French Parents Overturn a NIS 1.41M Israeli Tax Residency Assessment

Result: A NIS 1,410,000 Israeli residency assessment on French professional income cancelled in full · Timeline: 11 months · Challenge: 437 days in Israel across three years · Authority: Israel Tax Authority, Jerusalem assessing office · Financial Impact: NIS 1,410,000

Background

A couple in their early fifties living in the 16th arrondissement of Paris had two sons in Israel. The elder went to a yeshiva in Jerusalem in 2022 and stayed on at university; the younger followed him to the Hebrew University in 2024. Their daughter, then fourteen, remained at school in Paris. In late 2022 the parents bought a small three-room flat in Katamon so the boys would not be moving between rented rooms, and from that point they were in Israel constantly: 138 days in 2023, 151 in 2024, 148 in 2025.

Neither of them ever spent 183 days in Israel in a single year, and both of them believed that was the test. In February 2026 the husband received a letter from the Jerusalem assessing office asking him to explain his status, followed four months later by a best-judgment assessment for 2023 and 2024 that treated both spouses as Israeli residents and brought his French partnership income into the Israeli tax net. Tax, interest and linkage came to NIS 1,410,000.

Nothing about their situation had changed except that somebody in Israel had added up their days.

The Challenge

Section 1 of the Income Tax Ordinance 1961 defines an Israeli resident individual as a person whose centre of life is in Israel, and then supplies two day-count presumptions that a taxpayer and the assessing officer may each rebut. The first is the familiar one: 183 days or more in the tax year. The second is the one that catches families like this and is barely known outside professional circles: 30 days or more in the tax year, together with 425 days or more in that year and the two preceding years combined. The couple's three-year total was 437.

That second presumption is what the assessment rested on, and it was correctly applied. Once it bites, the taxpayer carries the practical burden of showing that the centre of life sits elsewhere, and the statute lists what the officer looks at: the place of the permanent home, the place of residence of the individual and of their family, the regular or permanent place of occupation, the place of substantial economic interests, and the place of activity in organisations, associations and institutions.

The family factor was the assessing officer's strongest card and the reason the file was opened at all. Two sons living in Israel, a flat bought in the parents' names for the sons to live in, and 437 days of presence is a coherent picture of a family whose life had moved. The officer's position, put in writing, was that the Katamon flat was the household and Paris was where the husband went to work.

There was also a procedural failure sitting underneath the substantive dispute, and it did real damage. Amendment 223 extended Section 131 of the Ordinance so that an individual who meets one of the day-count presumptions but maintains that they are a foreign resident must file an Israeli return setting out the facts, on Form 1348. The couple had never filed one, because nobody had told them the second presumption existed. The absence of that filing is what turned a routine residency query into a best-judgment assessment under Section 145, since the officer had no taxpayer account of the facts to work from and assessed on the material in front of him.

In Practice: Section 1 of the Income Tax Ordinance 1961 presumes Israeli residence where an individual spends 30 days or more in the tax year and 425 days or more across that year and the two preceding years, which is a far lower bar than the 183-day rule most non-residents plan around. Amendment 223 requires anyone caught by that presumption who claims foreign residence to file Form 1348 with an Israeli return; skipping it invites a best-judgment assessment under Section 145. The Jerusalem assessing office opened this enquiry in February 2026 and issued its assessment four months later, at NIS 1,410,000 for two tax years.

What We Did

The objection under Section 150 has to be delivered in writing within 30 days of the assessment notice, and that deadline drives everything. We filed on day 26, with the substantive case attached rather than a placeholder, because an objection that arrives empty invites the officer to treat the file as a delaying exercise.

The submission worked through the statutory factors one at a time and conceded the ones we could not win.

On the permanent home, the couple had owned and lived in the same Paris apartment since 2004, with continuous utility accounts, a taxe d'habitation history and building records. The Katamon flat was 61 square metres, furnished for two students, and both sons were named on its municipal arnona account as the occupiers. We supplied photographs of the flat's actual use and the sons' own signed statements.

On the residence of the family, we made the argument that decided the case. The statutory factor is the residence of the individual and their family, and the couple's household in every ordinary sense was Paris, where their fourteen-year-old daughter was in the fourth year of a French school, enrolled, examined and living with them. Adult sons studying abroad do not relocate a family unit, any more than a French student in Montreal moves their parents' residence to Quebec. We put the daughter's school enrolment certificates, her medical records and the family's Paris address on every French filing into the file. The presence of a minor child in France did more work than any other document in the bundle.

