EASEMENTS ON THE DEADLINES FOR REPORTING AND THE PAYMENT OF TAXES OWING TO THE SECURITY SITUATION
Following the outbreak of the “Rising Lion Operation” (the War) and given the security situation in which the country finds itself, the Israel Tax Authority (ITA) published a series of significant easements concerning the deadlines for reporting and the payment of tax. Within the framework of the easements, the deadline for the submission of periodic reports and payments for the month of May, with regard to VAT, income tax withholdings and advances, has been postponed to 26 June 2025. Moreover, the deadline for the submission by individuals and companies of annual financial statements for 2024 was extended until 31 July 2025, independent of extension arrangements for representatives. With regard to the annual financial statements for 2023, it was specified that individuals and companies included in extension arrangements could submit them by 30 June 2025, without a fine or monetary sanction being imposed for the late submission. In addition, the deadline for the submission of capital declarations will be postponed concomitant with postponement of the deadline for submission of the annual report, and the withholding reports for 2024 (Forms 126 and 856) can be received by 31 July 2025, without the imposition of penalties. The deadline for reporting and the payment of annual tax for a small business for 2024 was postponed to 31 July 2025.
At the same time, new collection and enforcement proceedings encompassing all tax spheres – income tax, withholdings, real estate taxes, VAT and customs – have been frozen until 30 June 2025, save for exceptional cases and subject to special approval. It should be emphasized that this postponement does not cancel out existing seizures or past debts, and the accrual of linkage differentials and interest will continue in accordance with the provisions of law. The deadline for the freeze may be updated subject to further developments.
COMPENSATION FOR WAR DAMAGES – TRACKS FOR SUBMITTING CLAIMS TO THE COMPENSATION FUND AND EXPANSION OF THE INSURANCE COVERAGE
As is known, the Property Tax and Compensation Fund Law, 5721-1961 (the Property Tax Law) and regulations enacted thereunder provide insurance coverage to a building and/or property located in Israel which sustain damaged during a war. We accordingly wish to update you of the tracks for the submission of claims to the Compensation Fund in this context, as well as of the unique possibility being presented by the ITA for the expansion of existing insurance coverage.
Tracks for the Submission of Claims to the Compensation Fund
- The regular track
As part of the process for the regular handling of war damages, representatives from the Compensation Fund (Property Tax Division) at the ITA attend at the damaged property as soon as possible after the occurrence of the damage-related incident, accompanied by professional appraisers and engineers. These teams conduct a tour of the damaged property (regardless if this speaks to residential apartments, businesses or offices) and provide guidance to the harmed persons of their rights and the procedure for submitting a claim for compensation. In this regard, it is important to highlight several mandatory guidelines:
- equipment, inventory, debris or any other item located in the damaged property must not be removed without coordinating this in advance with an appraiser on behalf of the Compensation Fund (broken glass can be removed prior to the arrival of the Compensation Fund teams, for safety reasons);
- no repairs can be undertaken in the damaged property prior to an inspection being carried out by the appraiser on behalf of the Compensation Fund.
Should the request for compensation be denied, the harmed person has the right to appeal such decision.
- The fast track
Against the backdrop of the security situation, the ITA recently published a fast track for the submission of claims for direct damage caused to a building and/or household contents owing to the War. This track, which is available to both individuals and businesses alike, allows for compensation to be received quickly, without having to wait for the appraiser’s visit and his opinion. In this way, claims for compensation under the fast track will be handled within 7 business days from the date of their submission, subject to the following conditions being met:
- the claim for damage does not exceed NIS 30,000;
- the person filing the claim (the applicant) satisfies the definition of “an harmed person” under the Property Tax Law (a property owner or anyone who proves that he himself bears the expenses for restoration of the property, the owner of the damaged contents – including a tenant residing in the property);
- identification of the applicant in order to obtain digital services via the ITA and the submission of declarations and documents (including photographs) that harmed person will declare to be correct;
- the submission of an invoice within 30 days, at the latest, from the date of payment of the compensation;
- the entitlement is limited to the submission of only one claim per family unit and only one claim for the damage-related incident;
- by submitting the claim, the harmed person waives the possibility of filing an additional claim for the damage-related incident, including a claim under the regular track.
It is important to emphasize that there is a limited time for filing a claim for damages caused to property as a consequence of a war-related incident. It should thus be borne in mind that notice about the damage should be submitted to the ITA within two weeks from the date of occurrence of the incident and the claim for compensation should be submitted, at the latest, within three months of the date of occurrence of the damage.
The Compensation Ceilings for War Damages to Household Items and the Possibility of Expanding the Insurance Coverage
- The basic compensation ceilings
Pursuant to the regulations, the scope of compensation for household items that are damaged during a war will be determined based on their cost of repair. If, in the opinion of the Property Tax Manager, the item cannot be repaired – then the value of the compensation shall be based on the value of a similar new replacement household item. In this respect, compensation will be granted up to a maximum ceiling of roughly NIS 85,000 per couple (and a higher amount for a family, depending on the number of children). It is nonetheless important to emphasize that there will be no entitlement to compensation for cash, cheques, jewellery, artworks and antiques that are damaged due to the war-related incident.
- Limitations of the basic coverage and the need for its expansion
As stated above, the basic coverage given by the Property Tax Division is limited by relatively low compensation ceilings. From our experience, in most cases amounting to significant war damages, this compensation covers only a small portion of the actual damage that is caused to the household contents, particularly in a home containing valuable items that are damaged.
It should be noted that the option of expanding the existing insurance coverage is currently available and involves contacting the ITA. This expansion allows for the coverage of household contents valued at hundreds of thousands of shekels and up to a maximum sum of roughly NIS 1 million, at a relatively low cost of roughly NIS 300 for every NIS 100,000 additional coverage to the contents (a rate of 0.3%). It should be borne in mind that here too the expanded coverage does not cover cash, cheques, jewellery, artworks and antiques, and that it applies until 31 December 2025.
Given the above, we recommend that owners of homes/apartments consider expanding the insurance coverage, particularly in cases where the value of the home exceeds the basic compensation ceilings. Expansion of the insurance coverage, at a relatively negligible cost, may provide peace of mind and ensure adequate compensation in the case of damage to the contents of the home as a result of war-related activities.
The application can be filed by means of the following link:
https://www.gov.il/he/service/optional_insurance_war_damages_compensation
* The newsflash is intended to provide subscribers with general information only and should not in any way be regarded as firm professional advice and/or a definitive legal opinion.
