Palo Alto Networks $25 billion acquisition of Israeli cybersecurity firm CyberArk Software program (Nasdaq: CYBR) might earn Israel’s state coffers $2 billion in taxes – about NIS 6.7 billion at immediately’s trade price. The exact quantity will rely upon the Israeli shareholders and their place of residence for tax functions.
Isak Rofe CPA, a world taxation skilled at Meir Mizrahi with A. Rafael & Co. legislation agency explains that the quantity of income to the state will depend on a number of components. He says, “The founders of CyberArk are Israelis, however a few of them formally left for the US. The ultimate quantity will depend on what number of Israeli shareholders the corporate has.” Rofe believes that based mostly on the truth that the corporate has about 1,000 workers in Israel out of about 4,000 in whole, in addition to estimates concerning further Israeli buyers, then 25%-30% of the corporate is in Israeli palms.
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“Taxation in Israel is taken into account comparatively excessive”
The tax calculation is complicated and will depend on the kind of shareholder. Anybody who holds lower than 10% of the shares pays 25% capital good points tax, and if their whole revenue exceeds NIS 720,000 shekels, an extra 5% surtax shall be added, in accordance with the brand new legislation that got here into impact in the beginning of 2025. Substantial shareholders, those that maintain greater than 10% pays 30% capital good points tax plus 5% surtax, assuming they’re Israeli residents.
A particular state of affairs applies to founders who’ve left Israel over time. “Anybody who leaves Israel pays an exit tax, which is set by the variety of days spent in Israel in contrast with the variety of days spent overseas through the holding interval,” explains Rofe. For instance, if the corporate was based in 1999 and the founder left for this objective in 2012, he was solely in Israel for half of the interval, and due to this fact pays half the tax in Israel that Israeli residents pay – 15% as a substitute of 30%.
Within the US, the federal capital good points tax price is barely 20%, plus state taxes that vary from 0% to 11%. “This isn’t a zero-sum sport for shareholders,” Rofe notes. “Taxation in Israel is taken into account comparatively excessive, so the extra you allow Israel for a state within the US with low taxation, the tax price will lower following the transfer.” Nevertheless, former Israeli residents are alleged to obtain a tax credit score within the US for the tax they paid in Israel.
Revealed by Globes, Israel enterprise information – en.globes.co.il – on July 30, 2025.
© Copyright of Globes Writer Itonut (1983) Ltd., 2025.
