Dear Clients,
The District Court recently ruled in favor of Broadcom Semiconductor Ltd. in its case against the Israel Tax Authority, and determined that changes to its business following its acquisition by the Broadcom group, should not result in a capital gain from the sale of FAR (functions, assets and risks). This ruling is contrary to a previous decision handed down by the same judge in 2017, in the Gteko case.
The issue of reclassification of a transaction following the acquisition of an Israeli company and the change of a business model is very complex and is dependent on a fact and circumstance test which differs from case to case. This is why an accurate analysis should be made in each case.
For the full review, please click here.
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