Trust Owned Vehicle - TOV

A TOV is a trust that owns an “underlying company”, which in turn does business and/or holds investments around the world.

A TOV may enjoy a complete exemption from Israeli tax on:

1.   Non-Israeli source income and gains: if the TOV is established by or for the benefit of non-Israeli residents. Furthermore, there is no Israeli tax reporting requirement.

2. Israeli source income and gains: interest on foreign currency deposits at an Israeli bank (PATACH) and certain capital gains (from a home; or from securities of listed Israeli companies, R&D, intensive private companies; and sales by venture capital funds with a special tax ruling).

Most other types of Israeli source income will be taxable in Israel at rates ranging from 20% to 48%.

The TOV first became possible when an amendment to the Income Tax Ordinance was Implemented in Israel on January 1, 2006.

Israel recognizes the trust concept and the Trust Law, 1979, largely applies common law principles.

The trustee may be Israeli resident without affecting the Israeli tax exemptions available to the TOV.

There are no Israeli exchange control restrictions as Israel abolished exchange control in 1998.

Who Does a Trust Owned Vehicle (TOV) benefit?

A Trust Owned Vehicle (TOV) may be beneficial to almost anyone, wherever they reside.

Non-Israeli residents may benefit from a TOV as follows:

  • No tax on non-Israeli source income
  • No tax on most Israeli source investment income
  • No estate/inheritance tax on investments in the US, UK, etc.
  • No need to report foreign source income
  • Israeli resident underlying company - potential access to Israel’s tax treaties with over 40 countries
  • Not on blacklists
  • No Israeli exchange control
  • Anti-money laundering rules usually not intrusive
  • Confidentiality
  • Asset protection
  • Orderly framework for personal finances
  • Facilitates gradual transfer of wealth to the next generation in Israel or elsewhere


Israeli residents may benefit from a TOV as follows:

  • No tax on non-Israeli source income
  • No estate/inheritance tax on investments in the US, UK, etc.
  • Improved foreign tax credit eligibility
  • confidentiality
  • Asset protection
  • Orderly framework for personal finances
  • Facilitates gradual transfer of wealth to the next generation in Israel or elsewhere

Professional advisors in each country concerned should review the pros and cons.