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National Insurance aspects – Social Security payments and entitelment for damage allowances

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2 different verdicts were published lately handling Israel National Insurance – BL.

By law, every Israeli resident has to pay National Insurance (Bituach Leumi).

Only by reporting and paying to BL the insurance premium on incomes, would entitle a self-employed person to receive allowances in case of a damage, disability, car accident, maternity etc.

This was emphasized again in a verdict (“Gurianov”) that was published lately. The insured person submitted a claim against BL after they rejected his request for allowances based on his self-employment incomes, since he didn’t report nor paid advances on those incomes before the accident accrued.

The insured person tried to put the blame on his accountant saying he should have delivered the report on time and since the accountant failed to do so, he shouldn’t be denied from receiving the allowances.

The court rejected his appeal and emphasized the law, that gives an insured person a coverage against damages or accidents only if this person reported and paid advances before the accident accrued.

Another verdict (“Joseph Tal”) handled the liability of an IL resident to pay BL although he already paid Social Security to the US (creating double taxation issue).

Here also the court had denied the appeal and made it very clear that IL and the US has not social treaty between them, and therefore, an IL resident who works for a foreign employer that reside in the US and pay Social Security there, would still have to pay BL in IL (of 12%) without being credited for the payments to the US (double taxation).

It is extremely important to consult and make sure you’re aware of the tax implications of your business moves to prevent tax accidents and double taxation payments.