Jerusalem Court Reclassifies Bank of Jerusalem’s Insurance Agency as Financial Institution for VAT

• The Jerusalem District Court ruled that Ir Shalem, the insurance agency of the Bank of Jerusalem, must be reclassified as a Financial Institution under the VAT Law.
• The court used a substance-over-form approach, recognizing the agency as integral to the bank’s financial activities.
• Ir Shalem provides mandatory life and property insurance to the bank’s mortgage customers and relies entirely on the bank’s business.
• The court rejected the VAT Authority’s objections, emphasizing that classification should reflect the entity’s actual functions.
• This ruling sets a precedent for subsidiaries of financial institutions regarding their VAT status.

Source: taxand.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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