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The largest-ever exit by an Israeli company Wiz by Google's parent company Alphabet could generate a record tax windfall for Israel if finalized, potentially negating planned budget cuts and preventing an increase in the country's deficit from 4.7% to 4.9%. However, the deal still requires regulatory approval in the U.S.
Should Google acquire Wiz for approximately NIS 117 billion ($32 billion) — roughly one-fifth of Israel’s 2024 national budget — the estimated tax revenue from the sale would be around NIS 13 billion ($3.5 billion).
Last summer, Google reportedly offered $23 billion for Wiz, with the expected tax revenue at the time estimated at NIS 10 billion ($3 billion). The final tax figure could change based on the shareholders' residency status, and Wiz's four Israeli co-founders may explore legal avenues to minimize their tax liabilities. Additionally, Wiz is registered as a U.S. company despite its Israeli founders.
Finance Ministry officials said that if an unexpected windfall reaches the tax authority this year, it could avert budget cuts and possibly even roll back some of the tax hikes planned for 2025 — potentially even after they take effect. However, the Knesset continues its tax legislation discussions without factoring in the possibility of a major revenue influx from the Wiz deal.
Wiz’s four co-founders — CEO Asaf Rappaport, CTO Ami Luttwak, CPO Yinon Costica, and VP R&D Roy Reznik — each own an estimated 10% stake, meaning each would receive $3.2 billion from the sale, or $12.8 billion collectively.
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They are expected to pay between 28% and 33% in taxes, totaling around NIS 13 billion. Hundreds of other Wiz employees who hold company stock will also owe taxes on their earnings.
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Wiz public offering launch in the U.S.
(Photo: Brandon Luckain: Lucky Shot Media - courtesy of Wiz)
Attorney Beni Tovi, a partner and head of international taxation at Shekel & Co. law offices, explained that “Israeli residents are taxed on all global income, including earnings from shares in a U.S. company.”
Under Israeli tax law:
- Shareholders with up to a 10% stake pay a 25% capital gains tax plus an additional surtax on annual income exceeding NIS 700,000, bringing the effective tax rate to 28%.
- Shareholders with over 10% ownership pay a 30% capital gains tax plus the 3% surtax, totaling 33%.
- Israeli employees with stock options granted under Section 102 of the Israeli tax code will pay 25% tax plus the surtax where applicable.
If the deal goes through, it could mark one of the most significant financial events in Israel’s corporate history.