if a reporting Israeli financial institution did not specify in a response sent pursuant to regulation 7(e) the reason for the rejection of the objection, and it has been requested, in writing, by an account holder or a controlling shareholder in a passive entity that holds the account, as the case may be, to specify the said reason, it shall furnish the reason for the rejection of the objection within 30 days from the date of receipt of the request.
(g)In addition to the provisions of regulation 10(i), the Administrator shall publish within 30 days from the date of publication of these Regulations, in a notice in the Reshumot (Official Gazette) and on the website of the Tax Authority, the list of foreign states with which agreements were made before the commencement of these Regulations.
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RegulationsAdministrative Law
תקנות מס הכנסה (יישום תקן אחיד לדיווח ולבדיקת נאותות של מידע על חשבונות פיננסיים), תשע"ט-2019
CSTRD regulations
Common Standard for Reporting and Due Diligence
financial accounts reporting
FATCA implementation Israel
CRS regulations Israel
automatic exchange of information
tax information reporting standards
financial account due diligence
income tax reporting regulations 2019