You have just taken what is probably the most important step in your life. You have made Aliyah. Welcome home!
Although you may feel instantly spiritually uplifted, the more down-to-earth, practical aspects of settling into your new life in Israel might prove somewhat more challenging. The Israeli bureaucracy has a reputation for, well, driving people just a little mad. That, combined with the difference in language and culture, might make everything seem at first quite overwhelming.
But take a deep breath and relax. You are not alone. Many Aliyah pitfalls can be avoided by some advance planning, by arming yourself with information and, most importantly, by seeking advice from qualified professionals who have vast experience with the Israeli system. Remember, your fellow olim, although well-intentioned and eager to help, might inadvertently misguide you with erroneous information.
Banking, financial planning and taxes are areas where it is imperative for you to receive good advice. The more correctly you do things at the very beginning, the less hassle you will face in the future.
ISRAELI BANKING: THE GOOD, THE BETTER AND THE BEST
Israeli banking differs from chutz l’aretz (outside of Israel) banking in several major ways. For example, you will have to re-learn the way credit cards work. Most Israeli credit cards operate more like the debit cards you are used to. Israeli credit cards allow you to pay for big ticket items in a series of tashlumim (payments) generally with no interest charges. This is both a blessing and a curse since while your money output is less at the moment of purchase, your tashlumim can accumulate quite quickly and you will end up with a big balance months in the future when you were not expecting one.
Another great service Israeli banks offer is horao’t keva: pre-arranged payments that come right out of your account or credit card for anything from utilities, to property taxes, to school tuitions and even charitable donations. This certainly makes life much easier since you do not have to worry about paying bills on time or having to write out tons of post-dated checks.
Be very careful, however, because between tashlumim and horao’t keva it is exceptionally easy to eat up the credit on your card and if you are not keeping meticulous track, you might find yourself unable to use the card when you need it most.
Another banking pitfall to be aware of is the fact that most bank accounts come with a built-in overdraft whether you asked for it or not. The overdraft is automatically calculated based on your monthly income. An overdraft is a blessing when you absolutely need a buffer between you and, say, feeding your family. BUT, if you are not vigilant, the bank will keep increasing your overdraft without you being aware, and before you know it, you will have incurred a huge debt you were not expecting. The bottom line is, where Israeli banking is concerned, vigilance, careful book-keeping and informed choices are you best bet for keeping yourself solvent and financially secure.
Here is a great tip: make sure to establish a really good relationship with one or two bank employees. In Israel, this is not difficult. If you speak with people who have been here for a while, you will hear of many instances when a bank rep or even branch manager made sure to cover a check that might otherwise have bounced, or called to let them know of any out-of-the-ordinary activity on their account and even gave them his or her personal cell for any kind of banking emergency. Just remember to reward their service with a Rosh Hashana gift basket or Mishloach Manot at Purim-time to show them how much you appreciate their personal touch and attention.
TAXES AND BENEFITS FOR NEW OLIM
Did you know that returning residents and new immigrants to Israel are exempt from paying taxes on income generated outside Israel for TEN years? And did you know that this exemption covers ALL income, including all employment or asset generated income, pensions, dividends, interest or royalties? Well, it is totally true. In the last decade, Israel has implemented a more streamlined and beneficial taxation system for new or returning olim in order to make Aliyah financially easier and therefore more appealing to Jews outside of Israel.
New immigrants are granted tax deductions based on a time/credit point system which reduces overall income tax substantially up to three years into their Aliyah.
Furthermore, new olim are exempted from paying tax on interest on foreign currency deposits for 20 years. The only conditions are that the provenance of those deposits is capital they owned prior to their immigration and that said capital was deposited in an Israeli banking institution.
Another advantage offered to new immigrants is the option to apply for an adjustment year. What this means is that during their first year of Aliyah, they will not be considered Israeli citizens where taxes are concerned. If they decide to stay in Israel after the first year, they will then be entitled to all the benefits available under the new tax reform and will receive them retroactively from the date they arrived.
This is just the tip of the iceberg on the topic of Aliyah and finances. Within your first year, it really is imperative that you engage an expert to guide you on the oftentimes bumpy road of the Israeli tax and financial system, and who will help you make sure you receive all the benefits that are coming to you, and more importantly, who will help you develop good financial and tax-related practices that will enable you to fully revel in your long-awaited homecoming.
