37 could take long months (at best) can now invest in Israel immediately and automatically enjoy tax benefits. This allows funds to focus on identifying and executing investments rather than on complex tax structuring and administrative hurdles.” Guy Katz, senior partner at Herzog, notes that “the proposed regulations suggest codifying tax exemptions for limited investors on capital gains, interest, and dividends earned on investments in technology companies. The Israeli managing partners in these funds (the GP) are entitled to a reduced tax rate (27%) on the carried interest. Non-Israeli managing partners are also subject to preferential taxation on their carried interest from Israeli exits, and in cases where they are subject to tax in Israel, such tax will be capped at 10%.” Widens the tax exemption to non-Israeli tech investors The proposed legislation widens the tax exemption to non-Israeli tech investors, like corporate VCs, angel investors, and family offices. “The exemption applies even where investors have a so-called permanent establishment in Israel, such as an office in Israel managing these investments,” Herzog’s Katz adds. “The capital gains tax exemption for direct investments makes it more attractive for institutional investors and companies to invest directly in Israeli high-tech companies, without the need to establish fund structures. The fixed formulas for calculating VAT on management fees based on the ratio between foreign and Israeli investors provide financial predictability and enable more accurate economic planning.” On the corporate side, the reform removes obstacles that previously constrained growth through mergers and acquisitions. “For technology companies, the new legislation regarding structural changes has already been approved, effectively removing significant barriers for investments and growth through acquisitions,” says Shibolet’s Miri Bickel. “This is a major change that enables transactions and exits in circumstances where the corporate structure previously made them impossible, allowing it More M&A flexibility for tech companies
RkJQdWJsaXNoZXIy MjgzNzA=