When planning a real estate project in Israel, the available paths are numerous but often appear complex. Between the general characteristics of such transactions, tax optimization, legal structures, and banking regulations, many investors feel discouraged in their approach.
However, one strategic question frequently arises: is it possible to acquire real estate in Israel using funds from a French SCI (Société Civile Immobilière)?
Whether you wish to purchase in your personal name or through your company, solutions do exist. Proper legal guidance is essential to transform such a project into a secure and concrete reality.
1. Acquisition in the Name of the French SCI
Israeli law provides a certain degree of flexibility for foreign entities, subject to proper legal structuring.
• Recognition of a foreign company:
An SCI incorporated outside Israel may directly acquire real estate rights in Israel. It is not legally required to establish a new Israeli entity; however, the company must regularize its status by registering as a “foreign company” with the relevant Israeli authorities.
• The opportunity to create an Israeli subsidiary:
Although direct acquisition is possible, establishing an Israeli company may sometimes be advantageous. Under certain conditions, this structure may allow for reductions in acquisition tax when assets are transferred between the foreign parent company and the local Israeli entity.
• Caution regarding a “Real Estate Association” (Igoud Mekarkain):
If the company’s primary assets become Israeli real estate, it may be reclassified for tax purposes as a real estate association. In such cases, any transfer of shares may be taxed as a direct real estate sale, triggering capital gains tax (Mas Shevah) and acquisition tax (Mas Rechisha).
2. Acquisition in a Personal Name Using Funds from a French SCI
If you prefer to hold the property personally while using funds originating from your SCI, two main legal routes are available:
A. Trust Structure (“Neemanout”)
A shareholder may acquire the property in their own name on behalf of the company.
• The principle:
The shareholder acts as a trustee, lending their name to the company without deriving personal economic benefit, in order to acquire the property rights on its behalf.
• The key condition:
To avoid double taxation, a trust declaration must be submitted to the Director of Real Estate Taxation immediately after the purchase. Without timely notification, the authorities will consider the individual as the sole owner for all legal and tax purposes.
B. Distribution of Dividends
This is the conventional approach for separating corporate and personal assets.
• The mechanism:
The SCI distributes its profits as dividends to the shareholder in accordance with French law.
• The advantage:
Once distributed, the funds become the individual’s private property, severing the link with the company and allowing the acquisition of Israeli real estate independently, with full legal clarity between corporate and personal assets.
3. Proof of Source of Funds — The Key to Peace of Mind
As part of anti–money laundering regulations and KYC (Know Your Customer) procedures, Israeli banks require full transparency.
• For a personal purchase (via dividends):
You will need to provide objective documentation confirming the legitimacy of the process, including incorporation documents of the foreign company, certified financial statements, dividend distribution resolutions, Kbis extract, and certifications from accountants or lawyers confirming tax compliance in both France and Israel.
• For a purchase through the SCI:
Banks will require certified articles of association, board resolutions authorizing the transfer of funds, and clear evidence that the funds originate from lawful activities.
International Legal and Tax Expertise — Your Strongest Asset
Opportunities in Israel are real, but the success of an investment depends on mastering legal nuances and understanding the opportunities they create.
Between substantial tax benefits, administrative pitfalls, and constant legislative changes, every real estate case has its own specificities and requires a tailor-made analysis.
Whether you are purchasing your primary residence, developing a rental investment portfolio, or securing an intergenerational transfer, a single misjudgment can cost you tens of thousands of shekels in avoidable taxation.
A question? Need assistance? We invite you to complete the dedicated contact form.
NB : This article is given as an indication, consequently each file/case will have to be the subject of a detailed study, in this direction the information contained in this article could not constitute a legal consultation.
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