Trustee for share consolidations, asset transfers and mergers under Sections 103, 104 and 104H of the Israeli Income Tax Ordinance. A trustee approved by the Israel Tax Authority, with pre-ruling expertise, so the structure is sound before it starts. Neutral, independent custody through the entire deferral period.
The ITA-approved trustee for tax-deferred restructuring
Sections 103, 104 and 104H, end to end.
Share consolidations, asset transfers and mergers under these sections depend on the trustee’s approval and the terms of the tax ruling. We serve as a trustee approved by the Israel Tax Authority. Psagot Securities is a TASE member; any custody or execution arrangements for a restructuring must be established for the specific transaction.
Restructuring trustee under the Income Tax Ordinance and the tax ruling
Custody under the transaction-specific trustee instructions
Withholding and reporting under the tax ruling
Pre-ruling ITA expertise
The structure is sound before it starts.
A 103/104 restructuring lives in a multi-year deferral window, and the smart move is locking the ITA’s position in writing before closing. We support your tax counsel on the pre-ruling, from drafting through the answer, including the green-track forms, and we review the ruling’s trustee provisions before it is signed, so that every duty written into it is one that can actually be executed.
Pre-ruling drafting and submission supported, including green-track filings
Trustee provisions reviewed before the ruling is signed
Ongoing ITA engagement through the deferral period
Neutral custody through the deferral
Independent of the parties for the entire window.
Deferral periods can run for years. Throughout, the assets need a custodian that cannot be pulled either way. As a non-bank, independent trustee, we sit outside the parties and outside their financial relationships.
Non-bank, independent trustee
Independent of the parties’ financial relationships
Annual reporting to the ITA on the structure’s events
When a trustee is required
Statutory in share exchanges. A ruling condition almost everywhere else.
Under Section 104H, depositing the allotted shares with a trustee is a condition written into the law itself. In most other restructurings the requirement arrives through the tax ruling: whenever an Israeli asset or company moves under a foreign entity, or Israeli taxpayers enter a share-exchange merger, the ITA conditions the deferral on an Israeli trustee. Local statutory mergers and splits usually need none, and we will tell you so.
Section 104H share exchanges: trustee required by statute
Israeli assets moving under a foreign company: trustee required by the ruling
Local mergers and splits: usually no trustee needed
The playbook, end to end
Custody, withholding, reporting, release.
The trustee’s duties run from closing to the final release: holding the allotted shares, withholding at every juncture the ruling defines, reporting each sale within its deadline, filing the annual report, notifying holders in writing before the deferral period ends, and releasing only against the ITA’s confirmation that the tax is paid.
Withholding at every juncture: share sales, cash consideration, interim dividends
Per-sale reporting within the deadline, plus the annual report
Release only against the ITA’s confirmation of payment
How it works
From ruling to release.
01
Trustee appointed to obtain the ruling.
The trustee is needed in order to obtain the ruling: the application names us and the ruling defines our duties. We join before filing, support the drafting, and review the trustee provisions before signature so they can actually be executed.
02
Trust agreement signed.
Psagot Equity appointed as trustee; holding account and asset registry established; transfer restrictions applied per the ruling’s terms.
03
Assets and shares transferred.
Restructured assets and shares transferred to the trustee. The holding period begins and all transfer restrictions are enforced.
04
Clearance and release.
On ITA and regulatory clearance, assets and shares are released to the authorized parties and the trust is closed, with a full audit trail delivered.
What is a restructuring trustee under Sections 103/104?
Israeli tax law allows certain share consolidations, asset transfers and mergers to defer tax, provided the restructured shares or assets are deposited with a qualified trustee for the statutory deferral period, under an ITA ruling. The trustee enforces the transfer restrictions and reports the structure’s annual events to the ITA.
Does the ITA ruling come before or after appointing the trustee?
The trustee comes first. The ruling application names the trustee, and the ruling’s terms define the trustee’s duties, so a trustee is needed in order to obtain the ruling at all. We join before the application is filed, support the drafting, and review the trustee provisions so they are executable. The trusteeship starts operating once the ruling issues and the assets are deposited.
How long does the trustee hold the assets?
The holding period is determined by applicable law and the transaction’s tax ruling. Throughout that period, the trustee remains independent of the parties and their financial relationships.
When does a restructuring require a trustee?
In a Section 104H share exchange, the trustee is required by the statute itself. In most other cases the requirement comes from the tax ruling: structures that move an Israeli asset or company under a foreign entity, and share-exchange mergers involving Israeli taxpayers, are routinely conditioned on an Israeli trustee. Local statutory mergers and splits usually need none.
What does the restructuring trustee actually do?
Holds the allotted shares through the deferral; withholds tax at the junctures the ruling defines, on share sales, on any cash consideration as an advance, and on interim dividends; reports each sale within its deadline and files an annual report; notifies holders in writing before the deferral period ends; and releases the shares only against the ITA’s confirmation that the tax is paid.
Some of our shareholders are foreign residents. How are they handled?
Their share of the consideration is held until an exemption or reduced-rate certificate is in hand. The ruling sets a window for obtaining it, after which maximum withholding applies, and treaty residents have a documented route based on residency certificates and declarations. We run the mechanism exactly as the ruling defines it.
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