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With its unique tax benefits and lack of sanctions law, Israel is an attractive destination for Russian oligarchs and a growing number have expressed an interest in moving to the country, according to legal experts.
Pinhas Rubin is the chairman and the head of Gornitzky & Co., one of the largest law firms in Israel. The firm is very well-connected to oligarchs from Ukraine and Russia and has recently received inquiries from individuals wishing to move to Israel.
Israel is a tax haven not only for Ukrainians or Russians but for “the entire world,” Rubin said. This is mainly because of a law that has been dubbed the “Milchan Law,” named after billionaire Arnon Milchan, which provides a tax exemption on overseas income for Jewish immigrants that are eligible under the Law of Return.
Rubin, who was one of the law’s primary architects, said that these tax benefits ultimately serve to encourage oligarchs to come to Israel.
“If a foreign national, whose business and fortune are abroad, immigrates to Israel and becomes a tax resident, he will not be taxed on his foreign assets and their income, or from their sale, for 10 years,” he said.
Rubin – who prefers to call wealthy individuals “activists of capital” rather than oligarchs, a term that he views as having overly negative connotations – believes that ultimately sanctions will not hinder them from immigrating to Israel because the majority are not on a US sanctions list.
“I really hope and expect, although it’s not a given, that when very wealthy individuals buy a huge villa here, they will have new friends and become part of the community in Israel,” Rubin related. “They’ll also invest in Israel. It will be a boon to the Israeli economy.”
In a meeting with Foreign Minister Yair Lapid on Sunday, U.S. Secretary of State Antony Blinken said that the America appreciates Israel’s efforts to implement sanctions on Russia.
“We thank the foreign minister for his strong repudiation of Russian aggression against Ukraine and the Israeli promise that Russia will not be used as a backdoor for sanctions violations,” Blinked said, adding that the sanctions were an important measure intended to pressure the Kremlin into ending its aggression in Ukraine.
Blinken’s statements notwithstanding, Israel currently has no laws in place to implement the kind of sanctions that have been imposed on Russia by the West. The Israeli government has said that it will ensure the country will not be used as a tax haven for those seeking to evade them but has so far not gone into detail about its efforts in this regard.
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US Secretary of State Antony Blinken, left, accompanied by Israeli Foreign Minister Yair Lapid, right, speaks at bilateral meeting at the State Department in Washington, October 13
(Photo: AP)
In fact, the lack of a legislative framework is one of the primary reasons Israel is viewed as a particularly attractive destination for wealthy immigrants, according to Michal Khaikin, a paralegal at Nimrod Yaron & Co., a firm that helps new immigrants plan their taxes if they meet the conditions set forth by the Law of Return.
“Without a shadow of a doubt, Israel is a practical destination for oligarchs from around the world, including those from Russia, who are currently experiencing international sanctions,” Khaikin explained. “Currently, in Israel, there is no sanctions law that does exist in other countries, a law that taxes the policy of imposing sanctions and how they are implemented.”
Khaikin revealed that her firm had received several inquiries from Ukrainians and others in “ex-Soviet nations” requesting their services and counsel in the matter.
“Israel is a bubble of economic stability because of the stable status of the Israeli shekel, which justifies interest in Israel,” she said.
Similarly, Dr. Udi Levi, a senior analyst at the Jerusalem Institute for Strategy and Security and an expert in sanctions and economic warfare, attested that many oligarchs are keen on immigrating to Israel and opening businesses.
Though he declined to name names, Levi noted that several wealthy individuals from Russia and neighboring countries already own houses in Israel, a country which they have long viewed as a sanctuary in times of need.
“Some of them understand that it’s going to be a very complicated situation [in Russia],” Levi said. “Israel is a good option; it’s a western country and you have everything here.”
Despite statements to the contrary, Levi is skeptical that Israel will enforce sanctions. Jewish oligarchs are well-connected to Israeli lawmakers and are also giving many donations to institutions across the country.
“Israel has never enforced international sanctions; I know it personally,” he asserted. “They will say that they’re enforcing sanctions but they will never do it.
Still, Israeli banks will be wary of accepting these individuals’ money for fear of retribution from the west, Levi noted. To circumvent this issue, some oligarchs will open bank accounts under another person’s name.
“They will use this platform exactly like terrorist organizations do today using legal entities to move money from one part of the world to another,” he argued. “They will try to use those Israeli people and infrastructure that they have connections with.”
Aside from Israel, it appears as though other countries in the region have also opened the door to oligarchs, among them Turkey and the United Arab Emirates.
Dozens of wealthy Russians have flocked to sanctions-free Dubai in the past month. Billionaire and ex-owner of Chelsea Football Club Roman Abramovich is reportedly house-hunting in Dubai with the hopes of transferring part of his wealth there.
Meanwhile, Turkish Foreign Minister Mevlüt Çavuşoğlu on Saturday said that Russian oligarchs are welcome in Turkey provided they abide by international law to conduct business. In recent weeks, two multimillion-dollar superyachts, allegedly belonging to Abramovich, were seen docking in Turkish resorts. While Turkey has been vocal in its criticism of the Russian invasion of Ukraine, the government has said it opposes sanctions imposed by its NATO allies but will implement any UN-approved punitive measures.