On occupation, the husband was an equity partner in a Paris firm whose partnership agreement required attendance, and we produced three years of office attendance records, client meeting logs and the partnership's own confirmation. He had never billed a client from Israel and had no Israeli professional registration.

On economic interests, everything was French: the partnership capital account, two French bank accounts, a plan d'épargne en actions, two assurance-vie contracts and a French mortgage. Their Israeli footprint was one flat with no income attached to it, which we volunteered rather than waited to be asked about.

On organisational activity, both were long-standing members of a Paris synagogue association and he sat on a professional committee, with attendance records for both.

We then filed the missing Form 1348 returns for the years in question, without waiting to be told to. Filing late is a weaker position than filing on time, and it is a far stronger position than not filing at all, since it converts an unexplained taxpayer into a compliant one and gives the officer a document he can point to when he closes the file.

In Practice: An objection under Section 150 of the Income Tax Ordinance 1961 must reach the assessing officer in writing within 30 days of the assessment notice, and where it succeeds the officer issues an order under Section 152(b); the remaining route is an appeal to the District Court under Section 153. Israeli marginal rates reach 47%, with the Section 121B surtax adding 3% above NIS 721,560 of annual income, which is how two years of French partnership profits reached an assessment of NIS 1,410,000. The objection here was decided in 7 months from filing, against the 18 to 30 months a Section 153 appeal would have taken.

The treaty argument was prepared in full and deliberately kept in reserve. Article 4 of the France-Israel double taxation convention signed on 31 July 1995 resolves dual residence by asking first where a permanent home is available, then where the centre of vital interests lies, then habitual abode, then nationality. On these facts the couple would have won at the second step. We obtained the French certificate of residence on Form 5000-SD from their local tax office and referred to it, but we did not build the case on the treaty, for a practical reason: leading with a treaty tiebreaker concedes that Israel has a residence claim at all. The stronger position is that domestic Israeli law never made them residents, with the treaty as the fallback the officer knows is waiting.

One parallel exposure needed handling separately. The National Insurance Institute runs its own residence test and does not follow the Tax Authority's conclusions, and a file had been opened there on the same border-crossing data. We closed it on the same evidence bundle two months after the tax file.

The Outcome

The assessing officer accepted the objection and issued an order under Section 152(b) reducing the assessment for both years to nil. No appeal to the District Court was necessary and no Israeli tax was paid on the French partnership income. Eleven months elapsed between the first letter from the Jerusalem office and the closing order.

Professional costs came to NIS 78,000 in Israel and roughly EUR 6,400 for the French documentation and certificates. Set against NIS 1,410,000 of assessed tax, that is the entire argument for engaging early rather than answering the first letter alone and hoping it goes away.

The forward-looking part mattered more to the couple than the refund they never had to claim. Their visit pattern was rebuilt around a cap of 120 days a year, tracked against a rolling three-year count rather than a calendar year, and Form 1348 is now filed annually whether or not a presumption is triggered. The sons remain in Jerusalem, the flat is still theirs, and none of that was ever the problem.

Key Takeaways

What this case illustrates for non-residents in similar situations:

1. The 183-day rule is not the only trip-wire. Thirty days in the current year plus 425 days across three years triggers the same presumption, and a family visiting adult children in Israel two or three times a year passes it without noticing.
2. File Form 1348 even when you are confident you are not resident. Amendment 223 makes it compulsory once a presumption is met, and its absence is what converts a residency query into a best-judgment assessment under Section 145.
3. A minor child at school in your home country is powerful evidence. The Section 1 factor is the residence of the individual and their family. Adult children studying in Israel weigh far less than a school-age child enrolled and living with you abroad.
4. Answer the objection deadline with a complete case, not a holding letter. Thirty days under Section 150 is short, and an objection decided by the assessing officer takes months rather than the years a Section 153 appeal to the District Court consumes.
5. Keep the treaty in reserve. Article 4 of the France-Israel convention resolves dual residence in France's favour on facts like these, but leading with it accepts that Israel has a residence claim. Win on Section 1 first.

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Facing a Similar Situation?

If your children study in Israel and you visit often, count your days across three years rather than one, and count them before the Tax Authority does it for you. Our guide to the Israeli tax residency day-count rules explains both presumptions and what the centre-of-life factors actually require.

Contact us for a confidential consultation about your Israeli legal matter.