Palo Alto Networks $25 billion acquisition of Israeli cybersecurity firm CyberArk Software program (Nasdaq: CYBR) might earn Israel’s state coffers $2 billion in taxes – about NIS 6.7 billion at immediately’s change price. The exact quantity will depend upon the Israeli shareholders and their place of residence for tax functions.
Isak Rofe CPA, a global taxation skilled at Meir Mizrahi with A. Rafael & Co. legislation agency explains that the quantity of income to the state is determined by a number of components. He says, “The founders of CyberArk are Israelis, however a few of them formally left for the US. The ultimate quantity is determined by what number of Israeli shareholders the corporate has.” Rofe believes that based mostly on the truth that the corporate has about 1,000 staff in Israel out of about 4,000 in whole, in addition to estimates relating to extra Israeli traders, then 25%-30% of the corporate is in Israeli arms.
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“Taxation in Israel is taken into account comparatively excessive”
The tax calculation is complicated and is determined by the kind of shareholder. Anybody who holds lower than 10% of the shares pays 25% capital beneficial properties tax, and if their whole earnings exceeds NIS 720,000 shekels, an extra 5% surtax will likely be added, in accordance with the brand new legislation that got here into impact at the start of 2025. Substantial shareholders, those that maintain greater than 10% pays 30% capital beneficial properties tax plus 5% surtax, assuming they’re Israeli residents.
A particular state of affairs applies to founders who’ve left Israel through the years. “Anybody who leaves Israel pays an exit tax, which is decided by the variety of days spent in Israel in contrast with the variety of days spent overseas throughout the holding interval,” explains Rofe. For instance, if the corporate was based in 1999 and the founder left for this goal in 2012, he was solely in Israel for half of the interval, and subsequently pays half the tax in Israel that Israeli residents pay – 15% as a substitute of 30%.
Within the US, the federal capital beneficial properties tax price is simply 20%, plus state taxes that vary from 0% to 11%. “This isn’t a zero-sum recreation for shareholders,” Rofe notes. “Taxation in Israel is taken into account comparatively excessive, so the extra you permit Israel for a state within the US with low taxation, the tax price will lower following the transfer.” Nonetheless, former Israeli residents are purported to obtain a tax credit score within the US for the tax they paid in Israel.
Printed by Globes, Israel enterprise information – en.globes.co.il – on July 30, 2025.
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