How does an Australian non-resident transfer or sell shares in their Israeli company?

An Australian shareholder in an Israeli company usually pictures a share sale as one signature and a wire. The signature matters, but three other things decide whether the transfer actually sticks: the company's own rules, the Israeli tax step, and the filing that makes the change official. Miss one and the buyer's name never properly lands on the register.

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Detailed Explanation

A share transfer in an Israeli company is governed by the Companies Law 1999 and, first of all, by the company's own articles of association (takanon) and any shareholders' agreement. Those documents often carry a right of first refusal, a board or shareholder approval requirement, or tag-along and drag-along clauses, and they bind you before any outside buyer. The transfer is executed by a share transfer deed signed by seller and buyer, after which the company updates its register of shareholders and reports the change to the Companies Registrar (Rasham HaHevrot). Until the Registrar filing is made, the world still sees the old ownership, so this step is not optional housekeeping. The corporate setup these rules come from is described in the guide to registering a company in Israel as a foreigner.

The tax step is where non-residents most often trip. A sale of shares can be a taxable capital gain in Israel, and Israeli law puts a withholding duty on the buyer under Section 164 of the Income Tax Ordinance, meaning the buyer may have to hold back tax from the price unless the seller produces an exemption or reduced-rate certificate from the Israel Tax Authority. Many non-resident share sales qualify for the Section 97(b3) exemption, but that has to be established with the authority rather than assumed, and the strategic side of an exit is covered in the note on selling an Israeli company as a non-resident founder. Getting the certificate before completion is what lets the full proceeds move.

From Australia, the same disposal is a CGT event for the ATO. You report the capital gain in your Australian return, apply the CGT discount if the holding period and your residency status allow it, and claim a foreign income tax offset for Israeli tax actually paid, capped at the Australian tax on that gain. Because a foreign resident's access to the CGT discount is restricted, and because timing the Israeli certificate against the Australian tax year affects the offset, the two sides are best planned together rather than in sequence.

In Practice: A share transfer is executed by deed and filed with the Companies Registrar (Rasham HaHevrot) under the Companies Law 1999, usually within days of completion. Israeli capital gains tax may apply, with the buyer required to withhold under Section 164 of the Income Tax Ordinance unless the Israel Tax Authority issues an exemption or reduced-rate certificate, which typically takes three to eight weeks to obtain. The Australian seller reports the CGT event to the ATO and claims a foreign income tax offset for Israeli tax paid.

Key Considerations

• The company's articles and shareholders' agreement can impose pre-emption and approval rights before any sale.
• The transfer is made by a share transfer deed and only takes effect on filing with the Companies Registrar.
• Israeli capital gains tax may apply, with buyer withholding under Section 164 unless a certificate is obtained.
• Many non-resident sales qualify for the Section 97(b3) exemption, but it must be confirmed with the Tax Authority.
• The disposal is also an ATO CGT event, with a foreign income tax offset capped at the Australian tax.

When to Consult a Lawyer

This question typically requires professional legal advice when:

• The articles or shareholders' agreement contain pre-emption, tag-along, or drag-along rights that affect the sale.
• The buyer intends to withhold Israeli tax and you need an exemption or reduced-rate certificate first.
• You want the Israeli certificate and the Australian tax year aligned so the foreign income tax offset is not wasted.

A qualified Israeli attorney should handle the transfer deed, the Registrar filing, and the tax certificate, coordinating with your Australian adviser.

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Speak With an Israeli Attorney

We handle share transfers in Israeli companies for non-resident shareholders, clear the pre-emption and approval steps, file with the Companies Registrar, and secure the tax certificate needed to release proceeds.

Contact us for a confidential initial consultation.