Knesset advances: a resident of Israel whose main income abroad will be exempt from payment to the National Insurance

Residents whose main income is in a foreign country where they pay social security will be exempt from paying social security contributions in Israel, according to a bill approved today (Tuesday) by the Labor and Welfare Committee.

Today, a resident of Israel is liable for tax on income generated or generated outside of Israel, including the payment of social security and health insurance fees. Thus, a resident of Israel whose center of life is in Israel but whose main source of income is abroad pays double the national insurance premiums and health insurance premiums, except in countries with which Israel has signed a treaty regarding social security. A resident whose income is in these countries and pays social insurance premiums there, will be exempt from paying national insurance premiums in Israel and will only pay health insurance premiums.

The bill seeks to grant similar conditions to citizens whose source of income is in countries with which Israel has not signed a treaty. The resident will continue to pay health insurance premiums according to his income, as well as minimum social security premiums of NIS 87, in order to maintain his basic rights to pensions in the National Insurance Institute. On top of that, it is proposed to exclude those whose employer sent them to work abroad, since in these situations it is the employer who bears the obligation to pay the insurance premiums.

The committee discussed four private bills by Knesset members Simcha Rothman, Ohad Tal (Religious Zionism), Merav Ben Ari (Yesh Atid) and Sharan Hashakal (Tikva New Hope) which were approved in a preliminary reading. At the end of the discussion, the committee merged the proposals into one bill and it was approved for first reading.

“In the current situation, a person who lives here and has income from the US, for example, can achieve a reduction of 60%-70% of his income on taxes and charges in both countries,” MK Rothman said. “This is a significant economic barrier that prevents many people from immigrating to Israel or establishing the center of their lives here as residents of the country, and also prevents Israeli citizens from earning money abroad because it is no longer worthwhile. This proposal will bring many immigrants and a lot of money to the State of Israel and will open up sources of income for the citizens.”