Foreign Source Income Allocation - New Immigrant Exemption

Last week, the Central District Court issued a Civil Appeal rejecting a Veteran Returning Resident's argument regarding the allocation of Israeli and foreign source income deriving from his compensation by a foreign company.

The facts of the case involve a developer turned manager who returned to Israel in July 2007, following a significant period of foreign residence. For more than ten years prior to the return the taxpayer worked for EMC Computer Systems company in the UK. In July 2007, the taxpayer moved back to Israel, retaining his position as finance manager and contract with his UK employer, and continued to work with four foreign markets and the Israeli market. Nevertheless, he physically worked from the Israeli office during this time.