What's Happening?
The Knesset has passed a bill that exempts US olim, or new immigrants, from paying Israeli National Insurance contributions for five years if they are already obligated to pay US Social Security taxes. This legislative move aims to prevent double payments
and encourage aliyah by reducing financial burdens on US citizens moving to Israel. The bill, which passed unanimously, will serve as a temporary provision for ten years and amends Israel’s existing National Insurance Law. Sponsored by MKs Simcha Rothman, Ohad Tal, and Merav Ben Ari, the bill addresses the lack of an agreement between the US and Israel to prevent double social insurance payments. The exemption applies to US olims' income, whether they are employed or self-employed, and does not affect their obligation to pay health insurance contributions. Israel's treasury will compensate the National Insurance Institute for the contributions covered by the exemption.
Why It's Important?
This legislative change is significant as it removes a financial barrier that has historically discouraged US citizens from making aliyah. By eliminating the requirement for US olim to pay double social security contributions, the bill aims to make the transition to Israel more financially viable. This could potentially increase the number of US citizens immigrating to Israel, thereby strengthening the cultural and economic ties between the two nations. The bill also highlights the unique situation faced by US citizens living abroad, who are subject to US Social Security payments regardless of their residency. This move could set a precedent for other countries with similar expatriate tax issues, potentially influencing international tax policy.
What's Next?
The bill is set to be a temporary provision for ten years, with the possibility of extension. The Labor Minister may extend the provision by two additional periods, each not exceeding five years, with the consent of the Finance Minister and consultation with the Aliyah and Integration Minister. Final approval would be required from the Knesset’s Labor and Welfare Committee. This legislative flexibility allows for adjustments based on the bill's impact and the evolving needs of US olim. The success of this bill could lead to further legislative efforts to address other financial or bureaucratic barriers faced by immigrants.
