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US – Israeli Dual Nationals Lose FATCA Challenge In Israel

israel-usaAn Israeli Supreme Court panel has thrown out a challenge to a tax information-sharing agreement with the U.S. and removed a temporary block on FATCA’s implementation, rejecting arguments that the agreement violates the rights of Israelis.

The three-justice panel issued a brief ruling rejecting the challenge, with a more detailed opinion to follow, while also lifting an injunction issued late last month that had barred Israeli officials from implementing the law facilitating the U.S. Foreign Account Tax Compliance Act among Israeli financial institutions. The statute had been contested on concerns that it violates rights to property and privacy, and has inadequate protections for the information sent to the Internal Revenue Service.

In temporarily blocking the pact’s implementation, Israel Supreme Court Justice Hanan Meltzer had in part cited concerns that there was inadequate time between the notification to people affected, U.S. citizens and those holding green cards, in August and the final implementation this month. The case was launched by U.S. citizen and Israeli resident Ritan Schreiber and the group Republicans Overseas Israel, protesting the legality of legislation intended to make Israeli financial institutions share information about accounts of U.S. citizens and green card holders with more than $50,000.

The group launched its suit against the Israeli government in December, claiming violations of rights to privacy, dignity and private property. The complaint raised concerns over the law’s automatic effect and lack of legislative input on implementation decisions.

Israel is not the first country whose government pushed back on FATCA’s requirements, as the Cayman Islands government ordered a delay in reporting dates earlier this summer, starting compliance reporting in August.

The case is Republicans Abroad in Israel v. Government of Israel, case number 8886/15, in the High Court of Israel. The appellate court overturned an earlier injunction against FATCA’s implementation in Israel, on the basis that ‘privacy in modern life is very limited’.